LifeStrategy for "Wealth Preservation" and SIPP?

Aminatidi

Just wanted peoples thoughts on a couple of first world problems please

I have £135K in an unwrapped GIA currently split around 60/40 between Capital Gearing Trust and Ruffer Investment Company.

I think of that money as money I don't intend to touch but which should be pretty instantly redeemable in most situations I can think of where I'd need it.

Both let me sleep at night and are in addition to around £25K in the bank and £20K in NS&I Index Linked Savings Certs which have just rolled over.

I also have a workplace pension worth about £63K with Royal London via an employer I've just left and £140K in a stocks and shares ISA.

I've been debating selling down the RICA holding and opening an unwrapped Vanguard account and putting it into either LifeStrategy 40 or 60 (I appreciate 60 is higher equity risk than Ruffer).

I also need to work out what to do with the Royal London pension and one option is to open a Vanguard SIPP and transfer it to that and to put it into LifeStrategy 60 or 80 or maybe even the Global All Cap Index Fund (it's a pension so isn't accessible for at least another decade).

I quite like the idea of the Vanguard account for hoovering up the odd £100 here and there where I might have used my ISA allowance but don't have enough to invest to justify trading fees and stamp duty etc.

Not entirely sure that I've asked a question there but thoughts welcome

tebbins

The £25k in the bank, I think most in the forum would suggest if you don't *need* all of that in the bank and a bank balance of £5-£10k wouldn't risk running into an overdraft, to stick the bulk of that in Premium Bonds (https://www.moneysavingexpert.com/savings/premium-bonds/).
£20k index linked certs - keep

With £63k I *think* Vanguard may work cheapest among the mainstream (https://www.moneysavingexpert.com/savings/cheap-sipps/, but research around as the fee structures for some isn't simple) for a SIPP however check your RL fee structure as sometimes private pensions setup by employers can have cheaper platform fees, and discounts on funds or access to (for example), Vanguard's Institutional classes of funds, same funds, cheaper OCFs.
I couldn't really comment on what to do with the GIA without knowing what's in the S&S ISA, however even if you are minded to move to a more index-based approach, wealth preservation trusts can still be thought of as an excellent diversifier, although arguably especially with CGT there is overlap between the high % in US TIPS (last time i checked) and your NS&I index linked certs.

Aminatidi

Thanks for the reply

The money in the bank is "sleep at night" money where in reality I could probably run it down to £10-15K and not even notice but I like knowing I won't have to sell assets even if there's an opportunity cost.

The ISA is basically Fundsmith, Smithson, and Buffettology and there's around £2K/month going into that from income.

The RL scheme is actually pretty cheap (about 0.4% all in unless you look at their external funds) so it is certainly an option to stick with it and I don't intend doing anything in a hurry).

I keep thinking about opening a Vanguard account but I don't like having lots of accounts with small amounts so if I did so I think I'd be doing it on the basis either hoover up some of the bank savings into it or at the very least start with the SIPP and transfer from Royal London so have a SIPP and a general account.

SIPPs seem a subject in their own right which I also need to look into to understand if I'm giving anything worthwhile up by moving away from the Royal London scheme.

MX5huggy

Presuming you have a job I would be saving as much as possible into SIPP and living off the GIA. You must be getting hit for dividend and building a Capital Gains Tax liability in the GIA. 

Alice_Holt

MX5huggy said:

Presuming you have a job I would be saving as much as possible into SIPP and living off the GIA. You must be getting hit for dividend and building a Capital Gains Tax liability in the GIA. 

     I'd agree with this approach. 
     
     The OP seems very light on pension provision. 

Aminatidi

There's a DB from a previous employer and £700/month going into the new employers DC pension scheme I just didn't mention it as it didn't seem related to any of the options I'm thinking through about existing money/pensions

bostonerimus

Why is the GIA balance so large? Are you maxing your ISA every year? Why aren't you making extra pension payments? Max your tax advantages.

Aminatidi

bostonerimus said:

Why is the GIA balance so large? Are you maxing your ISA every year? Why aren't you making extra pension payments? Max your tax advantages.

Maxing out the ISA and whilst I take the point about tax advantages I'm not keen on locking money away where it literally cannot be accessed for another 10 years (or more if the Government change more rules!).

dunstonh

There's a DB from a previous employer and £700/month going into the new employers DC pension scheme I just didn't mention it as it didn't seem related to any of the options I'm thinking through about existing money/pensions 

it is relevant as tax wrapper selection is part of the investment process and, assuming timescale and LTA is not an issue, pension trumps ISA which trumps GIA.

Aminatidi

dunstonh said:

There's a DB from a previous employer and £700/month going into the new employers DC pension scheme I just didn't mention it as it didn't seem related to any of the options I'm thinking through about existing money/pensions 

it is relevant as tax wrapper selection is part of the investment process and, assuming timescale and LTA is not an issue, pension trumps ISA which trumps GIA.

dunstonh thanks, I'm doing some reading into SIPPs but the biggest hurdle (for me) is simply that the money is locked away and whilst I don't plan on needing it it's an outside possibility.

From the reading that I'm doing there doesn't seem to be any significant downside to dripping some from the GIA or spare salary from the bank into a SIPP other than it being inaccessible?

With tax relief it basically looks like free money.

dunstonh

dunstonh thanks, I'm doing some reading into SIPPs but the biggest hurdle (for me) is simply that the money is locked away and whilst I don't plan on needing it it's an outside possibility.

And if that is a possibility then you are right to avoid the pension wrapper.  However, keep it on the back burner as there will come a point where you know you are safe to bed & pension.

From the reading that I'm doing there doesn't seem to be any significant downside to dripping some from the GIA or spare salary from the bank into a SIPP other than it being inaccessible?

Maturity process (ie.. tax, age and MPAA) are the main negatives.       Whilst tax is the main positive.       Tax being both a negative and a positive depending on your circumstances.

With tax relief it basically looks like free money.

Not just tax relief on contributions.   There is no CGT or dividend tax within the pension.  And no IHT on pensions (bar a couple of scenarios which are unusual but possible). it is not part of your estate and doesn't suffer IHT or go towards your asset value for IHT purposes.