Should I have a Little Tinker?

fiisch

Background
IT contractor, 33, paid on a day rate via limited company (outside IR35 for current contract). Pay £250 monthly into HL SIPP (£30k) and £400 monthly into Vanguard ISA (VLS100).

No employer matching, no higher rate tax currently to contend with, and potential to go PAYE in future hence higher ISA than SIPP contribution.

Question
Had a few beers with a friend who works for investment management company and came over all Jordan Belfort. Bought a few hundred quid (fortunately drunken self had the sense to add cash rather than sell existing investments!) worth of Lindsell Train Global Equity (Class A - Inc) and Scottish Mortgage Trust in my SIPP.

Should I be even thinking of adding funds at this stage given size of my investments? My thinking is VLS100 will be my steady bass guitarist - will stick with my monthly contribution - but SMT/LT the zany active front men to buy adhoc with spare company funds... (£5-10k/year).

On a related point, HL are offering £50 cash back if I transfer my Vanguard ISA. Tempted as I like their app, and adding an extra fund or two appeals to the tinkerer in me, but my head is telling me any profit from cash back will be swallowed by increase in fees and £5k is much too small a pot to add to the mix just yet.

fiisch

(To add - SIPP previously 100% invested in VLS100, until I added tiny amounts of Lindsell Train/SMT.

xylophone

Should I have a Little Tinker?

Wondered whether you were asking for comments on a possible patter of tiny feet.....

fiisch

xylophone said:

Should I have a Little Tinker?

Wondered whether you were asking for comments on a possible patter of tiny feet.....

It’s a bit late to ask for the forum opinion on that one.... second child due shortly!!

fiisch

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Thrugelmir

Why do you consider VLS100 to be a steady guitarist? More akin to Jimmy Page on a 12 string Fender. 

bowlhead99

On the cashback, the fee differential for holding vls100 in an ISA at HL versus vls100 at Vanguard is £30 per year per £10k invested.  At the moment you only have £5k invested but are adding £5k or more per year to that (£400pm plus growth) so it won't be very long before you're in the value range where HL is costing you £30 a year more than Vanguard.

So, I wouldn't get too excited about getting able to get £50 I've off as a cashback for moving your vanguard ISA to a more expensive platform. Yes, they have an App. No, you don't need it for the ISA because even after another a couple of years the ISA only has less than £20k in it, and one multi asset fund bought monthly on direct debit is fine with that sort of non- life-changing amount.

In terms of whether you need to have those frisky frontmen in your pension portfolio. You probably don't if you're satisfied with your tracker-based equities investment. If you added £5k of those frisky specialist investments to £30k of your existing strategy you would have roughly 15% of the £35k in the frisky specialist stuff and 85% in the mainstream normal stuff.

The normal stuff (100%  equity, global tracker based) has the volatility profile to drop by a half or so in a major crash. The other, more concentrated conviction-driven investments you identified may be good choices over the long term but could drop by more in the bad years. I would think no more than 15% in those high conviction funds alongside the cheap tracker based funds is ok for the longer term. Make that adjustment over the next year, if you like. However I wouldn't adjust my strategy such that you were adding £5-10k of high conviction stuff a year but only £3k (250pm) of the basic stuff. That will swiftly take you over 15% of your pension in the specialist - to 20, 30, 40% over time, and you will be constantly trying to second-guess and tinker and play with the app. Resist the app, it's not your friend. 

fiisch

bowlhead99 said:

On the cashback, the fee differential for holding vls100 in an ISA at HL versus vls100 at Vanguard is £30 per year per £10k invested.  At the moment you only have £5k invested but are adding £5k or more per year to that (£400pm plus growth) so it won't be very long before you're in the value range where HL is costing you £30 a year more than Vanguard.

So, I wouldn't get too excited about getting able to get £50 I've off as a cashback for moving your vanguard ISA to a more expensive platform. Yes, they have an App. No, you don't need it for the ISA because even after another a couple of years the ISA only has less than £20k in it, and one multi asset fund bought monthly on direct debit is fine with that sort of non- life-changing amount.

In terms of whether you need to have those frisky frontmen in your pension portfolio. You probably don't if you're satisfied with your tracker-based equities investment. If you added £5k of those frisky specialist investments to £30k of your existing strategy you would have roughly 15% of the £35k in the frisky specialist stuff and 85% in the mainstream normal stuff.

The normal stuff (100%  equity, global tracker based) has the volatility profile to drop by a half or so in a major crash. The other, more concentrated conviction-driven investments you identified may be good choices over the long term but could drop by more in the bad years. I would think no more than 15% in those high conviction funds alongside the cheap tracker based funds is ok for the longer term. Make that adjustment over the next year, if you like. However I wouldn't adjust my strategy such that you were adding £5-10k of high conviction stuff a year but only £3k (250pm) of the basic stuff. That will swiftly take you over 15% of your pension in the specialist - to 20, 30, 40% over time, and you will be constantly trying to second-guess and tinker and play with the app. Resist the app, it's not your friend. 

Thank you - that's really helpful, as ever!

I suspected as much re.: HL cash back, but hadn't done the maths, so you have saved me a job!  I will stick with my ISA via Vanguard and leave well alone - my daughter's JISA is also with Vanguard, and will be opening a further JISA for other daughter, and you're right.. I don't need an app!!

Interesting re.: your suggestion on a suitable mix - like the idea of a 85/15% mix between VLS and the more riskier stuff for now.  So really, top up the SIPP, but don't neglect the underlying Vanguard!

Investing £350 in SMT with an £11.99 fee wasn't the cleverest move in hindsight...  must be like normal people and stick to eBay after a few beers in future!!  Thanks again.