Fund and broker advice please

havingaball74

Thank you all very much for your help. I am indeed like a rabbit in headlights and basically not investing at all due to indecision paralysis!

So, is the consensus to pick EITHER vls OR HSBC as they are broadly similar?

Is it worth going through iWeb anyway to give myself flexibility in case I want to invest in HSBC in the future? Because iWeb is a fixed fee is better to go through them than Vanguard direct even if I just use Vanguard or is it an extra cost/fee?

So, am I right in saying that you can put different isa allowances in different funds as long as they are from different financial years?

Thanks for your patience!





Does putting

Iain_For

havingaball74 wrote: »

That is a really good question which I hadn’t thought about. I just assumed I would take the reduced pension at 57 and fund it, if necessary, with money from the stocks ans shares ISA. I may not retire before 60 but it would be nice if the investments stack up. Is it worth opening a SIPP then just in case or stick to the teacher pension and investments/savings?

Worth checking if your pension allows AVCs, if it's a defined benefit scheme you may even be able to purchase added years.

havingaball74

Iain_For wrote: »

Worth checking if your pension allows AVCs, if it's a defined benefit scheme you may even be able to purchase added years.

My worry is that the money is tied in until I’m 57. In an isa, theoretically I could access all or some of the money before that? Maybe worth doing both?

havingaball74

Last question! Should I go directly through Vanguard to buy VLS or should I go through iWeb to keep my options open in terms of adding other funds later? By doing that and hedging my bets, does it mean I’m paying more in fees?

dunstonh

Given the small cost difference, I would choose whole of market over restricted every time. Things change often and the best option now won't be the best option in 5 years time.

havingaball74

Brilliant! Thank you.

Iain_For

havingaball74 wrote: »

My worry is that the money is tied in until I’m 57. In an isa, theoretically I could access all or some of the money before that? Maybe worth doing both?

Indeed, I started off paying an additional 3% of my income into AVCs 20+ years ago ramping it up as circumstances allowed alongside an S&S ISA. The main benefit the ISA has had is flexibility in investment choice, 20 years ago AVC choices were things like with-profits funds which have not performed very well. As the ISA pot grew, it became a very useful security cushion that fortunately was not needed. It'll now account for around 25% of my total retirement income and, of course, be tax free. Circumstances do change, in my case the ability to make regular charge free withdrawals from an S&S ISA is now a crucial factor in choice of platform.

seacaitch

AnotherJoe wrote: »

Unless you plan to buy an annuity immediately you retire (very unlikely these days) then the vanguard target retirement fund is somewhat old fashioned because this is what used to happen when it was standard to buy a annuity when you retired. These days you tend to stay invested at your original risk level until much later, and some time into your retirement.

I'm just reviewing a few threads from earlier this month, and noticed the reference here to Vanguard's Target Retirement Funds (VTRF).

I would point out that VTRF is not aimed exclusively at those intending to annuitise as stated above. It's also aimed at people intending to follow drawdown strategies:
https://www.vanguard.co.uk/documents/adv/literature/trf-adviser-guide.pdf

(Look at the asset allocation glide path chart and note the still-relatively high allocation to equities (50%) at age 68)

It's approach might be considered as a 'halfway house' between the older lifestyling approaches, which followed glide-paths intended to result in annuity purchase at retirement, and the contemporary fashion (post-pension freedoms) to remain invested at the same static asset allocation and target risk level both during retirement as while saving for retirement, in order to support long term drawdown.

I think this type of fund can still have uses. For example, I'm looking at one of the VTRF funds as one possible option within the portfolio that will fund my partner's early retirement (from 55 to state pension age), prior to other income coming on tap.

In this use case, where there is a known end-date by which approximate full drawdown is intended (as opposed to the open ended date, ie. their future date of death, which most people are faced with when deciding upon an asset allocation), the glide path of VTRF into lower risk assets may be useful.

This is a bit of a niche example, but there may be other examples where a glide path may also be useful.

A further point I'd make is that I suspect, as always with markets, that recent-ish market history is playing a role in encouraging people to think that maintaining elevated (and often fixed) allocations to equities into and throughout retirement will be the natural thing to do.

We presently have a scenario where:
a) Equities have enjoyed a lengthy bull market, which (as always) makes it progressively harder for many people to avoid extrapolating the pleasant returns and low volatility;
b) Bond yields are historically extremely low, which makes it difficult to see how bonds can themselves be a future source of returns (until after yields have 'normailsed', if they ever do).

Given that backdrop, it's understandable that the default option for many people may be to wish to hold more equities and less bonds while saving for retirement, and to retain that allocation during retirement, than they might have done historically.

But of course, the circumstances described in a) and b) above could change quite dramatically over a short period of time.

seacaitch

havingaball74 wrote: »

Last question! Should I go directly through Vanguard to buy VLS or should I go through iWeb to keep my options open in terms of adding other funds later? By doing that and hedging my bets, does it mean I’m paying more in fees?

Look at the option that will be the best-suited over the next "period", eg, the next couple or next few years, because after that you can simply transfer to another option.

Take into account currently stated transfer fees, transaction costs, platform costs and product availability when making this determination. If one option is materially cheaper than another, then all other things equal* (*they rarely are), go with the cheapest...

When commencing investing, monthly transaction fees can play a disproportionately large role, while % platform fees play a minor role, a situation that will reverse as account balances grow.

You're not having to select a "platform for life"; every platform offering, functionality and pricing will change as time goes by, so it's simply a case of selecting the best-suited (or at least "good enough") option now, and being prepared to review as changes occur in the future.

dunstonh

I'm just reviewing a few threads from earlier this month, and noticed the reference here to Vanguard's Target Retirement Funds (VTRF).

I would point out that VTRF is not aimed exclusively at those intending to annuitise as stated above. It's also aimed at people intending to follow drawdown strategies:
https://www.vanguard.co.uk/documents/adv/literature/trf-adviser-guide.pdf

(Look at the asset allocation glide path chart and note the still-relatively high allocation to equities (50%) at age 68)

It's approach might be considered as a 'halfway house' between the older lifestyling approaches, which followed glide-paths intended to result in annuity purchase at retirement, and the contemporary fashion (post-pension freedoms) to remain invested at the same static asset allocation and target risk level both during retirement as while saving for retirement, in order to support long term drawdown.

I think this type of fund can still have uses. For example, I'm looking at one of the VTRF funds as one possible option within the portfolio that will fund my partner's early retirement (from 55 to state pension age), prior to other income coming on tap.

It has it's uses but its a niche fund. It starts at a higher risk than most consumers accept and ends up at a lower risk than most consumers accept. You are not in control of your asset allocation. It is higher cost than VLS. And alternative lifetstyling funds are available at 0.05%.

If you fit the niche, then fair enough but you may be better off just going with VLS80 and fundswitching down to 60 and 40 when you feel it is right for you.