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180K Investment

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Hi there, I hope some of you can assist me?

I am recently divorced at 55 and have 180K to place in a pension pot. I have been advised by a few friends that I should open a SIPP? This will be a long term investment as I don't feel I will need to access it because I'm lucky enough to have inherited a healthy estate from my parents.

I also have 120K ish (round figures) in a Stocks and Shares ISA and the following funds were chosen by my ex husband.

Global - 60K (Newton Global Income, Henderson Global Growth, Fundsmith Equity, Old Mutual Global Equity, Lindsell Train Global Equity)

UK Equity - 30K (Franklin UK Equity Income, Evenlode Income, CF Lindsell Train, Liontrust Special Situations)

UK (I think this is UK again?) - 20K
Royal London Sustainable World Trust

European - 10K (Henderson European Growth)

My question is should I invest in these type of funds in my SIPP and also do some research into other similar funds or one of my friends suggested that I just invest it all in a tracker (I think that's what it's called) called the Vanguard Strategic Life 80 (I hope that doesn't mean I only live until 80 lol!)

As you will realise I'm completely new to all this but feel I need to get this pension sorted and out of the way so any comments etc would be really, really appreciated.( but don't shout at me!)
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  • MEM62
    MEM62 Posts: 4,796 Forumite
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    With that level of funds to invest you should be talking to an IFA - not listening to friends (no matter how well intentioned) or taking advice from forums.
  • ColdIron
    ColdIron Posts: 9,164 Forumite
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    Be aware that you probably won't be able to put the whole £180K into a pension pot in one go and receive tax relief. There is an annual upper limit of £40K or your UK earnings, whichever is the lower. You could use 'carry forward' to use the last 3 years allowance but you would need to be a high earner to make much use of this
  • dunstonh
    dunstonh Posts: 116,688 Forumite
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    I am recently divorced at 55 and have 180K to place in a pension pot. I have been advised by a few friends that I should open a SIPP?

    How are you going to put £180k into a pension with the earnings limit/annual allowance?
    Is carry forward available to you?
    My question is should I invest in these type of funds in my SIPP

    Probably not as there appears to be no structure to those funds and appears to be more random than built to a model/structure.
    one of my friends suggested that I just invest it all in a tracker (I think that's what it's called) called the Vanguard Strategic Life 80 (I hope that doesn't mean I only live until 80 lol!)

    That is not a tracker. it is a fettered fund of funds which has underlying investments which are trackers. Do you have the risk profile to accept VLS80? (that is above the UK average)
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • AlanP_2
    AlanP_2 Posts: 3,267 Forumite
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    Might the £180K pension pot be as a result of a split in an existing pension pot following the divorce - i.e. a Pension to Pension transfer effectively or does it not work like that?
  • nb0825
    nb0825 Posts: 115 Forumite
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    MonroeM wrote: »
    Hi there, I hope some of you can assist me?

    I am recently divorced at 55 and have 180K to place in a pension pot. I have been advised by a few friends that I should open a SIPP? This will be a long term investment as I don't feel I will need to access it because I'm lucky enough to have inherited a healthy estate from my parents.

    I also have 120K ish (round figures) in a Stocks and Shares ISA and the following funds were chosen by my ex husband.

    Global - 60K (Newton Global Income, Henderson Global Growth, Fundsmith Equity, Old Mutual Global Equity, Lindsell Train Global Equity)

    UK Equity - 30K (Franklin UK Equity Income, Evenlode Income, CF Lindsell Train, Liontrust Special Situations)

    UK (I think this is UK again?) - 20K
    Royal London Sustainable World Trust

    European - 10K (Henderson European Growth)

    My question is should I invest in these type of funds in my SIPP and also do some research into other similar funds or one of my friends suggested that I just invest it all in a tracker (I think that's what it's called) called the Vanguard Strategic Life 80 (I hope that doesn't mean I only live until 80 lol!)

    As you will realise I'm completely new to all this but feel I need to get this pension sorted and out of the way so any comments etc would be really, really appreciated.( but don't shout at me!)

    With the amount of money you've quoted, I would go see a financial advisor. Also the funds you've chosen seem to have no rationale at all (why would you invest in UK equity if you've already invested in a global equity fund, you'd be overlapping your investments). A SIPP is best for people that are well read and know what they're doing, hence the reduction in costs and maximum flexibility.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    Wouldn't the pension be part of a sharing order from a divorce?

