SIPP portfolio

verloren

Have you considered the effect of inflation on your goal? Assuming inflation of 2%, your £30k when you're 58 will be worth something like £19k in today's money, which might not be enough for your plans.

Thumbs up from me on the choice of VLS80 by the way - it's certainly possible to build your own portfolio that covers global equity and bond markets, but it's ultimately going to end up looking something like VLS80, only more complicated! Personally I'd spend that energy working out how to put more money into your account rather than trying to improve your fund choice!

Pedro_S

verloren wrote: »

Have you considered the effect of inflation on your goal? Assuming inflation of 2%, your £30k when you're 58 will be worth something like £19k in today's money, which might not be enough for your plans.

Thumbs up from me on the choice of VLS80 by the way - it's certainly possible to build your own portfolio that covers global equity and bond markets, but it's ultimately going to end up looking something like VLS80, only more complicated! Personally I'd spend that energy working out how to put more money into your account rather than trying to improve your fund choice!

Thanks for the reply. Thankfully, yes, I have considered inflation. I used an online pension calculator which assumed 2.5% annual inflation and 0.75% costs (i'm less than this)

Appreciate the thumbs up on the fund choice. This thread has reassured me that it's certainly a decent enough choice for now

RickyB2000

Pedro_S wrote: »

I would think if money is ring fenced, then even if the platform goes bust it doesn't affect your money?

Not quite. Safe from fraud etc. However, the administrator can use your funds to pay their costs if they cannot be paid from other sources. In this case you will get back the first 50k they use (plus anything they don't use).

That is what I learnt from the Beaufort case. Maybe someone can correct it. Though as others have said very unlikely with large mainstream provider.

dunstonh

Not quite. Safe from fraud etc. However, the administrator can use your funds to pay their costs if they cannot be paid from other sources. In this case you will get back the first 50k they use (plus anything they don't use).

Although its unlikely that there would be any costs levied to individuals using mainstream investments given their liquidity.

That is what I learnt from the Beaufort case. Maybe someone can correct it. Though as others have said very unlikely with large mainstream provider.

Beaufort were not an investment platform. They were a discretionary investment manager. The areas where mainstream investment options were used, these were quickly handled without issue or cost to investor. However, Beaufort also heavily used niche, high risk/ speculative, illiquid investments and that is where the administrator has their work cut out. These will take years to liquidate and value will be lost (assuming there was real value there in the first place). It is the large investors into that area that are taking the haircut.

Beaufort is more comparable to an individual fund going under. Not a platform.

RickyB2000

Fair enough, makes sense. So only the cost of returning you your investments will be taken from your ring fenced funds. Not any other costs. And if this is straight forward, no costs - or at least no cost that would come anywhere near 50k compensation limit so as far as you are concerned as an individual investor, no cost. Would you therefore be confident enough to say 100% no risk of this in a mainstream SIPP platform with mainstream funds?

BLB53

VLS 80 is a perfectly good choice for your timeframe of over 20 years so I would suggest stick with it and try to avoid unnecessary distractions. In my experience, tinkering can seriously damage your returns!

Alexland

If you are a higher rate taxpayer are you claiming the additional SIPP contribution tax back from HMRC and if you are a basic rate taxpayer have you considered a S&S Lifetime ISA where you would get the same government contribution but there would be no tax on withdrawal from age 60?

VLS80 is a good fund and sounds likely to be appropriate for your needs.

Alex

Linton

RickyB2000 wrote: »

Fair enough, makes sense. So only the cost of returning you your investments will be taken from your ring fenced funds. Not any other costs. And if this is straight forward, no costs - or at least no cost that would come anywhere near 50k compensation limit so as far as you are concerned as an individual investor, no cost. Would you therefore be confident enough to say 100% no risk of this in a mainstream SIPP platform with mainstream funds?

There is never 0% risk, but you would need to think very hard to come up with a realistic scenario of losing your pension pot, other than global meltdown when all bets are off for anything. There is however the risk that if the platform did go bust there may be a delay in being able to access your money. Computer problems could have the same effect. So there is some benefit if you are retired in using more than one platform. In our case his accounts are on a different platform to hers.

DairyQueen

I agree that VLS80 is a good choice for investors of your profile (inexperienced, young and/or portfolio under 100k). A couple of things you may like to consider for the future as your fund grows and you gain more confidence and experience:

- Actively managed funds have a place in many investors' portfolios. For example, global passives are rightly focused on large caps and developed markets. One common strategy for those with sizeable portfolios is to use global passives as the core holding/s but supplement with actively managed satellites that target sectors and regions outside the scope of the global passives. Emerging markets, small caps and lower grade fixed interest are arguably better managed by specialist fund managers. Higher charges and more risk/volatility but investing a small percentage in each of these kinds of sectors provides further diversification of the portfolio.

- Unless you intend to purchase an annuity with all/most of your SIPP on the day you retire (unlikely and you have specified that you are planning to drawdown) the investment timeframe for a large %age of your portfolio is much longer than the 23 years between now and your preferred retirement age. Depending on your attitude to risk, an 80+% equity allocation would be appropriate for funds targeted for drawdown in middle/late retirement.

Given my time over, at age 35 I think I would allocate a chunk of my portfolio to a 100% equity global passive. More volatility over the short/medium term but it's likely to be invested for 40+ years.

- When (not 'if') the markets crash don't be tempted to a) sell or b) suspend contributions. These are classic newbie mistakes (done that, ironed the t-shirt). With a cheap, global tracker you just sit back and wait. You may have to wait a year, or two, or five, but eventually your patience will be well rewarded.

- Don't try to time the market. Another classic newbie mistake (been there too).

- Resist greed. IMO greed is the number one reason that newbies lose money (usually chasing the latest bubble/fashionable share/sector/fund). The aim should be to beat inflation over the long-term not to triple your money in a year.

Investing is one of those areas where the benefits you reap are directly related to the amount of time and effort you devote. It took me around 12-18 months of active research to reach the point where I felt sufficiently confident to manage our SIPPs. You will make mistakes - that's part of the learning experience - but don't beat yourself up over it and don't be discouraged. You have the advantage of this and other forums to guide you. There are plenty of experts here (not me but I'm a little ways ahead of you on the learning curve).

It's taken me 20+ years of intermittent and risky dabbling to reach a point of engaging brain before investing . You are doing everything right at the tender age of 35.

Good luck.

Pedro_S

Alexland wrote: »

If you are a higher rate taxpayer are you claiming the additional SIPP contribution tax back from HMRC and if you are a basic rate taxpayer have you considered a S&S Lifetime ISA where you would get the same government contribution but there would be no tax on withdrawal from age 60?

VLS80 is a good fund and sounds likely to be appropriate for your needs.

I am a higher rate taxpayer but I have no need to claim the extra tax relief because my pension is funded through company salary sacrifice scheme.

I must admit i'd never considered a LISA.

Thanks for the feedback