Cheapest platform for trackers

zagfles

Asghar wrote: »

Just wondering, where do Hargreaves Lansdown take their 0.45% platform charge from, do they sell off some units in your invested fund(s)?
Or do you get billed separately?

They take it out of the cash in your account which you're likely to have from dividends, tax credits, loyalty bonuses etc. If you don't have enough cash they sell part of your biggest holding IIRC.

jamesd

With an inheritance objective and GK you can have a specified minimum final capital value as well as having whatever extra is left based on meeting income targets. It doesn't have to be a drain everything in the worst historic case approach.

Guyton's sequence of return risk reduction approach might also interest you, since that was found to reduce risk and would help whether you're taking a percentage or using the GK model.

You don't have to because purist using GK even after you've followed it's rules and depleted all of your cash and all of your fixed interest investments, which it does before selling equities that have decreased in value. You could switch to percentage or estimated dividends then if you wanted to.

One thing worth understanding about the various drawdown safe withdrawal strategies is that they are expected to work whenever you start them and you can switch or restart one whenever you like.

AlanP_2

This thread seems to have gone a long way from the OPs question which related to building a pension pot, not spending it.

point5clue

Hopefully a little more 'on topic' (only just) - ERNs thoughts on a cash buffer rather than just having a bigger pot an hence a lower withdrawal rate for a given income...

(if I'm not allowed to post a link search for 'Early Retirement Now' and look for cash management in early retirement...)

https://earlyretirementnow.com/2016/10/26/cash-management-in-early-retirement/

AnotherJoe

Thats the one I recall P5C thanks, which comes to the conclusion that a 2 year buffer was best, much better than no buffer, and that if it was diminished you gradually topped it up (4 months worth at a time) rather than replenishing in one hit.

That anyway is what i read it to say, unfortunately it doesn't concisely summarise its findings at the end (or beginning)

Sally57

StellaN wrote: »

Cavendish online have just announced they have cut their SIPP rate to 0.25 and if you have a total of £200K in pension and Isa's it is down to 0.20!

So Cavendish are now a very viable option for people with total investments over £200K for 0.2%!

They also use the same Fundnetworks platform as Fidelity!

jamesd

That earlyretirementnow post isn't good and should largely be ignored:

1. It falsely asserts that the 4% rule is doomed because it doesn't use the correct equity-bond mixture which the 4% rule is for. The real 4% rule investment mixture is OK, though definitely stressed.

2. No bonds, so it's either sell equities or hold cash. Should be some bonds in there both for rebalancing and to draw on when equities are down.

3. No bonds and US shares reduce the natural yield so the cash runs out faster.

4. No bonds so it presumably isn't using Guyton's sequence of returns risk taking approach, which further improved performance/success rate.

The result is a too high two year cash suggestion when one year or GK should be used. One year topped up by the natural yield will last longer than most downturns because the yield is likely to be around 3.5-4% for UK investors. Even using 3% and drawing 6%, one year is a couple of years worth before bonds get touched.

Cardinal-Red

Coming back to the OP's point (as fascinating as the rest of the thread was!) am I right that for an investor like me, using Cavendish is a no-brainer in relation to the platform fees?

My situation is I have a SIPP worth about £40k invested in 8 individual tracker funds (Blackrock and Vanguard only) which I plan a quarterly contribution to which I will spend on rebalancing the portfolio to my planned allocations.

No shares or ETF's in my current plan. It is held with HL purely for historical reasons, though I do like their platform.

Aware of the current drawdown restrictions, but I am 38 and so it's not a huge issue right now.

Most of my pension contributions will go through Salary Sacrifice into my employer scheme, so I can't see my SIPP getting up towards this £200,000 level, though of course plans may vary!

What other factors have people used in choosing their platforms?

And if I choose to switch, would it be a case of liquidating my holdings, transferring as cash, and re-buying? Seems to be a £25 charge instead of £200 for transferring in units?

bigadaj

Have you run the numbers through snowmans spreadsheet, at that sort of level you are getting into fixed fee provider territory. So someone like iWeb or interactive investor, basic provision but much cheaper.