Self managing my investments

mistapike

Hi everyone. Apologies if this is already covered in another thread (feel free to redirect me) but I am looking to retire in the next year (age 58), and via a DB CETV transfer will have something in the order of £600k to manage in investments - and I'm interested in understanding the choices people made about how much to self manage.

I have been managing about £150k "savings" in Stocks and Shares ISA's (using Hargreaves Lansdown) for about 7 years, having known nothing in this area before then - so now consider myself reasonably informed in the world of self managing my investments, but undoubtedly still with more to learn. My instinct is to self manage my investments, and I have an instinctive aversion to paying say 3% annual fee (on top of any other fees)  to a "wealth manager" type to manage my portfolio for me, who may be more informed/experienced than me but that would add up to a lot of lost money year on year.

Overall I am very strongly in the camp of "fire and forget" investment of long term growth through funds/ETF's, and in asking this question am happy therefore that my decision is which fund to pick, and then is always a fund manager making the stock decisions (with according fees)  -  or an index tracker.

In essence I would be interested on the choices anyone made in a similar position, and whether I am missing anything important...but it feels to me there are broadly 3 routes open to me
1 - Continue to self manage my investments (making my choices on funds) via a provider platform like HL, as I have been
2 - User a provider (e.g. Vanguard) who provide a range of set investment portfolios based on risk appetite, with seemingly low additional fees compared to 1
3 - Go full Wealth Manager with a tailored portfolio but with much higher charges than 1 or 2

I'm particularly interested in anyone who chose the "2" route instead of "1" (and any providers they thought offered best value) because the relatively low extra fees were worth the removal of the burden of self managing a large pot - and also on my view to want to disregard 3 ! 

Thanks     

zagfles

What about the route of keeping the DB pension rather than transferring it out? You would need financial advice if wanted to transfer it out.

eskbanker

mistapike said:

I am looking to retire in the next year (age 58), and via a DB CETV transfer will have something in the order of £600k to manage in investments

First things first - have you obtained a positive adviser recommendation to support such a transfer, which is generally the exception rather than the rule?

jim8888

Hi Mistapike, I am of a similar mindset to yourself. I started investing in index trackers about twenty years ago  because a book (The Motley Fool Investment Guide) pointed me toward them for reasons you've no doubt sussed - low fees, better performance than many managed funds, etc. I started out buying total market funds across UK, US, Europe and Asia. This served me well, but when it came to my pension I decided to go for the Vanguard Life Strategy option. I have a SIPP with about £700k in an 80/20 Life Strategy fund (80% equities, 20% bonds). I'm going to "de-risk" some of that by taking some of my tax free lump sum out as cash, as I've retired this year. I'm deliberately sticking to this strategy because in the past I have been tempted to filter some cash into managed funds - just to back my own hunches - and invariably have been a bit disappointed. My experience is that the Vanguard funds are better overall long term bets. It's a bit boring but, for me, it works. 

bostonerimus

Definitely don't ignore the DB route. You need to analyze that carefully before taking the CETV...a DB and 150k in ISAs and then state pension to come could be a very comfortable way to fund retirement.

I self manage my portfolio for many of the same reasons as you state ie I hate paying someone else to do a job when I can do it myself without any difficulty. I use a combination of 1 and 2. I have a domestic and global equity portfolio in a couple of broad based trackers and a multi-asset fund that has large dividend paying companies and a broad selection of bonds that is less volatile and geared towards income. So I'm invested in basically 3 funds and keep a couple of years cash in the bank. I also have a small DB pension and annuity so I can be aggressive with the rest of my money and haven't done anything with my portfolio for a few years now.

jim8888

Hi Bostonerimus
You say you have:

"a multi-asset fund that has large dividend paying companies and a broad selection of bonds that is less volatile and geared towards income."

I understand you might not want to disclose exactly what fund that is, but could you give us some pointers to a similar style of fund? Although I'm happy enough with my LS 80/20, I will need to invest some of my tax free lump sum- which is in six figures - and I'm looking at where I might best (safely) do this to generate a better return than just holding cash for the next five years.
Cheers.

mistapike

Thanks everyone who is mentioning the DB v CETV route - much appreciated that you raise this, but please rest assured I understand this decision and the pros and cons, and wheels are in motion with a qualified advisor  - one of the reasons for this thread is two of my ex colleagues have taken CETV transfers promoted by the same people who then take on the wealth management which I am suspicious of  - hence why I want my advisor to not have a vested interest of skimming 3% of my pot post transfer. I very much would prefer it however if this thread assumed that the transfer goes ahead though, as I specifically want to understand peoples approaches/philosophies on self managing investments. Thanks

QrizB

What you've not mentioned is "Option 2a" where you deal with an IFA (rather than anyone with "wealth management" in the name). Others here have said that IFA fees are 0.5% to 1% and they get a discount on the platform fees.

MX5huggy

You’ve not really addressed drawdown, it’s easy to invest, but you’re strategy for drawdown needs planning and executing. 

mistapike

Please also rest assured the drawdown plan exists thanks - there is a lot of additional detail on my overall pension planning I haven't mentioned in my question in the interests of brevity, and with the desire to focus this question specifically on investment strategy/philosophy- thanks - in particular thanks so far to Bostonerimus, jim8888 and QrizB - these are the exact sort of insights I was interested in when I asked the question

bostonerimus

jim8888 said:

Hi Bostonerimus
You say you have:

"a multi-asset fund that has large dividend paying companies and a broad selection of bonds that is less volatile and geared towards income."

I understand you might not want to disclose exactly what fund that is, but could you give us some pointers to a similar style of fund? Although I'm happy enough with my LS 80/20, I will need to invest some of my tax free lump sum- which is in six figures - and I'm looking at where I might best (safely) do this to generate a better return than just holding cash for the next five years.
Cheers.

I'm in the US so you can't buy the fund I use, but it's the Vanguard Wellesley fund and has 60% bonds....I use it for my bond allocation. I think you can do something similar in the UK with the VLS funds.

If you are thinking of retiring in the next five years you really have something like a 35 year time horizon and will need to be in equities to keep up with inflation. If you have an index linked DB pension all this uncertainty disappears and that's worth a lot. Can you take a partial CETV and leave some in the DB plan? If you invest the CETV then you need a drawdown plan so you should read up about the strategies ie Variable Withdrawal Rates vs Index Linked Withdrawals and Guyton-Klinger.