How to review Investment Portfolio (SIPP & SS ISA)

[Deleted User]

Hi 

May I ask 2 questions please?

Q1.  Where would be a good starting point to learn how to review the balance of my portfolio, which comprises DC & DB Pensions, a SIPP and SS ISA?

About me:

DB Pension £18k per annum  as of now NRA is 65 capped cpi%
Avc pot provides £10k pa

DC Pension c£225k invested in LifeStyle strategy option
72% in  Mixed Portfolio 100% shares Fund
28% in Mixed Portfolio 40-85% shares Fund

Current month input (salary sacrifice me & employer) £2,450 plus tbc pannual £9k lump sum

*SIPP
 c£235k  invested in Vanguard Life Stategy 60% Equity Fund
C£13k held as cash
Current annual input is £12.5k (me plus tax relief)

*SS ISA
£60k Vanguard Life Strategy 60% Equity
£60k Fidelity Euro W-Accumulation 
£35k HSBC All World ftse index tracker Accumulation C

*Held on Online platform 19.99 a month for both ISA and SIPP (plus Trading / GIA accounts)

I'm 55  want to retire at 58 in summer 2025.  Plan to drawdown rather than annuity.
£50k salary/if bonus plus 12% employer DC Pension  contribution (3 years to go)

No children, no debts
House £450k no mortgage 
Rental Property £550k no mortgage £15k post tax/costs income

Full state pension at 67
Cash ISAs £125k
Prem Bonds £30k
Other Instant access £10k
Only child inheritance c£550k but not banking on it and hopefully won't have to think about it for many many many years

My attitude to risk is, I think,  high medium ie  3-4 out of 5 as I would like to achieve avg 6%+ return (is growth same thing?)  and recognise some risk is needed.

I have calculated that a £25k retirement income and I would obtain this through rental income, isas  until any of (sipp drawdown, DB pension, state pensions) can be used?

Q2:  How do I fiscally model that I can retire at 58 or am in for a shock? 

Thanks

Audaxer

Just had a quick look at the figures. If you only need £25k retirement income, after deducting the £15k rental income, you only need £10k per year from age 58 to 67, when your income will be more than covered by DB pension, SP and rental income. Adding up your DC pension, SIPP and ISA amounts, it looks like you will have easily more than enough to retire at 58, even if your investments don't grow much over the next decade.

[Deleted User]

Thanks Audaxer.....very reassuring....I could not see wood for trees. 

Please may I be cheeky and ask if you have any thoughts on the balance/where my Sipp and ss isa are invested....just looking to achieve some growth.....once we get out of next 24months madness.

Albermarle

My attitude to risk is, I think,  medium ie  3 out of 5 as I would like to achieve avg 6%+growth and recognise some risk is needed.

6% before inflation is not an unreasonable long term target, but 6% real growth is .

Have you come across the idea of a 'Safe Withdrawal rate' ? As a rule of thumb, you can add up all your investments and cash, and say that you could safely withdraw 3.5% to 4 % from them each year ( increasing with inflation ) and there would be a 95% chance the money would not run out even if you lived to 95. In fact the likelihood is that you will die with a large part of the pot still remaining. 

So today you could safely take an income from your savings and investments of around £25K + rental income of £15K. Then plus £25K pa when DB pensions kick in and then £10K pa with SP = £75K pa 

In other words you could easily retire today, even if that £25K estimated expenditure is a bit of a low estimate and it was actually £35K or even quite a bit more. 

By the time you reach 66, you will probably have a lot more income that you know what to do with. In this case you could increase income from investments well above £25K from 55 to 65 ,as post age 65/66, you can live .

or should I purchase specific independent financial advice? 

That is a personal choice but you seem to be doing OK so far. You have so much more money than you really need, especially if you work another 3 years as well, that even if you do not manage it 100% perfectly then would not be a big problem. 

To IFA or not IFA has been debated to death on this forum, so probably best to see this is as a separate subject to your main questions.

Steve_666_

Am I correct in this
"DC Pension c£225k invested in LifeStyle strategy option
...
Current month input (salary sacrifice me & employer) £2,450 plus annual £9k lump sum

*SIPP
...

Current annual input is £12.5k (me plus tax relief)"

2450x12 + 9 + 12.5 is approximately 50K, is this ok with the 40K annual pension allownace?

Dunky62

Thats what I was thinking. Surely you are exceeding the 40k annual allowance unless you are using some carry forward.

Albermarle

2450x12 + 9 + 12.5 is approximately 50K, is this ok with the 40K annual pension allownace

Well spotted and in fact the £9K will be plus tax relief of £2250 and the £12.5K might be as well ( it is not clear) 

[Deleted User]

Thank you to everyone who has commented & especially to those that had flagged the concern that my intended 22/23 pension contributions would exceed the AA of £40k.

Rather stupidly, I had only focussed on the post salary sacrifice earnings & contributions.  

So, having checked all my earnings & pension contributions since the AA was introduced, I am very fortunate in that for 21/22 & all prior, I have not exceeded the AA/earnings.  Also, I do have 21/22 20/21 19/20 excess to carry forward  & use for 2022/23.

I will need to amend what pension contributions will be possible until  my planned retirement in 2-3 years time and amend my LTA tracker and overall portfolio.  

I continue to assess my investments and I will be coming out of my employers DC Pension Life Style default options as the derisking timeline does not suit my requirements.   

Again, thank you everyone.

Johnnyboy11

Your rental property is yielding 3.3% after expenses, and personally I wouldn’t consider this worth the risk and effort, especially with upcoming regulatory changes and U.K. inflation. I suppose there is Capital Gain, but this will be taxed once you sell (Unless you make it your Primary Residence and meet the various qualifying criteria). Personally I would sell and invest in the Stock Market for the long-term return.

NedS

mulberryellie said:

Rental Property £450k no mortgage £15k post tax/costs income

I achieve the same income from a £250k diversified income portfolio.

Johnnyboy11 said:

Your rental property is yielding 3.3% after expenses, and personally I wouldn’t consider this worth the risk and effort, especially with upcoming regulatory changes and U.K. inflation. I suppose there is Capital Gain, but this will be taxed once you sell (Unless you make it your Primary Residence and meet the various qualifying criteria). Personally I would sell and invest in the Stock Market for the long-term return.

I agree, property has done well and I would be looking to sell and realise any gains. I think there are substantial risks moving forward and the potential returns do not warrant the risk, especially given your 'medium' tolerance to risk.

Kim1965

NedS
Think that 6%return? Is that purely off dividends without selling assets?