Basic rate tax payers ... what do you use to save for retirement?

JustAnotherSaver

captainreckless wrote: »

In terms of having all your eggs in one basket, the wrapper doesn't make much difference. It's the investments that you select that determine the risk / performance. For example, if you were only investing into a FTSE 100 tracker (not a good idea) and holding some units in an LISA and some in a SIPP you would still most certainly have all your eggs in the same basket. The ratio of LISA to SIPP contributions doesn't matter as much as the balance of the funds that you are buying to hold in them.

I have a SIPP, ISA and a LISA, and like you I am nowhere near the annual limits for these. I hold a range of funds across both wrappers - passive index trackers for the US, UK and Europe & some actively managed funds for Japan and the Emerging markets. Whenever I buy something in either the SIPP or the LISA I look to ensure that this fits in with the rest of the portfolio. In terms of sector allocation, I don't differentiate between the two wrappers.

As I started the SIPP a few years before the LISA, I've got all of my core funds in there. Money into the LISA is currently going to buy funds in specific sectors that I want to hold more of. At the moment that's Health Care and Pharma. It's also handy that the fund I'm buying invests mostly in the US as the EM funds in the SIPP have increased in value quite a bit with the falling pound and this has reduced the % of my overall portfolio that's in the US. My point is, in terms of keeping your eggs in different baskets the fact that the funds are held in different wrappers doesn't matter to me.

The LISA can be drawn upon from age 60 and the SIPP from 55 (will be at least 57 by the time I get there). Whatever is in the LISA is not subject to tax. The SIPP is taxed, but only on money above the personal tax allowance. Since my means are modest, and I'll be relying on a DB pension for my main income in retirement, I intend to empty the SIPP before I start the DB by taking out less than the annual allowance for however many years it takes to withdraw it all (probably only one!). The trick here is to have enough tax free investment income from my ISA that, along with the SIPP I'll be able to stop work early and not have my DB pension reduced.

I must admit that because the amounts that I invest are small and the effect of huge losses on my long term plans would be marginal, I don't consider things quite as carefully as I should. If you're talking about investing where the results of your actions might be life changing then I'd suggest that you pay no attention to what I do and ask somebody who really knows what they're doing!

Thanks and an interesting view.

I came into all of this looking for a cheap SIPP that is suitable for stated situation. At the very least a choice of 2 or 3 or so.

I've ended up with no such choice and instead i'm left wondering whether a pension is good or right at all & whether a LISA should be used and if so then how much in relation to a pension.

Basically i now have more questions than when i asked the damn thing :rotfl:

I know what will happen. It'll just get to the stage where it's like ok this is dragging on now, time to make a decision and just stick with it & see what happens.