SIPP Newbie help!

katie4

Hi Everyone
I am looking ahead into my retirement years having not been very good with money in the past i can now see more clearly.
I work full time and pay into works pension with employee contribution, i also have a Skipton LISA for retirement but I am interested in finding out about SIPPS, namely where the fudge do i start?! i haven't a clue.

Any beginners advice would be great

ConMan

Why are you using a Cash Lisa to fund retirement?

Also why do you want a Cash Lisa and a SIPP?

I don't see the point in having both?

Have you considered a S&S Lisa?

katie4

ConMan wrote: »

How old are you?

Hi I'm 32

ConMan

Katie4 - Please see new question set.

katie4

ConMan wrote: »

Why are you using a Cash Lisa to fund retirement? I'm very new to this I thought it was good?

Also why do you want a Cash Lisa and a SIPP? I don't know if I do i am just looking into what it is and whether it would be a good idea

I don't see the point in having both?

Have you considered a S&S Lisa?

I have heard of this but again I have done very little research on this, would this be a better option?
thanks

ConMan

My view is that a Cash LISA for retirement when you're a long way from retiring is a poor option.

You need to weigh up S&S Lisa v SIPP. In both of these though you'll need to chose your own investments though.

katie4

can i ask why it is a poor option? Would you know of any good starting points for a S&S LISA? thanks

ConMan

katie4 wrote: »

can i ask why it is a poor option? Would you know of any good starting points for a S&S LISA? thanks

Yes you can ask.

Your Skipton LISA pays 1% from looking on their website. (May have been different when you took it out).

Presumably you're under 40 years old. That means we're looking at least 20 years of growth. Therefore, historically, stocks offer the better choice.

With an S&S LISA you can choose a fund which will hopefully grow at a much higher rate than 1%, which will be less than inflation. I.e. you're actually losing money in the long run.

Take a standard fund Lifestrategy 20%, which means only 20% of the money you invest goes into shares, the rest will be in bonds and cash, (this means it's one of the most least riskiest options) has outperformed that 1% in each of the last 5 years.

I'm using that purely as an example that cash is not always a good option for long term investing.

A list of S&S Lisas

https://www.moneysupermarket.com/investments/lifetime-stocks-shares-isas/

Take a look however, you really should do a full comparison of LISA vs Sipp.

crv1963

Hi katie4,

Have a read through some of the threads, think about retirement differently. Decide -

1) What retirement income you will need?
2) What age do you want it to start?
3) What money you can currently save?

Then look at what is the best way to reach 1 and 2. Well done for looking at it at 32. It is best not to worry what others have or have not but what you want or need. I read with amazement at some figures quoted but remain content that we are reaching what it is we need.

Are you able to get anymore put into your works pension from your employer if you increase your contribution level- called matching payments, also some here use salary sacrifice which adds even more- this is not offered by all employers, so learn about your scheme first, then look to savings vehicles outside of it.

Good luck, ask as much as you need to, there are some people who post who are both knowledgeable and freely give their time to help others.

katie4

ConMan wrote: »

Yes you can ask.

Your Skipton LISA pays 1% from looking on their website. (May have been different when you took it out). Yes it does plus 25% of payments made into the account

Presumably you're under 40 years old. That means we're looking at least 20 years of growth. Therefore, historically, stocks offer the better choice. yes im 32

With an S&S LISA you can choose a fund which will hopefully grow at a much higher rate than 1%, which will be less than inflation. I.e. you're actually losing money in the long run.

Take a standard fund Lifestrategy 20%, which means only 20% of the money you invest goes into shares, the rest will be in bonds and cash, (this means it's one of the most least riskiest options) has outperformed that 1% in each of the last 5 years.

I'm using that purely as an example that cash is not always a good option for long term investing.

A list of S&S Lisas

https://www.moneysupermarket.com/investments/lifetime-stocks-shares-isas/

Take a look however, you really should do a full comparison of LISA vs Sipp.

Thanks for your help

tacpot12

Hi Katie4

It might be worth finding an Independent Financial Advisor (IFA), who can find you a Personal Pension and recommend a portfolio where the Pension provider takes responsibility for managing the portfolio. One of my friends has recently gone down this route. They IFA directed them to a Pension provider who has a range of pre-made portfolios for a range of different risk appetites. Given your age, you shoudl really look to take as much risk as you can within a regulated pension product.

The pension provider decides what funds should be held in the portfolio, and rebalance the portfolio every quarter if it needs it, so it would not require you to do any management of the investments. The cost was very reasonable at 0.4% (of the portfolio value) pa plus the charges levied by each fund (this averaged out at about 0.7% pa. So total charges were about 1.1% pa, and there were no further charges when the pension was drawn on. All you need to do is to decide if you want to move to a less risky portfolio in the future, although personally I would not recommend that you do so unless your portfolio is still very small by the time you retire.

An IFA will also be able to show you the difference between a Pension and a S&S LISA.

Research has shown that people that use an IFA are generally better of as a result of having done so than the people that don't use an IFA.