Investing into a Sipp

Goldman2020

[FONT=&quot]I am new to investing and so please bear this in mind when responding and be gentle.[/FONT]

[FONT=&quot]I am 64 and I have £110,000 in a stakeholder pension which I would like to transfer into a Sipp.
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[FONT=&quot]I already have some small annuities which I am not drawing and after compiling a household and living expenses budget I believe the annuities coupled with the state pension will meet my needs for the next 20 plus (hopefully) years. Please note that because my annuities come with guarantees I do not want to pay them into the planned Sipp.[/FONT]

[FONT=&quot]My questions are:-[/FONT]
[FONT=&quot]
[/FONT][FONT=&quot]1/ I am considering just having two Sipp funds and putting 50% of the £110K into each of the funds:-[/FONT]

• · [FONT=&quot]Vanguard Life Strategy 40[/FONT]

• · [FONT=&quot]Vanguard Life Strategy 60[/FONT]

[FONT=&quot]
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[FONT=&quot]I do not plan to go into flexi access drawdown for at least 5 years after opening the Sipp and when I do go into flexi access drawdown I will probably take between 3% and 4% maximum each year. Some years I may not even take any drawdown. I also do not plan to take out in one lump sum the tax free allowance.[/FONT]
[FONT=&quot]
[/FONT][FONT=&quot]Although it is not the main reason, I would like to think that there is some residue money left over within my Sipp for my two children when I pass on.[/FONT]

[FONT=&quot]Do those of you who are experienced and knowledgeable about Sipps, drawdowns and investing think the above two funds will be sufficient? If I should consider one or two additional funds please provide me with your suggestions and your reasons why I should consider them.
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[FONT=&quot]I realise some of you will not like the Vanguard Life Strategy approach and so you can suggest other funds if you want to. I am open to any positive and helpful suggestions except I want to keep the approach to investing within the Sipp simple and straightforward. I should also add that my approach to risk is probably somewhere in the middle being that I am prepared to take a modicum of risk and understand that the markets rise and fall.[/FONT]

[FONT=&quot]2/ If I were to move £110K into a Sipp would it be the wrong approach just to put 50% straight into each of the above mentioned funds or should I keep it in a Sipp cash account (if there is such an account) and drip feed it into the chosen funds over say the course of a year?[/FONT]

[FONT=&quot]I will leave the floor open to all of you experienced retirement/investment wizards out there who can give me your opinions and suggestions to the above.[/FONT]

[FONT=&quot]Thank you in advance to all those who provide me with any helpful, constructive and straight forward opinions/suggestions.[/FONT]

dunstonh

I am 64 and I have £110,000 in a stakeholder pension which I would like to transfer into a Sipp.

Why? What is wrong with your stakeholder pension?

1/ I am considering just having two Sipp funds and putting 50% of the £110K into each of the funds:-

· Vanguard Life Strategy 40
· Vanguard Life Strategy 60

What would that achieve by splitting them like that?

Do those of you who are experienced and knowledgeable about Sipps, drawdowns and investing think the above two funds will be sufficient?

I think it is largely pointless splitting them like that. Plus, there are probably better options now at that particular risk level.

or should I keep it in a Sipp cash account (if there is such an account) and drip feed it into the chosen funds over say the course of a year?

Again, what would that achieve?

I am throwing the questions back at you as you are presenting solutions without really letting us know what you are trying to achieve or what objectives exist. Ideally, you look at solutions once you know the goals/objectives. Not the other way around.

Albermarle

I am 64 and I have £110,000 in a stakeholder pension which I would like to transfer into a Sipp.

As Dunston says , what is your motivation to do this ? There are regular posts on this forum that say something similar such as ' my workplace pension is no good and I want to change to a SIPP'
A SIPP is not fundamentally different from other pensions, only that they are maybe more suitable for more experienced investors

Goldman2020

1/ My current stakeholder pension does not provide a Sipp or
an annuity and is a savings vehicle only.


2/ Any monies left over in my Sipp would be passed over to my children when I pass on if I name them in my expression of wishes.



3/ I believe that a Sipp would make better use of my £110K than leaving it in the stakeholder pension.

dunstonh

1/ My current stakeholder pension does not provide a Sipp or
an annuity and is a savings vehicle only.

What it may or may not do in the income phase is irrelevant until you get to the income phase. In the accumulation/growth phase, a stakeholder pension, SIPP (or personal pension as we haven't mentioned those yet) can all be suitable and all have the same objective. It is just the costs and investment options that vary.

a stakeholder pension is the same as a SIPP except stakeholder pensions have better FSCS protection and investments with due diligence carried out on them and its hard to do much wrong with a stakeholder.

3/ I believe that a Sipp would make better use of my £110K than leaving it in the stakeholder pension.

Why?

Tom99

[FONT=Verdana, sans-serif]Essentially you have VLS50 so 50% in bonds. Since your annuity and SP will meet your needs for an expected 20yrs is this a long term investment and part of inheritance planning? The SIPP is free of IHT, at least until tax on the beneficiary kicks in after age 75. In which case is 50% in bonds too high?[/FONT]

Goldman2020

I would consider the Sipp to be a long term investment as you have mentioned and is part of my inherritance planning. I also believe the Sipp [FONT=Verdana, sans-serif]is free of IHT up until the age of 75 and then tax would be paid by the beneficiaries at their standard rate.[/FONT][FONT=Verdana, sans-serif]
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Tom99

Goldman2020 wrote: »

I would consider the Sipp to be a long term investment as you have mentioned and is part of my inheritance planning. I also believe the Sipp [FONT=Verdana, sans-serif]is free of IHT up until the age of 75 and then tax would be paid by the beneficiaries at their standard rate.[/FONT][FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif] [/FONT]

The SIPP would therefore probably be the last savings/investment you would draw cash from and adding to it would still leave your beneficiaries at least 25% better off, even if you die after age 75, than say an ISA.

Goldman2020

That's how I see it.

Goldman2020

I believe that having two funds susch as Vanguard Life Strategy 40 and Vanguard Life Strategy 60
may give a good 50:50 mix. What are your opinions and do you think adding any other funds would be beneficial?

dunstonh

Goldman2020 wrote: »

I would consider the Sipp to be a long term investment as you have mentioned and is part of my inherritance planning. I also believe the Sipp [FONT=Verdana, sans-serif]is free of IHT up until the age of 75 and then tax would be paid by the beneficiaries at their standard rate.[/FONT][FONT=Verdana, sans-serif]
[/FONT]

So is the stakeholder pension.