DIY pension definition and related questions

aekostas

Hello,

I am a new user. In addition to my workplace pension I have an old personal pension going since 1998, but fed £68 per month plus Govt tax top-up; not a lot. I want to move it (I understand exit-costs) and I want to increase my SIPP pension contributions. In my examples I bring up Vanguard LifeStrategy which appears a lot on this forum.

I read the following old statement here:

dunstonh said:

Modern personal pensions for people over £20k held can come in at 0.4% p.a. A DIY investor with a low cost platform using similar styled investment can come in a lot cheaper than pensionbee.

How is DIY defined? If I went on the Vanguard portal and invested on Vanguard LifeStrategy for my SIPP, am I a DIY investor or am I missing a trick?
I understand these are investments and they may go up and down, so I am focussing on charges in the first instance. Is there a reasonable ballpark, perhaps across scales of investment? Vanguard LifeStrategy on their platform is 0.42% (unless I have missed discounts for investment-thresholds).

Many thanks in advance for any pointers.

NottinghamKnight

VLS would be fine on Vanguard platform, what is the current pot size, large pots will be much cheaper on flat fee platforms. Wouildn't have thought there will be exit costs but worth checking.

[Deleted User]

1. You can call anything “DIY” but if you buy VLS or similar multiasset funds, you are just buying a ready made product. Its a good product from a highly reputable organization but they did all the stock/index picking for you.  This is like buying a pre-assembled bed from a shop. You “DIYed” the shopping process but not much else.  Having said it, they tend to call anything “diy” if you don’t use an advisor. 

2. In my opinion VLS is a good product. You can reduce the cost a bit. I don’t like that their allocation of passive funds is actively managed (but stable).  Not sure why they did it; in other countries Vanguard does not mess with allocations. Its still a really good product. You are basically buying the whole world for a reasonable price. 

3. Vanguard as a platform is really good for investors wishing to buy Vanguard products if their portfolio is small. For people with large portfolios there are more cost efficient options. 

dunstonh

How is DIY defined?

Same as it in most walks of life.    Something you set up and arrange yourself.  i.e. you pick the provider and you pick the investments.   (just like home decoration would see you pick the paint brushes, the paint etc.  You dont make the paintbrush or the paint but you pick the quality etc).     DIY also means you cannot complain that the investments or provider were unsuitable for you as you made the choices.

 If I went on the Vanguard portal and invested on Vanguard LifeStrategy for my SIPP, am I a DIY investor or am I missing a trick?

That makes you a DIY investor.  You are choosing the platform and you are choosing the investments.

I understand these are investments and they may go up and down, so I am focussing on charges in the first instance.

Charges are a secondary concern.  Not a primary concern.  Where you invest and how you invest is more important.  Charges are certainly important but not the first thing you should be looking at.

[Deleted User]

You are not picking the brushes, paint and painting it. You are picking the colour, the vendor and are getting the vendor to do it for you. Vanguard experts have already chosen and pre-packaged the actual investments for you. They based investment choices within a VLS fund on a lot of research from some of the best experts in the field to design their products. You just pick whatever you believe suits you. Or you can pick an interior designer to select the colours for you. Neither is actual “DIY”. And the interior designer will try to get you to pay an annual fee on the paint he chose for you. 

Linton

Deleted_User said:

You are not picking the brushes, paint and painting it. You are picking the colour, the vendor and are getting the vendor to do it for you. Vanguard experts have already chosen and pre-packaged the actual investments for you. They based investment choices within a VLS fund on a lot of research from some of the best experts in the field to design their products. You just pick whatever you believe suits you. Or you can pick an interior designer to select the colours for you. Neither is actual “DIY”. And the interior designer will try to get you to pay an annual fee on the paint he chose for you. 

In this forum and when personal finance is discussed generally in the UK, DIY means not using an advisor.    Going deeply into the philosophy of the meaning of words could confuse rather than help.

In your example I could claim that someone who did pick the brushes and paint etc isnt actually DiYing either since they didnt (presumably) make either the brushes or the paint.

Dox

dunstonh said:

I understand these are investments and they may go up and down, so I am focussing on charges in the first instance.

Charges are a secondary concern.  Not a primary concern.  Where you invest and how you invest is more important.  Charges are certainly important but not the first thing you should be looking at.

But charges are the one certainty and as such are important, especially here where the personal pension was set up in 1998 and could be full of all sorts of old-fashioned charging nasties. 

