Investment Advice??

Macka09

Albermarle said:

I’ve messaged both Nest and Standard life to ask to transfer my small amount but hopefully this can be done fairly quickly. As I’ve got no credit in the AJ Bell SIPP as yet I haven’t had to choose a fund. 

You might have caused some confusion here. Normally there is no need to contact the schemes you wish to transfer out of. It should all be done via AJ Bell. It is not a big issue but best to do it in this way.

I have had that confirmed from AJ Bell today. I can do it all via there app apparently. I will do this later today. 

Albermarle

Macka09 said:

Albermarle said:

I’ve messaged both Nest and Standard life to ask to transfer my small amount but hopefully this can be done fairly quickly. As I’ve got no credit in the AJ Bell SIPP as yet I haven’t had to choose a fund. 

You might have caused some confusion here. Normally there is no need to contact the schemes you wish to transfer out of. It should all be done via AJ Bell. It is not a big issue but best to do it in this way.

I have had that confirmed from AJ Bell today. I can do it all via there app apparently. I will do this later today. 

One small bit of advice. When dealing with such issues, especially as it is all new to you, it is better to use a laptop/website if possible. This is only because it seems easier to absorb detailed info this way, rather than via the small screen.

Bostonerimus1

Macka09 said:

The reason I’ve been so dubious about getting into all of this, other than the fact it’s complicated, is because there seems to be a lot of people willing to charge good money for poor advice. 

A couple of family members have recently put there faith in a friend who works in finance and they’ve both lost £25k each in the first 3 months. 

I’m unsure what they paid in and they certainly wouldn’t opt for high risk investment so god knows what it was put into. 

You don't need to spend a lot of money or make things complicated or worry too much about funds, just eliminate debt, save some cash and inside your pension and ISA invest in one of the many inexpensive multi-asset funds that will give you a broad mix of investments; an example would be Vanguard LifeStrategy 60 (VLS60) which is 60% stocks and 40% bonds. Do NOT worry about creating a portfolio or all the thousands of other individual funds. You should make automatic pension contributions at a level at least enough to get the maximum match from your employer. Try to contribute 10% of your gross pay, more is better and also try to contribute to your ISA every time you get paid.

So here is my advice.

Do a detailed budget and look for places to save, maybe cancel Netflix or Sky and turn the thermostat down a few degs.
Pay off all high interest debt like credit cards.
Save at least 6 months cash into your bank account for emergencies.
Contribute as much as you can to a pension. Start with your workplace pension and invest in a single multi-asset fund, an example is VLS60.
Contribute to an ISA, again keep things simple as you did with the pension. Set the ISA up with one of the large respected platforms.

Macka09

Thanks for your advice. Just to clarify, I don’t have a work place pension as I’m self employed. 

My 2 little pensions are being transferred to AJ Bell, which will then have to be put into a fund. I will then contribute monthly to this. 

In regards to an ISA, are they that much better than just putting it into a savers account with my bank? Or is the interest rate that much better?

Apologise for the naivety of my questions. 

Bostonerimus1

Macka09 said:

Thanks for your advice. Just to clarify, I don’t have a work place pension as I’m self employed. 

My 2 little pensions are being transferred to AJ Bell, which will then have to be put into a fund. I will then contribute monthly to this. 

In regards to an ISA, are they that much better than just putting it into a savers account with my bank? Or is the interest rate that much better?

Apologise for the naivety of my questions. 

If you are self-employed then you can use a SIPP, which it looks like you might be opening already. The ISA is another tax wrapper , you put in money after tax, but it grows tax free and there is no tax on withdrawals. You can have a cash ISA which is essentially a tax free saving account with an interest rate or a stocks and shares ISA which is a tax free wrapper for investment funds, just like you might have inside your SIPP.

Macka09

Yes I am in the process of setting up my SIPP. Maybe the ISA is something I need to look into also

Roger175

Macka

Just to chip in again, ISAs are very useful and we (wife and I) have both cash ISAs and stocks and shares ISAs, but they are not as good as the SIPP insofar as you don't get that initial tax relief to give you that initial 25% uplift. That having been said, you might (probably will) pay some tax on the way out of the SIPP - if you take the 25% tax free and pay basic rate tax on the remainder, SIPPs still work out 6.25% better than ISAs.

The reason you might consider a stocks & Shares ISA rather than a SIPP (even if you're going to hold exactly the same investments within it), is that you can access the money at any stage, whereas the SIPP cannot be accessed until you are 57.

If you want a S&S Isa, you can open one through AJ Bell which will take seconds once your SIPP is open and the two accounts will appear on the same summary page when you log in.

Macka09

Thanks again Roger for the input. 

Out of curiosity, what is the timeframe of the 6% based on please? 

I did notice on there app that I could also use them for an ISA which is very handy. I’m right in thinking the ISA can only have £20k paid in annually aren’t I?

Where do people keep there 6 month salary substitute?

If anyone knows an adviser in the Midlands area they’d recommend that would be great, just so I haven’t gotta pester you guys here. 

cloud_dog

For a BRT payer not benefitting from salary sacrifice a pension is at least 6.25% more efficient than a ISA due to the tax relief on the way in and only 75% of the amount being liable for tax on the way out (25% tax free lump sum).

ISAs have annual allowances, some with their own allowance, e.g. Lifetime ISA £4K, and the overall annual allowance for new contributions is £20k.

Albermarle

I did notice on there app that I could also use them for an ISA which is very handy. I’m right in thinking the ISA can only have £20k paid in annually aren’t I?

Aj Bell only offer a Stocks and Shares ISA.

I think what you are looking for is a CASH ISA where you can keep your savings ??