Guidance on investment plan

bargainhunter888

Hi All,
recently joined and have already made a few posts - was always keen to get into stocks/investments as i'm not great with my money tbh.
34 - have a joint mortgage - no other outgoings other than fuel / odd takeaway other than bills most of it is dispoable.
hold an 2 x Cash ISAs 1 of which Matures in June on a 1.3% return, the 2nd had already matured and just sitting doing nothing (low interest)
have also got a every day saver - a large chunk of cash - yet again low interested rate now at 0.2% i've just kinda left it without switching accounts etc which means i've lost out on a lot of potential interest had i switched every year.
my current account is also very healthy as i tend to just accumulate my wages and i dont really spend much - quite a hoarder.
I set up a H&L S&S ISA couple weeks ago 19/20 tax year and deposit 10k - my very first investment was yesterday in which i put £3k into SWDA ETF, now have 7K to play with. i've got a fair bit of time, no rush for the money so would say i'm happy leaving things untouched with a fair bit of risk, but i want to start planning my retirement.
work have a DC pension, i put in 4% then put in 6% = 10%..HOWEVER i only started this about 3 years ago again lost out.

im thinking of transferring the cash from the matured ISA into my H&L ISA and deposit more cash to invest - is this OK?
in terms of my CASH ISA due to mature - i'm thinking of leaving it and just changing product (not depositing any cash this year)
my every day Saver - thinking of switching to a Marcus account
I'm kinda stuck on what to do on investments/funds been reading investment fact sheets and can see some funds generally return 5% accumulated over 10 year (am i right in thinking this is the average return per year over 10 years?) BUT.... how do i choose?
theres so many out there that i'm kinda lost, how do you differentiate certain products, and what would you do if you were me? or i can just plump some on individual shares
Thanks 

george4064

Since you only started your pension at aged 31, I would consider contributing more to that pot. You should aiming for more like the 15% mark (including your contributions, employer's conts and government conts').

Albermarle

The point that stands out is your very low pension % contribution.
As long as you as you can leave the money tied up until your are older, a pension is normally a better way of investing for the future due to the tax relief available. The tax advantage for a pension is a minimum of 6.25% and can be a lot more, especially if you are a higher rate taxpayer, or you contribute via salary sacrifice.
With most pensions you can also choose how you want the money invested within the pension ( some have more choice than others)

bargainhunter888

Albermarle said:

The point that stands out is your very low pension % contribution.
As long as you as you can leave the money tied up until your are older, a pension is normally a better way of investing for the future due to the tax relief available. The tax advantage for a pension is a minimum of 6.25% and can be a lot more, especially if you are a higher rate taxpayer, or you contribute via salary sacrifice.
With most pensions you can also choose how you want the money invested within the pension ( some have more choice than others)

unfortunately the pension contributions are fixed at 4%/6% - no i'm not a higher rate tax payer
any voluntary contributions are only set at the beginning of the year, unless i decided to go for a SIPP? which i assume would be just the similar scenario of me trying to select some funds....which i'm stuck on  

Alistair31

You could do far worse than open a SIPP and throw everything you can in SWDA. 

cloud_dog

bargainhunter888 said:

Albermarle said:

The point that stands out is your very low pension % contribution.
As long as you as you can leave the money tied up until your are older, a pension is normally a better way of investing for the future due to the tax relief available. The tax advantage for a pension is a minimum of 6.25% and can be a lot more, especially if you are a higher rate taxpayer, or you contribute via salary sacrifice.
With most pensions you can also choose how you want the money invested within the pension ( some have more choice than others)

unfortunately the pension contributions are fixed at 4%/6% - no i'm not a higher rate tax payer
any voluntary contributions are only set at the beginning of the year, unless i decided to go for a SIPP? which i assume would be just the similar scenario of me trying to select some funds....which i'm stuck on  

If you are not paid via Salary Sacrifice, then you should consider utilising a Lifetime ISA as part of your retirement planning.  You gain the same amount of Government benefit (LISA 25% bonus, Pension 20% tax relief) but you will not be taxed on withdrawals at age 60.  For retirement earlier than age 60 then your works pension and or ISAs could assist there.

Albermarle

unless i decided to go for a SIPP? which i assume would be just the similar scenario of me trying to select some funds....which i'm stuck on

There are two separate issues to think about

Where you should invest to take best advantage of tax relief, bonuses etc 

What funds you should invest in within whatever you choose. 

Lots of people get the two things mixed up together

bargainhunter888

Albermarle said:

unless i decided to go for a SIPP? which i assume would be just the similar scenario of me trying to select some funds....which i'm stuck on

There are two separate issues to think about

Where you should invest to take best advantage of tax relief, bonuses etc 

What funds you should invest in within whatever you choose. 

Lots of people get the two things mixed up together

I think funds is the best way, because I have a certain limit on my isa
but I’d like to know how to choose from the vast menu of funds? Do I just go for a vanguard 100 etc or just carry on investing swda or do I choose emerging markets to diversify? Mutual or index funds does anyone have any resources for research on this 

bowlhead99

Albermarle said:

unless i decided to go for a SIPP? which i assume would be just the similar scenario of me trying to select some funds....which i'm stuck on

There are two separate issues to think about

Where you should invest to take best advantage of tax relief, bonuses etc 

What funds you should invest in within whatever you choose. 