Linton

Dox said:

dunstonh said:

I understand these are investments and they may go up and down, so I am focussing on charges in the first instance.

Charges are a secondary concern.  Not a primary concern.  Where you invest and how you invest is more important.  Charges are certainly important but not the first thing you should be looking at.

But charges are the one certainty and as such are important, especially here where the personal pension was set up in 1998 and could be full of all sorts of old-fashioned charging nasties. 

Choice of inappropriate investments are likely to lead to a far greater loss than differences in charges.

dunstonh

Dox said:

dunstonh said:

I understand these are investments and they may go up and down, so I am focussing on charges in the first instance.

Charges are a secondary concern.  Not a primary concern.  Where you invest and how you invest is more important.  Charges are certainly important but not the first thing you should be looking at.

But charges are the one certainty and as such are important, especially here where the personal pension was set up in 1998 and could be full of all sorts of old-fashioned charging nasties. 

As I said, charges are important.  But what if that 1998 plan has higher charges than a modern plan but has a guaranteed minimum maturity value or GAR?    Yes, it could be an old "nasty" plan but it could be an old gem of a plan.  Charges dont come into play at that stage. They come in later when you compare the pros and cons.
If charges were a primary concern, then you would only stay in a savings account with its nil implicit charge.  You would never invest as all other investment options would fail at the first filter of "lowest charge".

You are not picking the brushes, paint and painting it. You are picking the colour, the vendor and are getting the vendor to do it for you. Vanguard experts have already chosen and pre-packaged the actual investments for you. They based investment choices within a VLS fund on a lot of research from some of the best experts in the field to design their products. You just pick whatever you believe suits you. Or you can pick an interior designer to select the colours for you. Neither is actual “DIY”. And the interior designer will try to get you to pay an annual fee on the paint he chose for you. 

You know that sounds like a load of marketing from someone brainwashed by the church of Vanguard?
All investment funds, whether issued by Vanguard of another fund house, have "experts" that choose and pre-package the actual investments [within the fund] for you.   If you buy an investment fund, you are not micromanaging the investments.   You are making the decision on which investment fund(s) to use.  That decision is not being made for you.    You are also making the decision on what investment platform to use.  That decision is not being made for you.    You are the one that does all the work to put it in place.  That is not being done for you.

[Deleted User]

Linton said:

Deleted_User said:

You are not picking the brushes, paint and painting it. You are picking the colour, the vendor and are getting the vendor to do it for you. Vanguard experts have already chosen and pre-packaged the actual investments for you. They based investment choices within a VLS fund on a lot of research from some of the best experts in the field to design their products. You just pick whatever you believe suits you. Or you can pick an interior designer to select the colours for you. Neither is actual “DIY”. And the interior designer will try to get you to pay an annual fee on the paint he chose for you. 

In this forum and when personal finance is discussed generally in the UK, DIY means not using an advisor.    Going deeply into the philosophy of the meaning of words could confuse rather than help.

In your example I could claim that someone who did pick the brushes and paint etc isnt actually DiYing either since they didnt (presumably) make either the brushes or the paint.

Yes, I agree. The IFAs are not DIYing either. But the standard terminology is as you described. 

zagfles

dunstonh said:

You are not picking the brushes, paint and painting it. You are picking the colour, the vendor and are getting the vendor to do it for you. Vanguard experts have already chosen and pre-packaged the actual investments for you. They based investment choices within a VLS fund on a lot of research from some of the best experts in the field to design their products. You just pick whatever you believe suits you. Or you can pick an interior designer to select the colours for you. Neither is actual “DIY”. And the interior designer will try to get you to pay an annual fee on the paint he chose for you. 

You know that sounds like a load of marketing from someone brainwashed by the church of Vanguard?
All investment funds, whether issued by Vanguard of another fund house, have "experts" that choose and pre-package the actual investments [within the fund] for you.   If you buy an investment fund, you are not micromanaging the investments.   You are making the decision on which investment fund(s) to use.  That decision is not being made for you.    You are also making the decision on what investment platform to use.  That decision is not being made for you.    You are the one that does all the work to put it in place.  That is not being done for you.

Hmm, whereas you sound like someone who is brainwashed by the "church of IFA"

If you choose "experts" to "choose and pre-package" your investments then that is hardly "DIY" just because you chose the investment house. Any more than if you chose an IFA to do the same.