New to investing, advice on diversifying

dunstonh

Also, why an AVC and not personal pension? AVCs are not what they used to be. Still a few gems about but nowadays, PPPs/SIPPs tend to be more popular.

Lungboy

Anonymous101 wrote: »

I think Ipgm was referring to the fund being actively managed or passive. Funds have various levels of management within them. Some just track the markets (passive) others a fund manager trades equities in an attempt to gain better returns (active). These have different fee's associated with them but in either instance the amount of your time required could be similar.

Oh I see, sorry, I thought they meant active as in hunting for shares etc myself to invest in.

dunstonh wrote: »

Also, why an AVC and not personal pension? AVCs are not what they used to be. Still a few gems about but nowadays, PPPs/SIPPs tend to be more popular.

No reason I haven't looked into personal pensions, this was all triggered by an avc presentation at work from Prudential. It seemed to make sense as it was connected to my work pension, and gave tax relief. Do personal pensions have the same benefits then?

dunstonh

No reason I haven't looked into personal pensions, this was all triggered by an avc presentation at work from Prudential. It seemed to make sense as it was connected to my work pension, and gave tax relief. Do personal pensions have the same benefits then?

AVCs are old fashioned, typically do not support the pension freedom options (or most of them) and have limited investment options and can be expensive by modern standards. There are a few AVCs around that can have exclusive benefits. However, most companies have been pulling them as there are no longer required to be offered by law.

Lungboy

The Prudential one doesn't support freedoms, although it sounded straightforward to transfer it to somewhere that does. Do personal pensions also give the tax breaks of an AVC?

dunstonh

Do personal pensions also give the tax breaks of an AVC?

yes they do.

Lungboy

From a very quick glance on Money.co.uk it looks like PPPs have considerably lower fees than sipps with PPPs more like s&s isas and sipps more like avcs. Does that sound about right? I'm guessing PPPs can't be taken early like LISAs, but can they be taken from 55 or only when SP is taken? As LISAs can only take new cash until you're 50, I'm thinking maybe only fund a Lisa until 50, then a PPP afterwards, with the Lisa containing slightly higher risk investments and the later PPP with lower risk things?

dunstonh

From a very quick glance on Money.co.uk it looks like PPPs have considerably lower fees than sipps with PPPs more like s&s isas and sipps more like avcs.

its not as easy as that.

PPPs are mostly retailed via IFAs. The DIY market has focused mostly on SIPPs (less regulation on SIPPs historically. So, lower cost to offer). SIPPs can range from lower cost to high cost.

I'm guessing PPPs can't be taken early like LISAs, but can they be taken from 55 or only when SP is taken?

Pensions can be taken from age 55. However, pensions can benefit from higher tax relief and can reduce your income (which can aid in getting back child benefit or your personal allowance back if you are near those thresholds). LISAs do not. Pensions are outside of the estate. LISAs are not. Pensions are not included in any means tested benefits until you get to age 60+. LISAs are included in means tests before that age.

Lungboy

dunstonh wrote: »

its not as easy as that.

PPPs are mostly retailed via IFAs. The DIY market has focused mostly on SIPPs (less regulation on SIPPs historically. So, lower cost to offer). SIPPs can range from lower cost to high cost.



Pensions can be taken from age 55. However, pensions can benefit from higher tax relief and can reduce your income (which can aid in getting back child benefit or your personal allowance back if you are near those thresholds). LISAs do not. Pensions are outside of the estate. LISAs are not. Pensions are not included in any means tested benefits until you get to age 60+. LISAs are included in means tests before that age.

Egad! Every time I think I'm starting to get my head around everything a load more issues appear. At this rate I'll lose all my money to inflation

Apodemus

Lungboy wrote: »

Egad! Every time I think I'm starting to get my head around everything a load more issues appear. At this rate I'll lose all my money to inflation

One additional issue to further complicate your life is that some AVCs (such as the Prudential tie-up with LGPS) can work alongside the employer's DB scheme to allow the whole of the AVC to be taken as a tax-free lump sum, while putting this in a SIPP or Personal pension would only allow 25% to be taken tax-free.

Lungboy

Apodemus wrote: »

One additional issue to further complicate your life is that some AVCs (such as the Prudential tie-up with LGPS) can work alongside the employer's DB scheme to allow the whole of the AVC to be taken as a tax-free lump sum, while putting this in a SIPP or Personal pension would only allow 25% to be taken tax-free.

Argh! I think I need to make a table comparing the pros and cons of each and go for the highest scoring option.