Lots of people get the two things mixed up together

So what he is saying here is that there are two decisions:

1) where should you invest (ISA, LISA, SIPP, etc, or even a general investment account without a tax wrapper)

2) what you should invest in, within that type of account - which individual fund(s) would you choose

Your reply to that is:

bargainhunter888 said is:
I think funds is the best way, because I have a certain limit on my isa 

This doesn't make any sense. It is like someone saying you should consider two separate stages:

(a) different ways to hold stuff you're about to consume: plates, bowls, cups, saucers, a nosebag, a bucket ; then

(b) different things you can consume: a great many different types of food

And then you replying "I think food is the best way, because my plate is only a certain size". It doesn't make any sense, or give any indication you understand what people are saying to you.

Do I just go for a vanguard 100 etc or just carry on investing swda or do I choose emerging markets to diversify.

"Vanguard LifeStrategy 100% Equity Fund" is a fund that spreads its investors' money across different equity index funds around the world. If you want to invest 100% of your money into equity index funds around the world, it isn't a bad choice. It allocates some of your money to the UK stock market and the rest to global stock markets, including emerging markets.

If you instead invest in SWDA, that is only a 'developed world' equity tracker so you wouldn't have any money in emerging markets - and if you added a separate emerging markets fund, you would then have less than 5% in the UK stock market which seems low, given you live in the UK. 

Mutual or index funds 

'Mutual funds' is American terminology for investment funds owned by the fund's investors. They can invest in line with specific market indexes, or in line with an investment strategy determined by a fund manager. A 'mutual fund' (which here in the UK and Europe, we just call an open-ended fund) is not a separate thing from an index fund - an 'index tracker' is simply one of the many strategies that can be followed by a mutual fund or exchange-traded fund (ETF: for example, SWDA).

does anyone have any resources for research on this 

There are tens of threads here for beginner investors. So you could search here for things like 'asset allocation' or the names of funds about which, you're curious.

bargainhunter888

bowlhead99 said:

Albermarle said:

unless i decided to go for a SIPP? which i assume would be just the similar scenario of me trying to select some funds....which i'm stuck on

There are two separate issues to think about

Where you should invest to take best advantage of tax relief, bonuses etc 

What funds you should invest in within whatever you choose. 

Lots of people get the two things mixed up together

So what he is saying here is that there are two decisions:

1) where should you invest (ISA, LISA, SIPP, etc, or even a general investment account without a tax wrapper)

2) what you should invest in, within that type of account - which individual fund(s) would you choose

Your reply to that is:

bargainhunter888 said is:
I think funds is the best way, because I have a certain limit on my isa 

This doesn't make any sense. It is like someone saying you should consider two separate stages:

(a) different ways to hold stuff you're about to consume: plates, bowls, cups, saucers, a nosebag, a bucket ; then

(b) different things you can consume: a great many different types of food

And then you replying "I think food is the best way, because my plate is only a certain size". It doesn't make any sense, or give any indication you understand what people are saying to you.

Do I just go for a vanguard 100 etc or just carry on investing swda or do I choose emerging markets to diversify.

"Vanguard LifeStrategy 100% Equity Fund" is a fund that spreads its investors' money across different equity index funds around the world. If you want to invest 100% of your money into equity index funds around the world, it isn't a bad choice. It allocates some of your money to the UK stock market and the rest to global stock markets, including emerging markets.

If you instead invest in SWDA, that is only a 'developed world' equity tracker so you wouldn't have any money in emerging markets - and if you added a separate emerging markets fund, you would then have less than 5% in the UK stock market which seems low, given you live in the UK. 

Mutual or index funds 

'Mutual funds' is American terminology for investment funds owned by the fund's investors. They can invest in line with specific market indexes, or in line with an investment strategy determined by a fund manager. A 'mutual fund' (which here in the UK and Europe, we just call an open-ended fund) is not a separate thing from an index fund - an 'index tracker' is simply one of the many strategies that can be followed by a mutual fund or exchange-traded fund (ETF: for example, SWDA).

does anyone have any resources for research on this 

There are tens of threads here for beginner investors. So you could search here for things like 'asset allocation' or the names of funds about which, you're curious.

Tbh I wouldn’t know the names of funds to start with to be curious about, I want to explore, just because everyone is getting a Big Mac, I don’t want to just be curious about a Big Mac, perhaps I’d be more interested in a quarter pounder or some chicken selects or something off the menu as a special request, hence asking what research tools there are for what’s available at the restaurant.
with regards to the vehicle I meant was that I have reach the the FSCS limit and wouldn’t want to hold so much in just one institution, therefore putting more money into investing in stock stocks and share / funds would be the option I’d go with. I wouldn’t want to go all out transferring all the value into a S&S as having a portion of cash is good 

kinger101

If you're a basic rate taxpayer, and can't access a salary sacrifice, what cloud_dog said for any pension savings.
The LISA gives you a 25% "uplift" compared to the 6.25% you'd get in a SIPP.  It's also less prone to future (some might say inevitable) increases in income tax rates or reduction in the tax advantages on pension withdrawal.