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ISA and SIPP?
todd89
Posts: 40 Forumite
Dear all,
I currently have an ISA with Vanguard which I pay into each month. I also have a current account with Santander which has had between 10k-20k for the past two years. I feel like it's not worth saving it in my bank anymore, so I'm wondering if opening a SIPP would be better? I would put in £500 into both the ISA and SIPP each month for the next 20 years or so. The current account would have an emergency fund.
When I retire I don't think having 20k in a current account and the rest of my savings in an ISA is the best method. Surely having two accounts which have made a good return is better? I would draw dividends from the ISA with Vanguard and leave the SIPP to mature and use when the ISA has run out, and when I've reached 55 or whatever the age will be.
I would appreciate any advice.
I currently have an ISA with Vanguard which I pay into each month. I also have a current account with Santander which has had between 10k-20k for the past two years. I feel like it's not worth saving it in my bank anymore, so I'm wondering if opening a SIPP would be better? I would put in £500 into both the ISA and SIPP each month for the next 20 years or so. The current account would have an emergency fund.
When I retire I don't think having 20k in a current account and the rest of my savings in an ISA is the best method. Surely having two accounts which have made a good return is better? I would draw dividends from the ISA with Vanguard and leave the SIPP to mature and use when the ISA has run out, and when I've reached 55 or whatever the age will be.
I would appreciate any advice.
0
Comments
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Are you working/earning money ?
If so are you not already enrolled in a workplace pension?
Otherwise a SIPP ( or any pension ) beats an ISA ( by 6.25% for a basic rate taxpayer ) due to the tax relief.
However money in a SIPP can not be accessed until you are 55.
Usual advice is that the SIPP is best for saving for retirement , a S&S ISA s better if you are likely to need the money before retiring but not in the short term . . Having both can make sense for some people0 -
Are you to old for LISA?0
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What ^^^they^^^ said. If you are able to and if you are a basic rate tax payer, and if you are ok to access the money from age 60 (without penalty) then a LISA will beat pensions due to all of the money being able to be drawn tax free.Are you to old for LISA?
There are other considerations that make pensions worthwhile, i.e. IHT and if you ever need to claim benefits but from a simple financial + / - calculation...LISA.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
What ^^^they^^^ said. If you are able to and if you are a basic rate tax payer, and if you are ok to access the money from age 60 (without penalty) then a LISA will beat pensions due to all of the money being able to be drawn tax free.
There are other considerations that make pensions worthwhile, i.e. IHT and if you ever need to claim benefits but from a simple financial + / - calculation...LISA.
The LISA is capped at 4K per year. What if I want to input more than this?0 -
Life is rarely just one thing or another.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
OP...we haven't asked the usual question regarding your workplace scheme...I don't suppose they operated salary payments vis Salary Sacrfice (sometimes called smart pension or 'salary exchange')?
If they do then additional pension contributions via your workplace scheme will be the best option.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
Good questions. No they don't.
By the way, if my parent has an investment account and was to pass away, would I have to pay any inheritance tax on it?0 -
Define investment account? If you mean a pension pot of some sort, and they pass before age 75, then no, otherwise all investments (bar any special trusts etc) count towards the value of the estate for IHT considerations, etc.Good questions. No they don't.
By the way, if my parent has an investment account and was to pass away, would I have to pay any inheritance tax on it?Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
A Vanguard stocks and shares ISA.
Finally, I can now divulge my full circumstances. Offered a job abroad so cannot open any ISA or SIPP.
Could he open a SIPP and I give him funds to add to this each year and benefit from it?0
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