Financial advisor or DIY?

dunstonh

Remember that pension beats ISA on a like for like basis.   So, rushing to use the weaker tax wrapper but not the better one seems counterproductive.

MeteredOut

If I were the OP, I'd look to open both an ISA and a SIPP via one of the usual routes (HL, Vanguard, II) in this tax year and top them up (probably the £20K and £36K the advisor recommended). That will lock in the tax benefits of this tax year and give some breathing space going forward. Should just about still be possible to get this done for this year if its kicked off this evening.

Aminatidi

JohnWinder said:

You could be investing for 40 years. With a miracle your investments would return 5.65%/year every year and never experience low performance, or after paying an advisor return 5%/year. By age 75 you would have foregone 22% of the gains through the advisor fee.

'My concern is that ongoing charges will eat into capital value during periods of low performance.'

You think fees during periods of low performance are a particular problem. No, they're always a problem. Get familiar with an online compound interest calculator.

Use an advisor by all means, but read Tim Hale's book Smarter Investing which will help you decide if you need an advisor as well as give you a more satisfying relationship with an advisor if you keep one.

Just my 2p but I think this is a very good post.

Don't rush into a decision like engaging an IFA because of time pressure over it being the end of the tax year.

If you want to do something this tax year opening an ISA and putting the cash in it to make use of your £20K allowance seems sensible as you can decide what to invest in whenever you like.

At first this stuff seems a total blur.

Then you read a bit and realise it's not that difficult if you can convince yourself to almost stop reading at the point where you know enough to invest in a low cost diversified fund that meets your appetite for risk and you go and do it and keep doing it.

DiamondLil

Re. putting £20k into a cash ISA now (or before 5th April). There's no reason why you can't put that £20k cash into a stocks and shares ISA now and then investing it into stocks and shares at your leisure.

egyptiancotton

Hi, all. Thank you very much for your replies. I'm sorry that only now I'm replying - it's been a very busy day.

I won't rush to engage with an IFA because of time pressure with the tax year about to end.

I'm maximising my employer's pension contribution. I pay 6% and my employer pays 11%. My employer won't pay more than 11%.

I realised that I have an open ISA with HSBC that I haven't paid into for at least 2 years. It's not a fixed interest rate, so no penalty for withdrawal. I'll put £20k into it tonight and then another £20k on Saturday 6th April.

I'm a bit torn whether to pay a lump sum pension contribution this tax year. It sounds tempting because I can get 20% tax relief on a lump sum payment, up to 100% of my annual earnings. As my pension contributions are taken from my gross pay (before tax and NI), this lowers my taxable income. When my salary goes up at the end of this month, I'll still pay basic rate tax because my pension contributions will lower my taxable income below the higher tax threshold, so my lump sum pension contributions after the pay rise in the next tax year will have basic tax relief added. This is my gross salary and pension contributions after I get a pay rise:

• Gross salary: £50,936
• Pension contributions at 6%: £3,056.16
• Taxable income: £47,879.84

If I make a lump sum pension contribution, would it be better to pay into a SIPP or my current workplace pension?

dunstonh

If I make a lump sum pension contribution, would it be better to pay into a SIPP or my current workplace pension?

It would depend on your AE scheme vs your SIPP.      Most AE schemes lack the ability to act fast.  So, you may not have the choice to include that.

egyptiancotton

dunstonh said:

If I make a lump sum pension contribution, would it be better to pay into a SIPP or my current workplace pension?

It would depend on your AE scheme vs your SIPP.      Most AE schemes lack the ability to act fast.  So, you may not have the choice to include that.

Understood. Thank you.

If I do want to pay a lump sum this tax year or monthly in the next tax year, as far as my relevant earnings go, would this figure be my taxable pay? My taxable pay is my salary minus my employee pension contribution, and before tax and national insurance. If the figure is my taxable pay, I can then work out what my net contribution should be and add the tax relief on top to reach my taxable pay.

kimwp

Consider a LISA. 

Linton

RolandFlagg said:

FA's have one objective:
To make themselves richer.

They give terrible outdated advice.

See the latest Ben Felix YouTube video on the latest data.

I had never heard of him but it would seem that Ben Felix is a guru based in Canada/US.  What knowledge does he have of the UK regulated IFA system?  Beware of taking non UK Facebook videos too seriously.

Bostonerimus1

Linton said:

RolandFlagg said:

FA's have one objective:
To make themselves richer.

They give terrible outdated advice.

See the latest Ben Felix YouTube video on the latest data.

I had never heard of him but it would seem that Ben Felix is a guru based in Canada/US.  What knowledge does he have of the UK regulated IFA system?  Beware of taking non UK Facebook videos too seriously.

I'd expand the caution to all videos and ads on Facebook.