SIPP - what to invest in

c_22

Over the years I have accumulated a number of pensions from various workplaces. I have recently combined them in to a single SIPP. Now the money is sitting there waiting to work for me I a am looking to invest in one or more funds / ETF's etc. that will grow the pot while I am still working  and my current workplace pension is building up with employer & employee contributions.

I would like it to grow at a modest ~5% or more while staying relatively safe, although I am not adverse to a bit of risk. Happy to review it periodically but essentially would like a set it and forget it while it grows in the background until I retire in about 10 to 15 years.

I do like the idea of investing in something that would provide a monthly dividend yield as I would like to use this when I retire as income rather than drawing down from the capital if possible.

Any recommendations for me to consider would be appreciated.

Many thanks

eskbanker

c_22 said:

I would like it to grow at a modest ~5% or more while staying relatively safe, although I am not adverse to a bit of risk. Happy to review it periodically but essentially would like a set it and forget it while it grows in the background until I retire in about 10 to 15 years.

I do like the idea of investing in something that would provide a monthly dividend yield as I would like to use this when I retire as income rather than drawing down from the capital if possible.

In your shoes, the normal approach would be to invest for growth for the period up to retirement and only then reallocate towards income-yielding investments (if doing so at all, there's plenty of evidence that drawing down from capital isn't to be feared if the capital is growing enough).

Bostonerimus1

Look at one of the many excellent multi-asset funds from HSBC, Vanguard (the VLSxx family) etc; they will give you a diverse portfolio wrapped in a single fund.

c_22

Thanks for the reply, I guess that is what I was trying to say although probably not put very well. based on some very basic calculations if I can grow this pot at a fairly decent rate then I wouldn't need to drawdown what it is making. 

dunstonh

I would like it to grow at a modest ~5% or more while staying relatively safe, although I am not adverse to a bit of risk.

And which single ETF do you think would match that objective?
Why you have eliminated OEICs/UTs?

I do like the idea of investing in something that would provide a monthly dividend yield as I would like to use this when I retire as income rather than drawing down from the capital if possible.

Pensions don't support natural yield withdrawals.   Every withdrawal is from Capital effectively.  However, paying the yield to cash and setting up a regular draw from cash would achieve a clean way of doing it.   

How old are you?   Setting up your drawdown strategy would suggest you are close to retirement.  But you dont say.

eskbanker

dunstonh said:

I would like it to grow at a modest ~5% or more while staying relatively safe, although I am not adverse to a bit of risk.

And which single ETF do you think would match that objective?
Why you have eliminated OEICs/UTs?

To be fair OP doesn't eliminate them (or commit to a single investment):

c_22 said:

I a am looking to invest in one or more funds / ETF's etc. that will grow the pot while I am still working

dunstonh said:
How old are you?   Setting up your drawdown strategy would suggest you are close to retirement.  But you dont say.

Timescale was mentioned:

c_22 said:

Happy to review it periodically but essentially would like a set it and forget it while it grows in the background until I retire in about 10 to 15 years.

c_22

dunstonh said:

I would like it to grow at a modest ~5% or more while staying relatively safe, although I am not adverse to a bit of risk.

And which single ETF do you think would match that objective?
Why you have eliminated OEICs/UTs?

I do like the idea of investing in something that would provide a monthly dividend yield as I would like to use this when I retire as income rather than drawing down from the capital if possible.

Pensions don't support natural yield withdrawals.   Every withdrawal is from Capital effectively.  However, paying the yield to cash and setting up a regular draw from cash would achieve a clean way of doing it.   

How old are you?   Setting up your drawdown strategy would suggest you are close to retirement.  But you dont say.

Thanks dunstonh,

I haven't eliminated any investments hence the etc. on the end of my sentence. I'm just looking for an investment or range of investments which I can hold in my SIPP which will give me good safe(ish) growth.

I am 53 so would be looking to retire in 10 to 15 if not sooner if I can.

tacpot12

I would recommend selecting one or two large global multi-asset funds with a focus on growth rather than income, e.g. HSBC Global Strategy Adventurous Portfolio/Vanguard LifeStrategy 80. While these might be sold as a higher risk fund, I don't think that it is much higher risk than some of the funds that are sold as being much less risky. 

Once you reach retirement (or perhaps a year before you retire), you can switch to income-producing funds as I did. I retired at 53, and switched my pension funds from the funds that had been used to accumulate my saving to funds (mainly Investment Trusts) that pay a regular dividend a year before I retired so that I could build up a pot of cash in the SIPP to smooth out the income and give a bit of a safety net (at the expense of some investment performance). I've been very pleased with this approach over the last five years - I would have struggled to sell at investments at a loss. As it is, I just have to live on the natural dividends and wait for the market to improve if I want to sell some investments. 

Albermarle

 I'm just looking for an investment or range of investments which I can hold in my SIPP which will give me good safe(ish) growth.

The Holy Grail of most nearing retirement !

When you say 5% pa growth , do you mean before inflation or after inflation? To get 5% on top of inflation you will need to go to the riskier end of the spectrum, and keep your fingers firmly crossed.

Currently you can invest in pretty safe Money Market funds that have a return linked to the BoE base rate, so just over 5% . However that is less than inflation currently.

In any case it is better to think in terms of what growth you would like to achieve above inflation, as that is real growth.

Also do you have any cash savings outside the pension, as this can influence the level of risk taken inside the pension?

Bostonerimus1

c_22 said:

dunstonh said:

I would like it to grow at a modest ~5% or more while staying relatively safe, although I am not adverse to a bit of risk.

And which single ETF do you think would match that objective?
Why you have eliminated OEICs/UTs?

I do like the idea of investing in something that would provide a monthly dividend yield as I would like to use this when I retire as income rather than drawing down from the capital if possible.

Pensions don't support natural yield withdrawals.   Every withdrawal is from Capital effectively.  However, paying the yield to cash and setting up a regular draw from cash would achieve a clean way of doing it.   

How old are you?   Setting up your drawdown strategy would suggest you are close to retirement.  But you dont say.

Thanks dunstonh,

I haven't eliminated any investments hence the etc. on the end of my sentence. I'm just looking for an investment or range of investments which I can hold in my SIPP which will give me good safe(ish) growth.

I am 53 so would be looking to retire in 10 to 15 if not sooner if I can.

It's important for you to eliminate a lot of investments otherwise you'll be paralyzed by choice. Companies like HSBC and Vanguard have done the work of portfolio construction for you with their multi-asset funds and you can choose your risk level as they have various ratios of equities and bonds. I suggest you keep 6 month's to a year's cash in the bank and then invest in something like Vanguard's Life Strategy funds. A mid risk one is VLS60 which has 60% equities and has returned 6% per year for the last 10 years.

Remember that investing in the markets is inherently risky and you can lose money as well as make it. The only safe things are cash and annuities, although inflation can be an issue. Also you might be retiring in 10 years, but you could well be managing your money for 30 years more so you need to plan for that.

aroominyork

There is a lot of discussion of ‘growth’. The word has two meanings and you need to be careful not to conflate (wonderful word!) them. One context is growth vs. income: with growth you are focusing on companies providing the best return on your investments, including reinvested dividends; the alternative is income, where your focus is on consistently high dividends, even if these companies’ overall returns lag the growth companies. The other context is growth vs. value: you are focusing on companies, typically with high P/Es, that are projected to grow at a fast pace; the alternative is value, where you are buying under-priced companies.