Choosing funds

Thrugelmir

justme111 wrote: »

Well since then the rates have gone up and the age from which one can access it has gone up; I don't think it is so good value anymore

Can you buy a pension of that value anywhere else for the same money?

TK87

dunstonh wrote: »

If it meets your objectives then yes. If it doesnt then no.

I apologise for not ultimately knowing which product / ISA may benefit me most, hence my questions. I appreciate your time and help. Just trying to learn.

eskbanker

TK87 wrote: »

So would you suggest I setup an S&S LISA instead?

If you mean instead of a standard S&S ISA:

LISA advantages:

Extra 25% top-up added by government.

LISA disadvantages:

If the money is accessed before 60, there are withdrawal penalties of 25% of the amount withdrawn.
Smaller range of providers (but one is HL, with a wide choice of investments).
Maximum annual contribution of £4K.
Can only be opened by under-40s.

I'd suggest that, based on what you've posted, many of the disadvantages don't affect your situation, but bear in mind the lack of accessibility in particular before deciding. If you do go down the LISA route, you can always pay into a non-LISA S&S ISA as well, subject to the overall annual £20K ISA contribution allowance.

If, on the other hand, you're comparing a S&S LISA with additional pension contributions, that's more complex....

Aminatidi

If TK87 is 31 and "looking at investing this money for a 10-15 year period" is there anything that makes a LISA look suitable?

https://www.moneysavingexpert.com/savings/lifetime-isas/

eskbanker

Aminatidi wrote: »

If TK87 is 31 and "looking at investing this money for a 10-15 year period" is there anything that makes a LISA look suitable?

Yes, their clarification in their next post that "It will more than likely be money for retirement. The dream would be to retire at 60"....

justme111

Thrugelmir wrote: »

Can you buy a pension of that value anywhere else for the same money?

If one intends to retire early and not wait till one collects it at 67 or even later likely than the value is not the same as it would be reduced by roughly 4%/year early; ie one accesses it at 60 reduced by about a third. I remember when I looked into it for myself I thought it was roughly the same as just a personal pension/SIPP ( assuming about 4or 5 % growth).

Alexland

TK87 wrote: »

With such a small sum (I'm not offended) is it best to invest purely in one fund rather than multiple?

Just pick a well diversified fund that matches your risk tolerance.

Alex

aroominyork

There are two types of Vanguard funds being mentioned here, TK87. The Global All Cap Index is similar to the HSBC All World Index in tracking the world’s stock indexes by market cap, eg USA is 51% and UK is 5%. The Vanguard LifeStrategy (LS) is weighted to the UK so the US is 42% and the UK is 22%. Which one you go for is your choice; the purists would generally say track the global market while newbies often prefer some home country bias.

For the LS 60 or 80, they just invest less in equities (60% or 80%, but with the same country proportions as the LS100) and use the other 40% or 20% to buy bonds, which are considered safer if investing for a shorter time period.

TK87

Great, thank you all, it's all really helpful.

chucknorris

justme111 wrote: »

If one intends to retire early and not wait till one collects it at 67 or even later likely than the value is not the same as it would be reduced by roughly 4%/year early; ie one accesses it at 60 reduced by about a third. I remember when I looked into it for myself I thought it was roughly the same as just a personal pension/SIPP ( assuming about 4or 5 % growth).

On face value what you said seems logical, however I would comment:

- That 4 or 5% is virtually guaranteed with the additional pension.

- I intend to have diversity within my retirement portfolio, which means having investments that yield less than equities, the additional pension provides that diversity, yet yields the same as the equities, so reduces the need for other less yielding investments.

- I also intend to have some cash within my retirement portfolio, which will yields less, having an income stream from the additional pension, reduces the amount of cash savings required.

- The additional pension also offers a hedge against living much longer than anticipated. Although it is true of course that you could die early, as my wife sometimes points out to me, my usual reply is that, the tragedy is that I've died early (so money issues pale into insignificance).