Grown up strategy

pkpk

After receiving some really good advice on the forum to help me address my 'head in the sand' approach to saving and investing, I have come up with the following strategy. Would appreciate any feedback.

I'm in my 40's, no pension and 10k worth of ISA's I have found in draws.

1) Set up a pension immediately - I looked at a Aviva Stakeholder but the customer service gets poor feedback and I have no idea how to pick a fund as there is little information or recommendations.

So I think a SIPP with H&L putting in £200 pm into Vanguard VLS60 would be the first step.

2) Transfer the 10k of outdated ISA's into a new ISA. As I know scarily close to nothing about investing I was tempted to go for Vanguard VLS60 again but the words 'eggs' and 'one basket' spring to mind. I would like to be able to start off with something low risk and add other funds as hopefully I make some progress and learn about investing. So I think an account with AJ Bell and choosing from their ready made funds might be the way to go. As I understand it I can then add other funds i choose still under the ISA wrapper.

Any thoughts would be very welcome.

El_Torro

Putting an ISA worth £10k into VLS60 and then paying into a SIPP, also into VLS60, isn't the worst idea. It's diversified so I wouldn't worry about putting all your eggs in one basket.

One option could be to put your ISA into one multi asset fund and your SIPP into another. It's debatable how much this would improve your diversification though as both funds are likely to perform similarly.


I think it's worth noting as well that VLS60 isn't particularly low risk. I would be tempted to increase the risk a bit in your SIPP (perhaps with a VLS80 instead) but I wouldn't get much more adventurous than that. Your ISA is probably about as risky as it needs to be, bearing in mind you may want to access the money in the not too distant future.


Do you have an emergency fund in easy access accounts? If not then you may want to save some / all of your ISA instead of investing it.


Are you paying enough into your SIPP to get enough income after retirement?

pkpk

Thanks for that. I do have about 6 months money stored away which i leave as cash so I'm aiming to put the lot in an ISA.

It's probably not enough of an investment for my pension to be fair but not having the right amount or getting confused by it all has stopped me taking action for years so i guess some progress is better than none.

Are H&L a decent place to start for a SIPP. Its a shame Vanguard don't do one directly.

El_Torro

pkpk wrote: »

Thanks for that. I do have about 6 months money stored away which i leave as cash so I'm aiming to put the lot in an ISA.

Do you mean a cash ISA? If so there are better places for your emergency fund than in very low interest cash ISAs. See here for more details: https://www.moneysavingexpert.com/savings/savings-accounts-best-interest

pkpk wrote: »

It's probably not enough of an investment for my pension to be fair but not having the right amount or getting confused by it all has stopped me taking action for years so i guess some progress is better than none.

True. Though remember the more you sacrifice today the easier your life will be in the future. And the reverse is also true.

pkpk wrote: »

Are H&L a decent place to start for a SIPP. Its a shame Vanguard don't do one directly.

HL don't charge you for buying into funds, which is good. However they do charge 0.45% a year in fees, which is expensive and not so good. For a small pot (which yours will be, as you're just starting out) HL are fine. You may want to look at alternatives as your pot grows though and that 0.45% gets more and more expensive.

Bear in mind that HL is a user friendly site, so if you want to learn more about investing this helps. I speak from first hand experience as I use them myself. Also I hear that their customer service is very good. I've never had to phone or e-mail them though so I can't vouch for that myself.

Vanguard have been talking about doing a SIPP. I wouldn't wait for that to happen though as they have been promising it for a long time with no end date in sight.

Thrugelmir

Worth a read.

https://www.moneysavingexpert.com/savings/cheap-sipps/#bestbuys

green_man

You won’t go too far wrong with the strategy you have proposed IMO.

If you want to put your ISA somewhere different then HSBC Global Strategy Balanced is a similar fund to VLS60 with a similar cost.

As stated above HL is quite good if starting from a zero balance, but review your costs if you get above say £50k in there.

My personal opinion is you are better going 100% equities if you are going to be invested 15+ years (I.e VLS100) but you need to be prepared for a more volatile ride and not lose your bottle if there is a big dip in prices, just be happy in the thoughts of buying cheaper stock. VLS is almost guaranteed to outperform VLS60 over 15 years.

pkpk

Thanks for all the advice. It seems a SIPP with H&L is a good option then.

For my 10k ISA would it make sense to keep with H&L or a separate account with AJ Bell?

El_Torro

pkpk wrote: »

For my 10k ISA would it make sense to keep with H&L or a separate account with AJ Bell?

If you're planning to buy VLS60 (or similar) and just leave it there I would go with AJ Bell. If you're planning to top it up ocassionally I would go with HL. Reason being that AJ Bell charge £1.50 per deal so if you're adding £100 or so every now and then that adds up.


With the amount of money you're talking about I would be tempted to just put it all (both the ISA and the SIPP) in HL for convenience. The problem with this strategy is that as the pot grows the 0.45% charge will also grow and the incentive to change providers becomes larger.




One thing I forgot to ask earlier, do you have an employer? If so you should join their workplace pension, as they have to contribute so this is a better deal than starting your own SIPP. I wouldn't bother with a SIPP at all if you can join a workplace pension.

pkpk

I'm self employed and will likely be so for the future.

For the ISA, I would hope to add new funds ext under the ISA banner as things grow. I have heard good things about Interactive Investor but perhaps the info and custer service at HandL might be useful at this stage.

TARDIS

If you're planning to use VLS for the ISA using the Vanguard platform is the cheapest % fee option. No charge to buy, sell or transfer either. I've always found their website fairly easy to use, but never needed to contact them direct so can't comment on customer service.