Vanguard Is It A Good Time To Top Up

awrightson

My understanding was (could be wrong) that I could not invest more than £2880 per year as a non earner?
I have the 2035 retirement fund in the sipp.

dunstonh

Timeframe is likely about 10 years but don't really enjoy the best of health so it may be slightly less.

VLS80 is quite high risk in that respect then.  Especially with just £5k in cash.

My understanding was (could be wrong) that I could not invest more than £2880 per year as a non earner?

You are correct.  £3600 is the maximum for a non-earner.

Albermarle

awrightson said:

My understanding was (could be wrong) that I could not invest more than £2880 per year as a non earner?
I have the 2035 retirement fund in the sipp.

You said this Part of "the plan" was to invest into vls80 to try and make enough to top up my sipp every year which as a non earner is £2880,

It reads like you are investing in VLS80 outside the SIPP and then later adding the proceeds to the SIPP. Just a misunderstanding.

awrightson

Dunstonh, Might it be an idea to consider VLS60 or 40 perhaps?

Albermarle, you have confused me as that is exactly what I am doing, the VLS80 is outside the sipp it is an isa and my intentions/hopes are that it makes enough profit over the year to top up the sipp by the £2880 each year. 

I hope/thought that I was working within allowances e.t.c by doing that, have I done something wrong?

Albermarle

awrightson said:

Dunstonh, Might it be an idea to consider VLS60 or 40 perhaps?

Albermarle, you have confused me as that is exactly what I am doing, the VLS80 is outside the sipp it is an isa and my intentions/hopes are that it makes enough profit over the year to top up the sipp by the £2880 each year. 

I hope/thought that I was working within allowances e.t.c by doing that, have I done something wrong?

You are not doing anything wrong.
However it would seem to make sense to add money directly to the SIPP ( £2880) first , to make sure you get the full tax advantage, and then any excess to the VLS80 outside the SIPP.

Now if the VLS 80 went down, rather than up, then the SIPP could end up being not funded.

awrightson

Albermarle, Phew I was panicking there! The sipp has been topped up this year so can't add anymore to it.

I suppose there's always a risk in the vls80 going down in any year but my hopes are it doesn't and does it actually make a little profit to invest next year and the following years into the sipp. 

I suppose a more cautious/sensible person may have looked at a fixed rate isa but I saw at as a risk worth taking, granted I may not be in the right fund with Vanguard and or perhaps I should have split it, so any suggestions are most welcome.

I suppose it would be fair to say I am probably trying to make up for lost time and actually have a little extra to retire on (assuming health holds out)  that is why I have decided on this route, is it wise, I don't know but I am giving it a go!!

dunstonh

I suppose a more cautious/sensible person may have looked at a fixed rate isa but I saw at as a risk worth taking, granted I may not be in the right fund with Vanguard and or perhaps I should have split it, so any suggestions are most welcome.

Its a jump from cash to VLS80.   If you take a typical 1-10 scale with cash at 1 and 10 being a high risk equity portfolio (ie. not including silly risk options), then VLS80 would come in at 8/9.

In the long term, you would hope VLS80 beats VLS60, VLS40 etc.  However, you could may need multiple economic cycles for that to happen.   You are not investing that long.    In the 10 year period from 2000 to 2009 you would have seen the higher risk ones have lower returns (or even losses) compared to the lower risk ones.    In the 10 year period after that, it was the other way around.   

you need to consider timescale as a risk element.  i.e. less than 15 years, the higher equity funds become a progressively higher risk than their plain risk score value as the timescale shortens.     Conversely, if you invest for more than 25 years, you can argue that VLS80 is lower risk than VLS60.

Beddie

Depending on how much you have to invest, you could drop it in over a few months, rather than in one go, just to alleviate your concerns about it dropping the day after you put it in.

awrightson

Appreciate the replies. 

Any suggestions on another less risky fund other than the lifestrategy ones within vanguard I could perhaps consider to split my investment?

Splitting my top up over a few months sounds like a good idea, might well just do that.

dunstonh

Splitting my top up over a few months sounds like a good idea, might well just do that.

I disagree.   It just delays the inevitable.  i.e. in a few months you will be 100% invested. If you are nervous (potentially) now then phasing it over a few months will just mean you are nervous in a few months time.