Sipp returns

Joey_Soap

I guess the last five years have been unusually investor friendly, but since transferring my ISA/SIPP accounts from HL to II almost exactly five years ago, the value of the portfolio has grown from around GBP 200k to around GBP 378k with no further money invested. Over much of this time the mainstay was the Fundsmith OEIC and a small handful of other funds. The portfolio is presently split between Fundsmith, Smithson IT and Blue Whale fund with about 15-20% of the SIPP in a REIT.

johnnyren

Thanks for all answers so far received , I would take me years to reach any level of expertise my ifa has , he has obviously listened to and discussed my concerns and aims at our initial discussions and came up with this plan , that is what he is paid to do I suppose.
I need to ask myself if this low gain /low risk policy is best or try something different , I can’t help feeling a return of 4000 over 2 years is very poor

beamyup

Next time you meet up with your IFA i suggest you focus on understanding the following:

1) what is you bond/shares mix (ratio)
2) why is it that exactly, what did you say to make your ifa suggest/invest that
3) what are your charges and fees split by IFA, platform and funds

Your IFA should be able to explain these to you so that you fully get it.

OldMusicGuy

johnnyren wrote: »

Thanks for all answers so far received , I would take me years to reach any level of expertise my ifa has , he has obviously listened to and discussed my concerns and aims at our initial discussions and came up with this plan , that is what he is paid to do I suppose.
I need to ask myself if this low gain /low risk policy is best or try something different , I can’t help feeling a return of 4000 over 2 years is very poor

4000 over two years isn't poor if your objective was to set up a portfolio that would better protect you in downturns (ie low risk). The trouble is those types of portfolio don't gain much in upturns.

However, I suspect you might have made the same mistakes I did. Several years ago (when my knowledge of pensions and funds was zero), I asked an advisor to set up a low risk portfolio for my SIPP, because I am very risk averse. They did that, it didn't grow that fast and was high cost because they used largely active funds. However, they did what I asked them to do, it was my fault that performance wasn't great.

What you need to do is to do a bit more reading about how investments work so that you can have a more informed discussion with your IFA. Just understanding how the mix of bonds, equities and other investments affects risk and growth will help you to have a better discussion with your IFA. Also, understanding the difference between things like active and passive funds is important.

More importantly you need to define your long term objectives. You need to think about how much you will need for your retirement, how much you have today and how you will fund that. That will give you an understanding of how much growth you need in your SIPP. If you don't do that you run the risk of "fund chasing", because as soon as somebody says "my fund did better than yours" you get uncertain and start switching investments based on what somebody else says rather than your own long term objectives. I know, because that's what I used to do.....

Finally, you need to understand your attitude to risk. Will you mind if your SIPP falls by 25% the next time there is a 25% market drop? Or would you prefer that perhaps in those circumstances your SIPP drops by say 10 to 15% but when growth returns it doesn't grow as fast as market averages? That's an important factor in your decision making.

Joey_Soap

I have to say, an IFA would most likely list a million reasons why my portfolio of ISA/SIPP investments isn't right and highly unsuitable for me. In the meantime, I've almost doubled my money when most IFA portfolios typically wouldn't manage half that return, if you were lucky. I couldn't care less what an IFA might think. I am far better placed for the next downturn that causes 30% of my portfolio to disappear overnight than I would have been in a typical IFA advidsed portfolio.
(Yes, I know that not all IFAs are the same etc....... I also know that ALL the folks I talk to who are IFA clients would give their right arm for my returns).

OldMusicGuy

Joey_Soap wrote: »

I have to say, an IFA would most likely list a million reasons why my portfolio of ISA/SIPP investments isn't right and highly unsuitable for me. In the meantime, I've almost doubled my money when most IFA portfolios typically wouldn't manage half that return, if you were lucky. I couldn't care less what an IFA might think.

I also couldn't care less what an IFA would think. I manage everything myself. But I think the OP here is way, way off being able to manage their own investment choices so in the first instance they need to have a more informed discussion with their IFA.

[Deleted User]

However, I suspect you might have made the same mistakes I did. Several years ago (when my knowledge of pensions and funds was zero), I asked an advisor to set up a low risk portfolio for my SIPP, because I am very risk averse. They did that, it didn't grow that fast and was high cost because they used largely active funds. However, they did what I asked them to do, it was my fault that performance wasn't great.

IFA isn’t blameless. When asked: “are you comfortable with losing half your money” every normal person not educated in investment and risk is bound to say “I am risk averse”. Filling in a form and answering a bunch of standard questions doesn’t help. A really good IFA would make sure you understand that he is only an advisor and that you need to educate yourself on risk before making a decision

[Deleted User]

johnnyren wrote: »

Thanks for all answers so far received , I would take me years to reach any level of expertise my ifa has , he has obviously listened to and discussed my concerns and aims at our initial discussions and came up with this plan , that is what he is paid to do I suppose.
I need to ask myself if this low gain /low risk policy is best or try something different , I can’t help feeling a return of 4000 over 2 years is very poor

IFAs take a 9 months course, most of it spent learning about selling and the rules governing sales. Their practical experience is in sales. Some educate themselves, but many don’t.

In any case the decision is always yours and yours alone. You are paying IFA for advice, not for making decisions. As a minimum you need to know enough to ask the right questions.

Try this one book, it will help https://books.google.ca/books/about/Deep_Risk.html?id=GCT2ngEACAAJ&source=kp_book_description&redir_esc=y

OldMusicGuy

Deleted_User wrote: »

IFA isn’t blameless. When asked: “are you comfortable with losing half your money” every normal person not educated in investment and risk is bound to say “I am risk averse”.

They are in this case. I was insistent that my money went into very low risk funds. I know better now, and am more balanced in my approach to risk, because I understand more how investing in funds works.

Prism

Deleted_User wrote: »

A really good IFA would make sure you understand that he is only an advisor and that you need to educate yourself on risk before making a decision

This is certainly where the internet has helped massively though I think its fair to say that if someone hasn't got a reasonable grasp of maths some things are quite tricky to understand. I have tried explaining this stuff to my sister a few times and she just doesn't get it.

I remember when I set up my first personal pension in the 90's all I had to help was the banks FA. I hadn't even heard of a thing called the stock market, nevermind bonds and shares. Nowhere to turn for information so I just did what I was told. I should really have picked a higher risk option considering I sailed through dot.com without even checking my pension statements. I may have had a 50% drop - no idea! Anyway, nowadays there is much greater visability of investments and a wealth of information available should you want it.