Research for DIY drawdown

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
33 replies 3.4K views
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  • kidmugsykidmugsy Forumite
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    You have to internalise the truth that anything fact-based is necessarily backward-looking. Nobody can know whether the lessons will apply in the future. With that proviso:-

    https://www.kitces.com/blog/understanding-sequence-of-return-risk-safe-withdrawal-rates-bear-market-crashes-and-bad-decades/

    https://www.york.ac.uk/media/economics/documents/discussionpapers/2017/1706.pdf
    Free the dunston one next time too.
  • JoeEnglandJoeEngland Forumite
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    kidmugsy wrote: »
    You have to internalise the truth that anything fact-based is necessarily backward-looking. Nobody can know whether the lessons will apply in the future. With that proviso:-

    https://www.kitces.com/blog/understanding-sequence-of-return-risk-safe-withdrawal-rates-bear-market-crashes-and-bad-decades/

    https://www.york.ac.uk/media/economics/documents/discussionpapers/2017/1706.pdf

    Yep, prediction is difficult, especially the future!
  • OldMusicGuyOldMusicGuy Forumite
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    JoeEngland wrote: »
    Yep, prediction is difficult, especially the future!
    I knew you were going to say that..........:)
  • edited 1 August 2018 at 5:34PM
    AudaxerAudaxer Forumite
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    edited 1 August 2018 at 5:34PM
    JoeEngland wrote: »
    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?
    Something to bear in mind if you have a large pot, is that SIPPs are only currently covered up to £50k by the Financial Services Compensation Scheme (going up to £85k from April 2019). This covers you mainly against the risk of a major fraud. So if you have a large pot you may want to consider splitting between a couple of platforms. The general consensus is that the risk is very low, but if it did happen and you had a large pot the impact could be very high.
  • JoeEnglandJoeEngland Forumite
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    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.

    I've ordered the book!
  • scdandemscdandem Forumite
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    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.

    Can you help me understand how you hold cash in a SIPP please? Does that mean bonds or do SIPPS have a simple cash savings mechanism built in? And if so, how do you ensure cash isn't eroded by inflation due to low interest rates? There seem to be fixed rate savings accounts that give better returns than bonds at the minute? Or am I misunderstanding?

    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.
    I'm in the same position as the OP as in 2 yrs to planned retirement and having DCs in pension pots and learning about DIY with a view to creating an income (£250k total pot). I've read and understood a fair bit (inc John Edwards and Lars Kroijer) and wonder is it wisest to transfer to a SIPP(S) now then spend 2 years learning more, or take no action until much more knowledge under my belt? I'm conscious of the need to reduce killer costs ASAP but don't want to assume I know enough! 
  • cfw1994cfw1994 Forumite
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    BLB53 said:
    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.
    In bold: perhaps.  Perhaps not.
    How good is your current active scheme, OP?   Are you engaged enough to understand the funds it invests in?  Is it already perhaps on a “glidepath”?  (our default plan reduces risk 10 years from nominated retirement date - something that would have cost me a LOT of money if I had remained on it!) 
    We have a decent low cost Aviva Group Plan, with around 80 choices of funds we can use.  I felt that was enough for me, and moved 3 other smaller older DC pots into it.  Very easily done yourself, especially if they are listed as using Origo Options.
    Before you do that, investigate how you can drawdown on the current scheme: it may be “cheap enough” to not need a HL or AJBell, etc.   I sometimes feel they are great if you are a serious investor and want access to individual stocks as well as funds, but for my needs, a choice of 80 funds is more than enough!
    Also: if any pots are under £30k, you may want to leave them - there is a “small pots” rule that could give you access to the lot.  
    Finally, check there are no guaranteed benefits with them.  If there are, you may want to leave alone too.

    Plan for tomorrow, enjoy today!
  • cfw1994cfw1994 Forumite
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    Audaxer said:
    JoeEngland wrote: »
    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?
    Something to bear in mind if you have a large pot, is that SIPPs are only currently covered up to £50k by the Financial Services Compensation Scheme (going up to £85k from April 2019). This covers you mainly against the risk of a major fraud. So if you have a large pot you may want to consider splitting between a couple of platforms. The general consensus is that the risk is very low, but if it did happen and you had a large pot the impact could be very high.
    Well, the SIPP may only be protected to the FSCS limit, but the investments within a SIPP are legally ‘ring-fenced’ from the SIPP provider itself. That means that, even if the provider fails, the investments are safe – and also entitled to their own, separate FSCS protection.
    JoeEngland wrote: »
    Yep, prediction is difficult, especially the future!
    I knew you were going to say that..........:)

    “I never make predictions and I never will.”

    — Paul Gascoigne
    Plan for tomorrow, enjoy today!
  • AlbermarleAlbermarle Forumite
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    scdandem said:
    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.

    Can you help me understand how you hold cash in a SIPP please? Does that mean bonds or do SIPPS have a simple cash savings mechanism built in? And if so, how do you ensure cash isn't eroded by inflation due to low interest rates? There seem to be fixed rate savings accounts that give better returns than bonds at the minute? Or am I misunderstanding?

    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.
    I'm in the same position as the OP as in 2 yrs to planned retirement and having DCs in pension pots and learning about DIY with a view to creating an income (£250k total pot). I've read and understood a fair bit (inc John Edwards and Lars Kroijer) and wonder is it wisest to transfer to a SIPP(S) now then spend 2 years learning more, or take no action until much more knowledge under my belt? I'm conscious of the need to reduce killer costs ASAP but don't want to assume I know enough! 
    As already explained there is no one size fits all approach.
    I had three ex employer pensions and one current workplace pension. All with the traditional insurers - Scottish Widows; Standard Life ; Aviva etc .
    I moved the two ( not both at the same time ) with the highest charges/poor choice of funds into a new SIPP ( Fidelity)
    The SIPP gives me a wider choice ( investment trusts, ETF's , different funds etc ) although it is worth noting that I did not really save that much  on the % charges .
    My current workplace pension ( SW) has very low charges , although the website is a bit clunky and they are slow to respond to queries. The other one ( SL) is better but I would have to change to a different product for drawdown.
    For now my plan is that when drawdown starts , I will use my SIPP but leave at least one of my other pensions alone. Maybe use the other one to feed the SIPP as it runs down. Also every time I transfer another pension into my SIPP, I get cashback , so effectively fee free for a few years. :)
  • gm0gm0 Forumite
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    When you have read the blogs and the intro book and have got the hang of the domain language/terminology of pensions and drawdown then a very very good book is Michael McClung's Living off your Money.  This can help you make sense of the many different approaches you will have encountered as recommendations on the internet and to determine how much difference (if any) they make. 

    And it's a tough read (took more than one go at some sections).  So not the first book to look at.
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