Trying to learn

BLB53

Ah, sorry if I was being dim, I assumed that as the SIPP is an investment, I shouldn't be looking to take anything out of it in the short term.

A SIPP is basically a personal pension plan which you manage yourself. It is fairly easy to start your own with a low cost platform such as HL or AJ Bell Youinvest and set up your monthly DD.

For a good guide on this I can recommend 'DIY Pensions' by Edwards which provides a useful step-by-step guide to setting up and running a DIY Sipp and also covers income drawdown at such time as you want to draw benefits.

Certainly 53 is not too late to start. You may have another 15 yrs to retirement but then maybe an additional 30 years during which your pension pot would remain invested.

LateStarter

Thanks to all who've replied so far; I feel better for having (at least theoretically) started the journey. I'll keep asking questions/throwing ideas out as they spring into my head.


I've bought "DIY Investing" by Edwards, so that's the New Year's Day reading sorted. I'm starting to think I should be seperating my planning into:

• short term cash fund (for holidays /emergencies etc.)
• long term (pensions)

Is there a need for a medium term? What if I want/need to change my car in 5 years? Maybe a bond or savings ladder type of thing?

Audaxer

LateStarter wrote: »

Thanks to all who've replied so far; I feel better for having (at least theoretically) started the journey. I'll keep asking questions/throwing ideas out as they spring into my head.

I've bought "DIY Investing" by Edwards, so that's the New Year's Day reading sorted. I'm starting to think I should be seperating my planning into:

• short term cash fund (for holidays /emergencies etc.)
• long term (pensions)

Is there a need for a medium term? What if I want/need to change my car in 5 years? Maybe a bond or savings ladder type of thing?

Agree a bond ladder is a good idea. Any money you may need within 5 years is still short term in my opinion and should be in some form of cash savings account.

Another good book to get you started is Smarter Investing by Tim Hale.

LHW99

Also worth checking if you are on track with your state pension (NI contributions).
https://www.tax.service.gov.uk/check-your-state-pension

Also, are you married? if so what is your OH's position - its best to consider retirement income as a partnership.

LateStarter

LHW99 wrote: »

Also worth checking if you are on track with your state pension (NI contributions).
https://www.tax.service.gov.uk/check-your-state-pension

Also, are you married? if so what is your OH's position - its best to consider retirement income as a partnership.

My state pension is £8575.55 p.a., which is the maximum I can get; surprisingly it says I only need to make 9 years more contributions to get the full amount - how does that work? Does that mean if I stop working at 62, and not make any more NI payments, I still get full state pension?


Somebody suggested I just max out my company pension before opening a SIPP. I'm starting to feel I want 2 pots, if that makes sense (please let me know if it doesn't). My company pension as the 'safe' low risk profile, and a riskier invesment pot (using the SIPP for the tax relief).


I live with my partner, but we're not married - I take it from the taxman's point of view we're seperate. Her approach to finances is very different to mine, so there's a few conversations to be had about the future in terms of money, but I need to start working out what my goals are first.



LS

Albermarle

Somebody suggested I just max out my company pension before opening a SIPP. I'm starting to feel I want 2 pots, if that makes sense (please let me know if it doesn't). My company pension as the 'safe' low risk profile, and a riskier invesment pot (using the SIPP for the tax relief).

Within the company pension you will normally have the ability to hold the money in different funds and split it between different risk levels . So no absolute need for a separate pension to do this .
Often workplace pensions will have lower charges than ones you open your self directly , so you need to check the charging structures of the company pension and any new pension you might open
The tax relief is the same however you do it.

dunstonh

Somebody suggested I just max out my company pension before opening a SIPP. I'm starting to feel I want 2 pots, if that makes sense (please let me know if it doesn't). My company pension as the 'safe' low risk profile, and a riskier invesment pot (using the SIPP for the tax relief).

So, in effect, you want a more medium risk weighted spread. Most portfolios will have assets from the different sectors (US equity, UK, europe, Asia, Japan etc). A low risk spread will have low amounts allocated to the higher risk areas. A high risk spread will have higher amounts allocated. A combination of the two gives you medium risk.

So, why not go medium risk in your workplace pension instead of two pensions invested in opposite extremes?

LateStarter

dunstonh wrote: »

So, in effect, you want a more medium risk weighted spread. Most portfolios will have assets from the different sectors (US equity, UK, europe, Asia, Japan etc). A low risk spread will have low amounts allocated to the higher risk areas. A high risk spread will have higher amounts allocated. A combination of the two gives you medium risk.

So, why not go medium risk in your workplace pension instead of two pensions invested in opposite extremes?

You're right, there's no reason why I couldn't do it via the company pension (I did admit I've got a lot to learn).

LateStarter

Albermarle wrote: »

Within the company pension you will normally have the ability to hold the money in different funds and split it between different risk levels . So no absolute need for a separate pension to do this .
Often workplace pensions will have lower charges than ones you open your self directly , so you need to check the charging structures of the company pension and any new pension you might open
The tax relief is the same however you do it.

Cheers, yeah I'm just getting my head around this. Can you tell HMRC how much you plan to put in and they adjust your tax code in advance, or is it done in arrears?

OldMusicGuy

LateStarter wrote: »

Cheers, yeah I'm just getting my head around this. Can you tell HMRC how much you plan to put in and they adjust your tax code in advance, or is it done in arrears?

For me it was arrears in the first year but in subsequent years they adjusted my tax code on the assumption I would make a similar contribution in the following year.