    Would agree with others that involving an ifa would be best. The funds currently held aren't bad but there's maybe a suggestion of fashion investing, and the ifa could review the whole financial situation such that investments are structured appropriately between pension, isa etc
  • MonroeM
    MonroeM Posts: 174 Forumite
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    edited 26 November 2016 at 3:53PM
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    dunstonh wrote: »
    How are you going to put £180k into a pension with the earnings limit/annual allowance?
    Is carry forward available to you?

    Probably not as there appears to be no structure to those funds and appears to be more random than built to a model/structure.

    That is not a tracker. it is a fettered fund of funds which has underlying investments which are trackers. Do you have the risk profile to accept VLS80? (that is above the UK average)

    The 180K pension pot is currently in a company scheme (my ex-husband and I were co-directors of our own business) but I now I want to transfer out into my own SIPP.

    Regarding the funds that my ex chose for my ISA's over the years they may not have had any structure/strategy and indeed may have been chosen at random or on reviews, however they have all performed very well for me over the years especially the global ones. In fact the last global fund he chose about 5 yeas ago now (Fundsmith) has really done well. I realise I can't compare this to anything or to what a financial advisor's portfolio would have returned but the advisor's portfolio would have needed to to be outstanding to exceed the returns I have made from these funds. I know there is absolutely no guarantee they will continue to perform in this way and there could be a crash in the markets but as I mentioned in my original post that fortunately I do not need to dip into my investments as they are for the long term or to leave to my children.

    I do have the risk profile for the Vanguard product so I am not averse to a quite high risk strategy. I think I mentioned in my original post that I was lucky enough to have inherited quite a large estate from my parents ( i don't want to appear arrogant but I have to give you the facts so that you can give me your responses related to my financial position).

    Now that I have retired after a pretty successful business career (arrogance again but factual), I feel I'd like to try my hand at the investments and work out a strategy and an effective portfolio but have literally just started with my research and hence seeking views from this forum. I always listen to advice and then make my own mind up as to which direction to go in. All of my retired friends look after there own SIPPS so I suppose the easy way would be to pass my pension pot to a financial advisor as most of you have advised but I really would like to get my teeth into this and have a go and I have plenty of time on my hands now. We all make mistakes but as long as you learn from them you should come through the other side.

    Any comments or views would be greatly appreciated?
  • MonroeM
    MonroeM Posts: 174 Forumite
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    nb0825 wrote: »
    Also the funds you've chosen seem to have no rationale at all (why would you invest in UK equity if you've already invested in a global equity fund, you'd be overlapping your investments).

    Sorry, at the moment I don't understand this because I haven't learnt anything as yet but just starting so please can you explain why it has no rationale at all to invest in UK Equity Funds as well as Global Funds?

    Many thanks.
  • darkidoe
    darkidoe Posts: 1,125 Forumite
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    I think it is reasonable that you are showing an interest to manage this sum of money yourself but obviously it takes a certain amount of research into tax efficient savings, various types of investments, overall costs.

    In terms of being tax efficient, SIPPs and ISAs are valid options.
    As far as I know, with SIPPS, you will be able to contribute up to a maximum of 40 000 pounds into the pension per year. Then there is the ISA annual allowance of 20 000 from April 2017.

    Picking the investments would be a bit more of an academic choice or perhaps even then it would be a punt. Investing in a tracker would ensure you keep costs low and get an 'average' market return. You need to decide whether that is what you are after. Make sure you read about Stock/Bond allocation to smooth out the volatility of you portfolio given your age. Vanguard Lifestrategy products are usually recommended as a simple to understand product to start with as you learn more about investing.

    How well your funds have performed over the past few years have no indication of how they will perform into the future. It should be evaluated and assessed on a regular basis to see if they are balanced or do the investments overlap and invest in similar stocks or perhaps if you are overweighted to a certain sector or region. This can increase your risk profile and costs without really providing any additional edge in return.

    Most people here are DIY investors and some have better experience and technical knowledge than others. However you will be taking on the risks yourself in DIY investing and should always DYOR and try to understand whatever risks you are taking on. Unless you are comfortable with the unknown risks you are taking, the suggestion of an IFA to assess things on your behalf is a reasonable one given your age and relatively large amount of money involved and also quite a lot of time will be taken up doing all the learning/reading.

    Good luck!

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