GAR Not wanted

Amolad

1) The UK market as measured by the FTSE has risen on average only 5%p.a. (total 28%) in past five years, two of which have been losing years. Not exactly stellar.
2) In a losing year I would probably not drawdown any funds. It will depend on performance/income tax timings etc. The new rules on income drawdown make it very flexible as I'm sure you know.
I would still expect to maintain the fund and draw a reasonable "income" long-term
3) You're forgetting 2013 which was marginally better than 2016 as measured by the FTSE. From a personal viewpoint 2013 was twice as good as 2016.
4) I was basing my estimate on past 30-odd years

Amolad

Yes, thanks it's probably worth looking into but I suspect it will be like travel insurance inasmuch as once you say you've had a heart problem you can no longer get quotes online and have to phone in (if they take you on at all) and rates rocket.

soulsaver

Ok - you've decided what you're doing.. rightly or wrongly.
So back to fundamentals - Can we see if you can get a cheaper IFA quote:

See links in post #13...
https://forums.moneysavingexpert.com/discussion/5554142

greenglide

I suspect it will be like travel insurance inasmuch as once you say you've had a heart problem you can no longer get quotes online

There are price comparison sites for travel insurace for people with health issues. I got multi-trip European cover for a year for two of us. Included declaring diabetes type 1, cancer, lymphoedema (including a week in hospital last year), bradycardia (including pacemaker) and historic cerebral haemorrhage for less than £150 for both of us from such a comparison.

I assume life insurance has something similar? I assume the travel insurance comparison for existing conditions is a comparatively new thing?

atush

Amolad wrote: »

Hi Atush ...

Expecting to DD 11% and maintain capital is a pipe dream.


I hold 100% company shares (i.e. no funds) in my SIPP ... these yield average 4.9%, the FTSE has risen by an average 5% over past 30-35 years (capital gain) ... I've beaten the FTSE in 5 out of the past 6 years by over 8% ... as I've said before, with investing, I'm an optimist ... and even Spurs have won tonight against the "unbeatable" Chelsea .... Crikey!


All the Best .... Amolad

Past performance is no guarantee, and besides holding only single companies and not diversified funds and trackers means you are too high risk and prob UK centric.

Again, madness.

jamesd

Amolad wrote: »

Yes, thanks it's probably worth looking into but I suspect it will be like travel insurance inasmuch as once you say you've had a heart problem you can no longer get quotes online and have to phone in (if they take you on at all) and rates rocket.

It will be more expensive than without but online quotes can still be obtained, though a broker who asks for more info may get you a better deal. The longer the term you want the more costly it will get because that increases the chance that you will die before the end and they will have to pay out. But decreasing term insurance reduces that because they would have to pay out less as you get towardss the more chance of dying years. The income one still has some effect but that is probably cheapest of the lot.

Malthusian

Amolad wrote: »

Yes, thanks it's probably worth looking into but I suspect it will be like travel insurance inasmuch as once you say you've had a heart problem you can no longer get quotes online and have to phone in (if they take you on at all) and rates rocket.

Since you have to see an IFA anyway you may as well ask them if they can provide a quote for life insurance. They will be able to ring round the providers (or use an automated system) with your medical details to get an indication of how much it would likely cost you.

Without knowing anything about your age or current state of health, it's quite possible that a 9-10 year decreasing life insurance policy with a starting sum assured equivalent to the GAR policy's transfer value (which would more or less cover the risk of dying early) would cost much less than you think.

Since I hold over 80 shares, including at least 50% of the FTSE 100, in effect I'm managing my own fund which is broadly moving with the FTSE.

On the face of it that alleviates concerns about the risk of experiencing catastrophic and permanent loss due to poor share selection. (Assuming that your 80 shares are actually diversified, and not 50% in some safe-as-houses bet like BP.) You are still overexposed to the UK and the risk of a "lost decade". However the more pressing problem is that expecting to draw 11% per annum and maintain the capital from a portfolio which is predominantly invested in the FTSE 100 (and moving in line with it) is a pipe dream.

However with dividends, taking advantage of market and company fluctuations, and taking up promising IPOs, beating the FTSE by 8-10% per year is achievable (although BREXIT sure didn't help me).

Only in the sense that it's achievable to beat the FTSE by 8-10% with online poker. It's mathematically possible, but insanity to rely upon it.

Amolad

Madness?

OK let’s analyse my madness:

If you’re mainly in high-yielding stocks you’re beating the FTSE by, say, 4.5%-5%.
If you can get a further edge by buying low and selling high (what a novel approach!), but seriously it would have been rude not to buy Shell in 2016 at around £13 (today £23.50) or Persimmon (following Brexit) after they’d fallen to under £13 from £22 (today £19.50) and numerous others. With profitable IPO’s, rumours of takeovers and actual takeovers etc I think another 3.5% over the FTSE is reasonable to add in. Then there’s the FTSE itself ... if it grew by just 2.5% p.a. over the next 20 years then that’s 5% + 3.5% + 2.5% = 11% (there’s a coincidence). This 11% is an estimate NOT a necessity.

Since 1/1/12 my SIPP investments have risen 100% (incl divs), with the FTSE rising 29%. I’m happy with that so will probably continue with my madness.

I agree with the stock phrase “Past performance is no guarantee” which is why I would, of course, adjust income to suit how the overall fund was performing and take no income if there were no growth or loss, after all my pension pot (after taking 25% tax-free) would comprise only about 20% on my investments overall.

So if I transfer the AEGON pension and live over, say 13 years & if investments perform poorly, I may miss out on about £6K a year from then on (big deal!) ... but at least I’ve made it through the 13 years! If I die within the 13 years then I’m penalised for dying (&dead!) So, again, why do I need an IFA to give me a “Full Advice service” to tell me this?

Linton

Amolad wrote: »

Madness?

....
So if I transfer the AEGON pension and live over, say 13 years & if investments perform poorly, I may miss out on about £6K a year from then on (big deal!) ... but at least I’ve made it through the 13 years! If I die within the 13 years then I’m penalised for dying (&dead!) So, again, why do I need an IFA to give me a “Full Advice service” to tell me this?

For a male aged 65 today life expectancy is around 87 so you have a 50% chance of living longer. Compare the overall income from the 11% annuity and your poor performing investments over 22 years.

The reason why you will have to take advice is that the law says so. The reason why an IFA is unlikely to agree with your proposal is that if you survive your 13 years you could sue the IFA for poor advice and have a good chance of winning and getting him, or his insurer, to pay for compensation for the income you have lost.

Amolad

The reason why you will have to take advice is that the law says so


Then to quote Mr Bumble "the law is a !!!"


As far as I understand the requirement it is only necessary for the IFA to ensure that I understand and accept the risks involved ... please can you tell me where it says otherwise .. thanks.