advise for a doctor with zero financial IQ

tibbles209

I am a doctor and a member of the NHS pension; yes it is frustrating that the retirement age keeps going up, and employee contributions keep going up but it remains exceptional value compared to the vast majority of other pensions. Don't let the fact that it is not as good as it used to be blind you to how lucky you are to have access to this pension scheme that most people on this board would be thrilled to be a member of.

The Lifetime Allowance needs to be a major consideration for you. If you are a doctor who works/is planning to work full time for most of your career and retire at normal retirement age, you are almost certainly going to hit your lifetime allowance with your NHS pension alone, which means any additional money you put into a SIPP will end up being very heavily taxed.
While ERRBO is perhaps expensive, it does not increase the value of the pension (calculated as a 20 multiple of your annual pension at the time of retirement) in Lifetime Allowance terms, assuming you do indeed retire early as the scheme intends, so can be a tax efficient way of bringing back your retirement date. That being said, you are already a fair way into your career and ERRBO cannot be applied retrospectively, so pension you have already accrued will be actuarily reduced if you use ERRBO to retire early; only the proportion of your pension accrued after joining the scheme can be taken unreduced.

Basically, this is a complicated situation and its really worth thinking hard about seeing an IFA if as you say you have 'zero financial IQ'.

Can you tell us more about what you are actually trying to achieve? What age are you looking to retire at? I am assuming early retirement must be the goal, as your NHS pension will more than meet your income requirement of 2-3k/month in retirement on its own.

justme111

if you go through wesleyan you aready going through FA , just without "I" which stands for "independent ". so they will offer you investment options of limited range

maximumgardener

go and see several IFA's. you should find their advice worth its weight in gold. select one to work with.

clearly you could diy but do you have the time or the inclination . could you do better than the IFA?

dunstonh

clearly you could diy but do you have the time or the inclination . could you do better than the IFA?

And as the OP is looking at options from a provider that uses tied FAs/insurance agents, he is not avoiding the costs of advice and is not getting the cost benefit of DIY. It is the worst of both worlds.

letspretendforaminute

Thrugelmir wrote: »

Anyone can "make" money in a bull market. Over confidence is many an investors downfall.

Not everyone does though and a rising market lifts all boats including active funds and trackers. In a bearish market they aren’t immune either.

I’ve managed to grow <£50k into £128k within 5 years and another £10k into £25k in 3 years, all by self-investing. Taking control of your own investments can be as worthwhile as using an IFA. I’m not overly confident either... it’s a huge responsibility, stress and risk having any kind of capital in the markets.

ridingrodeo

I started to invest in shares around 3 years ago, made some good decisions but got a bit over confident and made some poor decisions. My NHS pension estimate from the beginning of contributions to March 2014 was 8,200/ year. NHS pensions had mentioned that it was not possible to forecast for the future as the pension age was tied to the state pension after 2015.
I have put some money into the Vanguard LS60 and in my ISA...but nothing more than that.
I am less inclined to go for Wesleyan as have been reading that they have limited products....
options are:
keep it simple...SIPP in a platform like AJ bell and buy multiasset funds
see an IFA, however I am aware that he is human and cannot magically generate profits or may take risks to do so....the annual charges too add up..

atush

Dont invest in single shares. Invest in funds, trackers and investment trusts

letspretendforaminute

Dont invest in single shares. Invest in funds, trackers and investment trusts

^This. Except maybe a handful of individual stocks in your portfolio. It’s almost a full time job managing a fragmented portfolio of shares so unsurprisingly there’s a niche filled by IFAs who make it their job. I’m shifting more to passive funds/trackers - very low fees. I haven’t looked at investment trusts yet as they are a more sophisticated product that ironically would require me to seek the advice of an IFA.

sandsy

ridingrodeo wrote: »

see an IFA, however I am aware that he is human and cannot magically generate profits or may take risks to do so....the annual charges too add up..

All investments involve taking risks. SIPP, ISA etc - if they are invested in funds, there is a a level of risk for which you may get a reward (return). If they're invested in cash deposits, you're taking on a risk of not even matching inflation.

Funds invest in shares. The manager of each fund chooses the shares for the fund. The IFA assesses the level of risk you are prepared to take and matches you with appropriate funds. That doesn't mean the funds will definitely produce returns - it means they are suitable for the level of risk you indicated you wanted to take. You have no come back if investment returns are poor.

And yes, you have to pay for this expertise. You pay the fund manager. You pay the provider of the pension or ISA wrapper and/or platform. You pay the adviser.

This is why a defined benefit scheme is so valuable, especially one backed by the government. You get a promised income, irrespective of the returns or how much it costs to generate those returns, without taking on any risk yourself.

Thrugelmir

letspretendforaminute wrote: »

I’ve managed to grow <£50k into £128k within 5 years and another £10k into £25k in 3 years, all by self-investing. Taking control of your own investments can be as worthwhile as using an IFA.

Hence my earlier comment. Over confidence in ones own abilities is a downfall of many an investor.