Vanguard Pension

Cnkp21

Hi
My wife works as a Dental Therapist on a self employed basis and her practice doesn’t provide a pension or advice. She pays into a lifetime ISA, however we feel it would also be beneficial for her to pay into a pension. We are both clueless with pensions and when we have sought advice from financial advisors previously, we have always felt that their advice is biased towards their own fees. I am aware that Vanguard offer a low fee pension, however selecting a fund option is a minefield to us. She is wanting to invest in a medium to low risk fund option saving £100 per month until she is approx 65, however we are unsure what to go for. My wife is currently 36. 

Can anybody please advise? 

Many Thanks 
Chris 

cloud_dog

How much does she earn per year?

Dazed_and_C0nfused

As she has virtually 30 years of investment why is she going medium to low risk now?

The obvious choices (for her risk preference) which plenty posting on here seem to have would be Vanguard LifeStrategy 20, 40 or 60.

Cnkp21

cloud_dog said:

How much does she earn per year?

It varies but usually around 35-40k. 

Cnkp21

Dazed_and_C0nfused said:

As she has virtually 30 years of investment why is she going medium to low risk now?

The obvious choices which plenty posting on here seem to have would be Vanguard LifeStrategy 20, 40 or 60.

I have a really good career average salary at present and so my wife’s is just an added bonus. Plus we don’t feel confident enough with the pension to be risky. We just want to start it off and keep any eye on it. She pays 100 into a LISA so we are thinking another 100 for the time being. She only works two days a week at present so we don’t want to over stretch. 

cloud_dog

You may want to consider using a LISA as part of, or instead of a pension.  They both benefit from the same uplift (pension tax relief, LISA bonus) but, the LISA monies can be withdrawn without any possible tax liabilities, which usually makes it slightly the better financial option but with your wife not having any existing pension (outside of any state pension), this benefit is possibly not as meaningful.

It may be worth running a LISA until age 50 and then continuing in to a pension.

Cnkp21

cloud_dog said:

You may want to consider using a LISA as part of, or instead of a pension.  They both benefit from the same uplift (pension tax relief, LISA bonus) but, the LISA monies can be withdrawn without any possible tax liabilities, which usually makes it slightly the better financial option but with your wife not having any existing pension (outside of any state pension), this benefit is possibly not as meaningful.

It may be worth running a LISA until age 50 and then continuing in to a pension.

Thanks Cloud Dog. We were thinking that but we thought it might be a good idea to hedge our bets with both options. Defo worth considering. 

Cnkp21

Dazed_and_C0nfused said:

As she has virtually 30 years of investment why is she going medium to low risk now?

The obvious choices (for her risk preference) which plenty posting on here seem to have would be Vanguard LifeStrategy 20, 40 or 60.

I will also look into these. Thanks Dazed and Confused. 

Albermarle

Due to her young age the LISA should be invested so should be a stocks and shares LISA.
I used to be a low/medium risk sort of person but having learnt more about investing , it is clearly the wrong strategy for a long term regular  pension or LISA investor with a very long time frame . The VLS 20 and 40 funds mentioned above are really more suitable for someone already with a big pot and near retiring . You need to look at the VLS 60 & 80  &100 .
Maybe these links will be useful.
https://monevator.com/investing-for-beginners-why-do-we-invest/
https://www.moneysavingexpert.com/savings/investment-beginners/

Cnkp21

Albermarle said:

Due to her young age the LISA should be invested so should be a stocks and shares LISA.
I used to be a low/medium risk sort of person but having learnt more about investing , it is clearly the wrong strategy for a long term regular  pension or LISA investor with a very long time frame . The VLS 20 and 40 funds mentioned above are really more suitable for someone already with a big pot and near retiring . You need to look at the VLS 60 & 80  &100 .
Maybe these links will be useful.
https://monevator.com/investing-for-beginners-why-do-we-invest/
https://www.moneysavingexpert.com/savings/investment-beginners/

Thanks Albermarle. Will do 

Mutton_Geoff

Albermarle said:

Due to her young age the LISA should be invested so should be a stocks and shares LISA.
I used to be a low/medium risk sort of person but having learnt more about investing , it is clearly the wrong strategy for a long term regular  pension or LISA investor with a very long time frame . The VLS 20 and 40 funds mentioned above are really more suitable for someone already with a big pot and near retiring . You need to look at the VLS 60 & 80  &100 .
Maybe these links will be useful.
https://monevator.com/investing-for-beginners-why-do-we-invest/
https://www.moneysavingexpert.com/savings/investment-beginners/

Good advice. The danger of a risk averse investment with a long timescale ahead is that by the time you realise performance is related to risk, it will be too late to do anything about it. Risk must be measured over a long period of time together with the compounding effect of time.

You'll need to hold your nerve too, most people would be horrified if your chosen investment suddenly halved in value but I would view it as a buying opportunity since your £100 a month will now be buying twice as many units which then recover value further down the line. (Pound cost averaging).

The other point is that whilst any pension saving is admirable, especially at a young age, £100 a month will only generate a pot of £100,000 in 30 years (conservative estimate). A drawdown rate of 4% will provide you with a pension of £4,000 a year. All at today's rates but hardly life changing. If you can afford to squirrel away more nuts now, the compounded effect will be even greater.

There are plenty of funds and platforms to choose from but Vanguard are currently in vogue, and as Albermarle suggests, I would seriously be looking at being 100% in equity based investments at this stage in life.