Investing into a Sipp

kidmugsy

I have a SIPP. I value it because I can invest in such things as individual shares, Gold ETCs, and whatnot. If all I wanted was trackers I might well take dunstonh's hint and keep the money in a Stakeholder.

Or I might wait for Vanguard's own SIPP and see if that's a particularly cheap way to hold their products.

Tom99

Goldman2020 wrote: »

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?

[FONT=Verdana, sans-serif]That would not be a 50/50 balance of Funds as such, since both have exactly the same holding only in different proportions. It essentially £110,000 in VLS50.[/FONT]
[FONT=Verdana, sans-serif]The 50% in bonds look to be mostly government bonds with some investment grade bonds so very low down the risk scale for bonds and therefore a low return on those bonds.[/FONT]
[FONT=Verdana, sans-serif]The VLS funds put a much greater %age into the UK than a Global Index tracker would, the equity side seems about 22%UK, 42%US and the bond side about 29%UK and 31%US.[/FONT]
[FONT=Verdana, sans-serif]A Global Index Tracker would be more like 5%UK, 50%US.[/FONT]
[FONT=Verdana, sans-serif]For such a long term investment do you want to put as much as 50% into such a low risk investment? [/FONT]

Goldman2020

Thank you for your constructive comments Tom99.


For the purposes of a Sipp could you give me an example of the type of funds you might consider/choose and at what percentage allocation based upon the following:-


My Stakeholder pension does not provide a Sipp or annuity and that is why I want to move my Stakeholder pension into a Sipp.


I am 64 years of age and do not believe I will need to rely 100% on the Sipp and flexi access drawdowns because I will have the SP and some annuities.


After setting up a Sipp at some point I would probably not go into drawdown for at least another 5 years and then take between 3% to 4% once a year or not at all some years.


I am also using the Sipp for inheritance planning because I would like there to be some monies left in the Sipp to pass onto my children.


I have been looking at the Vanguard Life Strategy funds because of their mix between equities and bonds.


I would like to keep the number of funds in the Sipp to just two or three because I want to keep it simple and keep the costs down.

I am open to any helpful and well-intended opinions/suggestions to help me with my choice of funds for a Sipp portfolio. Please note that I will not consider this to be advice from you or anyone else.

Tom99

Goldman2020 wrote: »

Thank you for your constructive comments Tom99.
For the purposes of a Sipp could you give me an example of the type of funds you might consider/choose and at what percentage allocation based upon the following:-
My Stakeholder pension does not provide a Sipp or annuity and that is why I want to move my Stakeholder pension into a Sipp.
I am 64 years of age and do not believe I will need to rely 100% on the Sipp and flexi access drawdowns because I will have the SP and some annuities.
After setting up a Sipp at some point I would probably not go into drawdown for at least another 5 years and then take between 3% to 4% once a year or not at all some years.
I am also using the Sipp for inheritance planning because I would like there to be some monies left in the Sipp to pass onto my children.
I have been looking at the Vanguard Life Strategy funds because of their mix between equities and bonds.
I would like to keep the number of funds in the Sipp to just two or three because I want to keep it simple and keep the costs down.
I am open to any helpful and well-intended opinions/suggestions to help me with my choice of funds for a Sipp portfolio. Please note that I will not consider this to be advice from you or anyone else.

[FONT=Verdana, sans-serif]I expect there would be many different views on that and even to comment more info would be needed, some asked above. What's wrong with the stakeholder pension?, they are meant to be lost cost in terms of charges, lack of investment choice?, I assume they can be inherited like a SIPP but maybe not, what other cash/investments do you have etc.[/FONT]
[FONT=Verdana, sans-serif]If this £110,000 forms a small part of your overall assets and you don't intend to every touch it unless absolutely necessary then what you might choose to invest in may be very different from a situation where you knew you were going to seriously draw down on it in a few years.[/FONT]
[FONT=Verdana, sans-serif]You say you think you annuity + SP would be enough to live on so why do you think you will draw down 3%/4% in maybe 5yrs time. If you don't need the cash then drawing down will increase your IHT bill.[/FONT]

Goldman2020

There is nothing wrong with a Stakeholder pension.

My Stakeholder pension provider is moving my investment from an All Share Tracker fund into Bonds & Gilts as I approach retirement age and I just thought (rightly or wrongly) that moving over to a Sipp may be a better way forward for me.

I may take 3% - 4% out for a holiday or something else which has not been accounted for within my budget.

dunstonh

My Stakeholder pension provider is moving my investment from an All Share Tracker fund into Bonds & Gilts as I approach retirement age and I just thought (rightly or wrongly) that moving over to a Sipp may be a better way forward for me.

most stakeholder pensions will have multi asset funds.

The reason we are labouring on this point is that your stakeholder may do exactly what you want of it. Stakeholder pensions are a simple option with a limited fund selection where due diligence has been carried out on the funds for you. You get 100% FSCS protection with no upper limit. Some stakeholder pensions can cost as liitle as 0.4% p.a.

The SIPP carries out virtually no due diligence on investments and you have to pay a platform charge and often a range of service charges and the investment charge on top. It may be that a low cost SIPP could come in cheaper than a full cost stakeholder. However, comparing like for like, as in SIPP vs SHP vs PPP, you often fund the SHP or PPP are better value.

For example, if you used HL for the SIPP then thats 0.45% p.a. plus VLS charges which are 0.34% p.a. (0.22% OCF and 0.12% TC) giving you a total charge of 0.79% p.a. You can buy the Aviva stakeholder at 0.45% all in. (that is just an example, not a recommendation).

Now, a stakeholder doesnt have the full functionality of a SIPP. However, you are not after the full functionality at this time and product choice will be different in 5 years time. So, you should look at the now, rather than the later as there is a good chance that what is best now will not be best in 5 years time.

Goldman2020

Thank you for your above post dunstonh.

I am in no hurry and so I will sit on my SHP for the time being.