Retirement Planning / ISA Advice

dunstonh

When I reach 60, is there any harm in transferring my ISA to an all bonds ISA, to consolidate my gains and limit my exposure to the markets...am I talking cobblers...please be honest as I can't afford any mistakes with my life savings.

No, that would not be a good idea unless you have severely limited life expectancy.

Re annuities; with my Civil Service Plan; I don't need an annuity...is that right please or are you talking about using my ISA funds to purchase a separate annuity pension in addition to my Civil Service pension?

You don't have to buy an annuity.    However, the target return funds that you mention are often used (or similar) for those that intend to buy an annuity.  You are not.

AsifM068

Thank you so much. It's all starting to make a little more sense.

Re my all bonds suggestion when 60; why is that not a good option please?

Explain it to me like I'm a cabbage - it's quite OK.

MEM62

AsifM068 said:

...please be honest as I can't afford any mistakes with my life savings.

Then you should consider speaking with an IFA.  

Linton

AsifM068 said:

Thank you so much. It's all starting to make a little more sense.

Re my all bonds suggestion when 60; why is that not a good option please?

Explain it to me like I'm a cabbage - it's quite OK.

Bonds are unlikely to match inflation in the long term so your pension will be decreasing in real value.  Equity investment is expected to beat inflation in the long term but will be more volatile in the short term.  So a suitable combination of the two would be sensible.

dunstonh

Re my all bonds suggestion when 60; why is that not a good option please?

At 60, your life expectancy average is closer to 85 and a quarter will make 92.  So, you are looking at 25-30 years of investing some of the money.     Yet you are looking at options in the short term and not the long term.   

When you consider inflation, £100,000 will have the spending power of around £67,000 in 10 years time and £44,890 in 20 years time.      So, you need to invest to counter inflation and going 100% into bonds (or cash) is unlikely to do that.

Albermarle

AsifM068 said:

Thank you so much. It's all starting to make a little more sense.

Re my all bonds suggestion when 60; why is that not a good option please?

Explain it to me like I'm a cabbage - it's quite OK.

You are talking about swinging from one extreme to another . 100% equity to 100% bonds. Most people have a mixture of both and would only gradually change the percentages.

AsifM068

Righto forum, so I need to look at a mix of bonds and equity. I will go check out Vanguard's Targeted Retirement fund options.

Thank you all for your thoughts and explanations and maybe I will consult with an IFA; any recommendations IFA wise or is that against Forum rules?

Albermarle

AsifM068 said:

Righto forum, so I need to look at a mix of bonds and equity. I will go check out Vanguard's Targeted Retirement fund options.

Thank you all for your thoughts and explanations and maybe I will consult with an IFA; any recommendations IFA wise or is that against Forum rules?

It is against forum rules for any IFA on the forum to be looking for new customers.

Normally it is best to have a local IFA, so anyway unlikely that any contributor would just happen to know one where you live.

AsifM068

Would something like Lifestrategy 50/50 work or maybe hold 2 ETFs, one global equity ETF and one global bond ETF. To give me a 50/50 bonds/ equity split. 

Is this a more viable approach please?

AsifM068

dunstonh said:

Re my all bonds suggestion when 60; why is that not a good option please?

At 60, your life expectancy average is closer to 85 and a quarter will make 92.  So, you are looking at 25-30 years of investing some of the money.     Yet you are looking at options in the short term and not the long term.   

When you consider inflation, £100,000 will have the spending power of around £67,000 in 10 years time and £44,890 in 20 years time.      So, you need to invest to counter inflation and going 100% into bonds (or cash) is unlikely to do that.

Great, got it - thank you