More newbie investor advice

Neil1344

Good evening ,

Am new to the investment world and have found lots of good advice on this forum to get me started! Have circa 50k to invest and have started by placing 10k in a vanguard LS80 equity fund which I aim to top up monthly to its 20k allowance throughout the rest of the year through new monthly savings.

This leaves my other 40k in a cash savings account earning very little. Just after some ideas on what I could do with this?

So two main questions:

1)I have invested half isa allowance and then drip investing the other half as I understand this ensures I’m not buying into the fund when unit prices might be high. Should I continue with this strategy or just invest the full 20k now?

2) dependant in the answer to above I will have 30 or 40k remaining , plus 300 pm to invest. Should I / can I invest all of this into the same LS80 with a separate general account and transfer from that for next years isa allowance: or is there another fund I would be better considering?

Any suggestions/ guidance would be most appreciated.

If it helps, I am 46 years old and looking at longer term investment (10 years) with intention to retire at 55. Have good final salary pension and very small mortgage outstanding.

Regards

Neil1344

Apologies , should have included into the above am married and wife has unused isa allowance for this year so can use this also.. same basic question applies though, should I use same LS80 in that account or spread risk /opportunity with something else?

Thanks!

capital0ne

Unless you need the £40k then stick £30k into your LS80 fund, keep £10k as your 6 month emergency fund.

Then top up your ISA monthly to the £20k limit.

Well done!

make sure you have company pension in place as well!

Just read your followup - definitely use her allowance as well, LS80 is good.


A

Neil1344

Great thanks. Don’t need to keep any of this back for emergency fund as have separate cash to cover that. So in principal that I can have 2 accounts with vanguard for the same fund, isa and general account?

NoMore

If it's for retirement why not use a SIPP and take advantage of the tax relief rather than using a general investment account which would be subject to CGT

Neil1344

Thanks, hadn’t considered that. Both myself and wife do however have good pension schemes. When I say I’m investing for retirement, I probably meant to say just the long term, although I do retire in 9 years! I intend to continue investing in retirement as opposed to relying on the investment for retirement if that makes sense

NoMore

Your current DB pensions will probably be subject to early retirement reductions if you take them at 55. Instead you could build a SIPP up now and use that to bridge the gap and avoid the reduction in DB pension.

Its what I'm doing, my DB nrd is 60, so I'm building a SIPP and ISA savings up to live off between 55 and 60. Idea is to get max tax relief (I'm higher rate tax payer) and then withdraw from the SIPP upto personal allowance = 25% tax free and avoid paying any income tax until DB kicks in.

Albermarle

For a basic rate taxpayer , the financial advantage of SIPP vs ISA is 6.25% , assuming investment in same funds. Can be even better if you can follow the procedure suggested by the previous poster.
If you are a higher rate taxpayer now, but will be a basic rate taxpayer in retirement , then the pension route is a no brainer.You will just need to research some rules ( plenty of threads on this forum ) about annual contribution limits, LTA etc

jamei305

NoMore wrote: »

Your current DB pensions will probably be subject to early retirement reductions if you take them at 55. Instead you could build a SIPP up now and use that to bridge the gap and avoid the reduction in DB pension.

The age you can access a SIPP changes to 57 from 2028. The OP doesn't say when their birthday is, but I wouldn't encourage them to rely on a SIPP from age 55 without being very sure about the relevant dates.

NoMore

jamei305 wrote: »

The age you can access a SIPP changes to 57 from 2028. The OP doesn't say when their birthday is, but I wouldn't encourage them to rely on a SIPP from age 55 without being very sure about the relevant dates.

The general idea still applies, its to cover the ages between the earliest you can access a SIPP and the non reduced access to a DB pension.

Neil1344

Thanks for all the advice so far.. I have invested my first 20k (this years isa allowance into the LS80 through the vanguard platform) last week. As per my first post, I now have a further 30k earmarked for investment, remaining which is currently sitting in an RCI bank savings account aearning 1.42 annual interest. My question is around market timing and when to invest the rest of my savings into the LS80 fund, using a vanguard general investment account. As someone new to investment, I am unsure how much attention I should pay to ‘market noise’ which could suggest an incoming market correction /downturn , such as the stagnant ftse, brexit looming, America/China etc... I appreciate that market conditions will never be perfect and having read Lars Kroijer’s book should not approach investment assuming I have an ‘edge’, but surely this conditions do present a potential opportunity to ‘wait and see’ and possibly get lucky and invest following any short term correction? Am I overthinking or should I go all in now?!