Which fund and am I on the right track? (Newbie!)

Lolog

Hi all, hoping I can run something by you and seek your suggestions please on a suitable fund.

I've read the book "The Simple Path to Wealth" (JL Collins) and he advocates on the equity side, to basically pick a single (global?) equity tracker fund with low fees (he uses Vanguard) and just leave it sitting there riding through the ups and downs.

I've decided, having read a little more, that this is the approach I want to take. This will be my first investment into the markets.

My current position is as follows:
160k SIPP (all in cash)
40k S&S ISA (all in cash)
150k Cash in bank
20k Cash ISA
500k Equity in UK property (home + one rental)
25k Employer DC pension scheme

I'm single, 41 years old and make around 130k per year, which is made up of gross salary (PAYE), net rental income and employer pension contribs. I expect to be able to add around 2-3k a month to the pot, plus employer will be topping up pension.

I'm with HL for the SIPP and S&S ISA and will likely open a GIA with them too. Would like to put everything from rows 1-3 into this fund, retaining maybe 75k in cash for emergency/flexibility. I am likely to drip feed this in (even though I know the 'rules' about dollar cost averaging not being effective/required!)

I was originally thinking 80% equity, 20% bond fund - but lately thinking I might just go all equity for the time being, since I'll be holding cash and an investment property. I don't have a hard deadline for retirement, but sooner the better. Although having said that, I'm also thinking about how I can reduce working hours and make the most of now.

Does anyone have opinions either on the approach as a whole, or a suitable equity fund.

Thank you in advance for any thoughts. This is my first post so please go easy on me

dunstonh

I'm single, 41 years old and make around 130k per year, which is made up of gross salary (PAYE), net rental income and employer pension contribs. I expect to be able to add around 2-3k a month to the pot, plus employer will be topping up pension.

Are you planning to increase your pension contributions to a level to reinstate your personal allowance (as much as possible)?

I'm with HL for the SIPP and S&S ISA and will likely open a GIA with them too. Would like to put everything from rows 1-3 into this fund, retaining maybe 75k in cash for emergency/flexibility.

What rows 1-3?

AnotherJoe

OMG how did you end up with £160k in cash and nothing else in SIPP :eek:


With HL, I would look at an IT or an ETF as its much cheaper to hold long term.


For example Vanguard FTSE All-World UCITS ETF 0.25% fees.
You pay half a percent stamp duty to buy but thats pretty much the same as HL's 0.45% annual fee, but you only pay that stamp duty once so after the first year you are even.
And there's (from memory) £200 cap on ETFs (and other shares) in their SIPP.

Whereas 0.45% of £160k is £720 a year. So £500 a year and rising, better off with ETFs and ITs.

OldMusicGuy

AnotherJoe wrote: »

Whereas 0.45% of £160k is £720 a year. So £500 a year and rising, better off with ETFs and ITs.

There's no charge for holding cash in an HL SIPP. Tiny bit of interest as well.

Lolog

@dunstonh

"Are you planning to increase your pension contributions to a level to reinstate your personal allowance (as much as possible)?"

Yes, I swept everything over 100k into the SIPP for the year just gone. I think it would make sense to use some og my allowance from previous years to use up the max there too? (I did not use the max 3 years ago).

"What rows 1-3?"
I was referring to rows from my statement of current situation in the OP. So the cash in the SIPP, S&S ISA, and bank - to move it all into this one equity fund/ETF.


(Sorry, I'm on my phone and new here and I can't figure out how to do quotes!)

Lolog

@AnotherJoe

"OMG how did you end up with £160k in cash and nothing else in SIPP"

Some I put there intending to invest but was putting it off (I know, I know - should have done all this much sooner!), and some transferred in by closing down an old employer pension to consolidate.


"With HL, I would look at an IT or an ETF as its much cheaper to hold long term.
For example Vanguard FTSE All-World UCITS ETF 0.25% fees. "

Yes ETFs were what I was looking at - it's just that there are so many and I'm not sure how to decide! Are you meaning I would buy that ETF via HL, or are you saying set something new up with Vanguard?

Lolog

Thanks for responses. Yes, I'm not planning on keeping anything in cash other than reserve in bank account. I was hoping I could find a suitable ETF available via HL and once I'm comfortable with this as an approach, just put everything into that. And create GIA for anything extra that doesn't get swept into ISA/SIPP each year. Don't really want multiple platforms.

Hmm, maybe HL wasn't the best idea in the first place but at the time I needed to get something set up to act before end of tax year - and I didn't have a clue at that point about where or what I would invest in.

AnotherJoe

OldMusicGuy wrote: »

There's no charge for holding cash in an HL SIPP. Tiny bit of interest as well.

I should have been clearer with my explanation perhaps. That's in contrast to holding funds.

AnotherJoe

Lolog wrote: »

@AnotherJoe

"OMG how did you end up with £160k in cash and nothing else in SIPP"

Some I put there intending to invest but was putting it off (I know, I know - should have done all this much sooner!), and some transferred in by closing down an old employer pension to consolidate.


"With HL, I would look at an IT or an ETF as its much cheaper to hold long term.
For example Vanguard FTSE All-World UCITS ETF 0.25% fees. "

Yes ETFs were what I was looking at - it's just that there are so many and I'm not sure how to decide! Are you meaning I would buy that ETF via HL, or are you saying set something new up with Vanguard?

I was saying buy with HL. The one I mentioned is about a general as you can get. You couldn't buy that Ina SIPP with vanguard as they don't do a SIPP.

EdSwippet

AnotherJoe wrote: »

You pay half a percent stamp duty to buy but thats pretty much the same as HL's 0.45% annual fee, but you only pay that stamp duty once so after the first year you are even.

There's no stamp duty payable on ETF purchases. Win-win there, then.

Lolog

Thanks that all makes sense.

So if you were in my shoes,

1) Would you think twice about putting all of the cash in the SIPP and the S&S ISA (total of 200k) into this fund right now?

2) If so, would you drip feed it in (over a period of how long?)... and/or would you stick some in a broad Bond fund?

I've been sitting on this situation for some time and so on the one hand I'm keen to make a decision and act, but on the other I feel a bit terrified!