Could my pension be working harder?

[Deleted User]

adam81 said:

Most of those replies highlight my lack of understanding.

I picked VLS 100 simply as that is pretty much as far as my knowledge goes.  When I plumped for ISA a few years ago, most folk seem to suggest VLS were fire and forget.  At the time it wasnt huge amounts, still isn't.   The pension has taken priority so has climbed in value a lot over the last 3-4 years which had made me think, I should look to be making the amount work harder.

The Pens Portfolio One doesn't seem a great fund either based on historical data ( I realise that's not going to repeat).  I'm unsure what funds I can move to and whether the 0.75% charge remains/increases/decreases.

If I go with an IFA, then I imagine I'll get at best a 0.5% management charge, so already pretty close to the 0.75% I pay without fund charges.

VLS still is “invest and forget” type of fund. A great solution for large or small portfolios. The best thing about it is simplicity. That minimizes the temptation to tinker and leads to better returns. 

IFAs work if all of the following conditions are met:
1. The investor is completely ignorant
2. The IFA is good
3. There is a lot of money to invest. 

You are not ignorant. You know enough to ask the right questions. And your solution is pretty good. 

Many IFAs are not great. Some are. How do you know in advance? In general they tend to recommend portfolios which are far too complex to justify their own costs. They also tend to steer you to brokers which require IFAs, so you cant easily change later on.  There are circumstances when it gets complicated and IFAs can help but your case is very straightforward. 

You don’t have an awful lot of money yet, so IFAs charges will take a noticeable chunk out. 

[Deleted User]

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Home bias is included for a very good reason. https://www.vanguard.co.uk/documents/adv/literature/strategic-asset-allocation.pdf

GSP

Prism said:

GSP said:

AlanP_2 said:

GSP said:

Reading some of the posts, how’s a newbie going to have any confidence when you boys are arguing over sectors, funds etc. Not quite backing the horses, but can someone end up with a bloody nose here if they have little knowledge in what they are doing?

If I recall correctly (apologies if I'm wrong) you transferred out from a defined benefit scheme and now you seem very worried about where you have ended up.

In hindsight would sticking with the DB scheme have been a better option for you?

In answer to your point, most comments on this thread are about tinkering at the margins. A sensible asset allocation, a sensible withdrawal rate and regular (1 - 2 - 4 times a year) to make sure things are broadly on track with your plan and that's it. Whether you go all passive via a multi-asset fund, all active via single sector managed funds or a hybrid will, in hindsight, make a bit of difference to your returns. But, if your chosen options allow you to live the life you want who cares?

Yes your memory is good. I did transfer out from a db pension which would have paid £15k p.a. but chose the CETV of £800k, and definitely don’t regret that.  I am not worried at all in fact my fund is almost back to where it started despite withdrawing £170k in three years.
My concern was not really knowing about investing and effectively giving all the money to an IFA to trust. Without any knowledge of other IFA’s, I have been posing certain questions and the answers have been very interesting to say the least, from both ends of the spectrum. I am still digesting everything and its very interesting, so please all carry on. Thanks

That seems like quite a high withdrawal rate. Are you thinking of continuing at that rate of income or cutting back a bit? Usually you want to use the early years to increase the pot if the markets allow before a downturn hits.

Yes it’ll be coming down a bit. My wife will be able to drawdown in 2022, so will be looking to reduce mine somewhat and take advantage of using her’s with her personal tax allowance.

dunstonh

Deleted_User said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Home bias is included for a very good reason. https://www.vanguard.co.uk/documents/adv/literature/strategic-asset-allocation.pdf

Home bias exists as a management decision and opinion.

zagfles

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

[Deleted User]

dunstonh said:

Deleted_User said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Home bias is included for a very good reason. https://www.vanguard.co.uk/documents/adv/literature/strategic-asset-allocation.pdf

Home bias exists as a management decision and opinion.

1.I have nothing against a world tracker.
2. Some home bias is justified on a risk/performance basis, due to lower taxes, currency risk, etc. 

3. While there will be periods of under/over performance, a 20% allocation to Britain won’t have a long term effect.
4. As long as the allocation is consistent and the manager isn’t tinkering, I don’t care if you call it a “management decision”.  

5. I am not aware of cheap “world tracker” mutual funds available to Brits

Prism

zagfles said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

Fidelity Index World - 0.12% (developed world)
HSBC FTSE All-World - 0.13%

Rich1976

Prism said:

zagfles said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

Fidelity Index World - 0.12% (developed world)
HSBC FTSE All-World - 0.13%

Legal and General International index 0.08% on HL

Prism

Rich1976 said:

Prism said:

zagfles said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

Fidelity Index World - 0.12% (developed world)
HSBC FTSE All-World - 0.13%

Legal and General International index 0.08% on HL

Yes but that doesn't include the UK so I skipped it.

Rich1976

Prism said:

Rich1976 said:

Prism said:

zagfles said:

dunstonh said:

Apart from its high UK bias which may or may not be a bad thing depending on your opinion there is nothing wrong with the LS100 fund.

Except a global tracker fund may be available cheaper and without the home bias.

Examples?

Fidelity Index World - 0.12% (developed world)
HSBC FTSE All-World - 0.13%

Legal and General International index 0.08% on HL

Yes but that doesn't include the UK so I skipped it.

You could have a separate UK tracker alongside it for a similar fee.