Research for DIY drawdown 30 July 2018 at 7:56PM edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning 33 replies 3.4K views

JoeEngland

I'm 52 and have several DC and private pension pots, most of which don't allow drawdown. If I wanted to do a DIY management of my pensions and drawdown what are good resources for research into doing this?

AnotherJoe

All the same ones as for investing as thats what you'll be doing. Monevator a good website.


Are you DIY investing them now?

jamg21

I think DIY drawdown is a high risk strategy in my opinion, dependant on your level of investment knowledge/expertise etc... I think for example if you were looking to manage your own portfolio and take withdrawals at 55, you should read into something called sequencing risk as it can really have a negative impact dependant on market conditions in the early years.

atush

It can be made a little less risky by having a large cash pot to live on during market downturns, and by investing in income funds/trusts so that it doesnt matter if they go down (or up) as long as they keep paying that income.

OldMusicGuy

First, if you want to DIY manage your DC pots, transfer them all into one that offers flexi-access drawdown. I moved five other DC pots into my HL SIPP.

Second, do lots of reading about investing for retirement. Like AnotherJoe said, it's about how you invest your retirement funds to create the wealth you need in retirement. You might find this Kindle book helpful as well: DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning by John Edwards.

DIY drawdown itself is not a high risk strategy. It's HOW you decide to do the drawdown and strutcure your investments in the SIPP that can introduce risk. The choice is typically between using a safe withdrawal rate as opposed to some form of a bucket strategy which attempts to minimize sequence of returns risk, although the difference is often not that "black and white". Google "Wade Pfau" and "sequence of returns risk" and you will get a lot of information that explains this.

There is also a lot of good information on this site as well.

FWIW I have a very low risk drawdown strategy where I have a lot of cash in my SIPP and have also created a portfolio of investments based around a core holding of a multi-asset fund that is more skewed to bonds/fixed interest than equities which will reduce volatility in the short term. This does mean I will miss out on some market gains but my objective is defensive rather than growth-oriented.

JoeEngland

OldMusicGuy wrote: »

First, if you want to DIY manage your DC pots, transfer them all into one that offers flexi-access drawdown. I moved five other DC pots into my HL SIPP.

Second, do lots of reading about investing for retirement. Like AnotherJoe said, it's about how you invest your retirement funds to create the wealth you need in retirement. You might find this Kindle book helpful as well: DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning by John Edwards.

DIY drawdown itself is not a high risk strategy. It's HOW you decide to do the drawdown and strutcure your investments in the SIPP that can introduce risk. The choice is typically between using a safe withdrawal rate as opposed to some form of a bucket strategy which attempts to minimize sequence of returns risk, although the difference is often not that "black and white". Google "Wade Pfau" and "sequence of returns risk" and you will get a lot of information that explains this.

There is also a lot of good information on this site as well.

FWIW I have a very low risk drawdown strategy where I have a lot of cash in my SIPP and have also created a portfolio of investments based around a core holding of a multi-asset fund that is more skewed to bonds/fixed interest than equities which will reduce volatility in the short term. This does mean I will miss out on some market gains but my objective is defensive rather than growth-oriented.

Thanks for the book recommendation, I'll have a look at that. I'm also interested to know where's a good place to research and compare different providers and products with details of risk profile, charges etc. You mentioned a HL SIPP, how did you decide on that one?

JoeEngland

AnotherJoe wrote: »

All the same ones as for investing as thats what you'll be doing. Monevator a good website.


Are you DIY investing them now?

No. I have one active DC pension with my current employer, and several that are no longer being paid into. I want to start doing more research now as I plan to give up work in 2 years, and have 3 years until I can start drawing down from the pensions.

OldMusicGuy

JoeEngland wrote: »

Thanks for the book recommendation, I'll have a look at that. I'm also interested to know where's a good place to research and compare different providers and products with details of risk profile, charges etc. You mentioned a HL SIPP, how did you decide on that one?

You need to understand the difference between a SIPP and a fund. A SIPP is a pension wrapper ("platform") within which you hold various investments, it has no risk profile. The risk profile depends on the investments (typically funds but can be other things) you decide to hold within the SIPP.

You need to decide on two things: what platform provider to use (decision 1), and then what investments you will hold within the SIPP, including how much you might want to hold as cash (decision 2). The choice of platform provider depends on their costs, the range of investments they offer and also do they offer flexi-access drawdown. There is a good spreadsheet here https://forums.moneysavingexpert.com/showthread.php?t=5583030&highlight=spreadsheet that compares the costs of different platform providers

You need to read that book asap, it will explain the basics to help you understand this more.

FYI it has taken me around two years of reading books along with sites like Monevator and this one to get to the point where I am confident to define a retirement strategy and manage my own investments.

JoeEngland

OldMusicGuy wrote: »

You need to understand the difference between a SIPP and a fund. A SIPP is a pension wrapper ("platform") within which you hold various investments, it has no risk profile. The risk profile depends on the investments (typically funds but can be other things) you decide to hold within the SIPP.

You need to decide on two things: what platform provider to use (decision 1), and then what investments you will hold within the SIPP, including how much you might want to hold as cash (decision 2). The choice of platform provider depends on their costs, the range of investments they offer and also do they offer flexi-access drawdown. There is a good spreadsheet here https://forums.moneysavingexpert.com/showthread.php?t=5583030&highlight=spreadsheet that compares the costs of different platform providers

You need to read that book asap, it will explain the basics to help you understand this more.

Great, I'll have a look at the spreadsheet. I know it's the individual funds which have a risk profile, and I need to have a think about how much to keep in cash given that we already have a good amount in cash savings (ISAs and 1 year fixed rate savings accounts).

BLB53

If I wanted to do a DIY management of my pensions and drawdown what are good resources for research into doing this?

I think the first thing would be to choose a sipp provider and then arrange for them to transfer your DC plans so you consolidate in one place.

I use AJ Bell Youinvest as they work out a little cheaper than HL.

Here's a good article on the DIY Investor site covering the nuts and bolts of drawdown

http://diyinvestoruk.blogspot.com/2016/08/a-look-at-sustainable-drawdown.html

I think the book mentioned above would go into more detail but this covers the basic strategies.

tacpot12

This is a good overview article: https://www.trustnet.com/news/824990/what-is-the-best-way-to-receive-an-income-from-my-investments

This blog has some excellent articles on safe withdrawal rates: https://earlyretirementnow.com/