Stakeholder vs SIPP

Albermarle

Aylesbury_Duck said:

Albermarle said:

Aylesbury_Duck said:

El_Torro said:

Do you plan to buy an annuity? If so the lifestyling makes sense, otherwise it doesn't. 

Vanguard probably offers lower total fees than anything Scottish Widows could offer you, so from that perspective it makes sense to ditch Scottish Widows and move to Vanguard. Just depends on how much the accidental death benefit is worth to you.

If your concern is paying the lowest fees then there are cheaper platforms out there than Vanguard.

Thank you.  Is that because lifestyling is designed to provide the most secure pot by a target retirement age with which to buy an annuity, whereas if I were to invest fully in equity funds, for example, I might use flexible drawdown and therefore would ideally have continual growth of the plan as I draw from it?  If I lifestyled and went for drawdown, I suppose the remainder wouldn't be expected to grow much because it would be in safe, lower-risk assets like bonds and cash?

As you can tell, I'm gradually learning more about all of this, so points like yours are helpful to check my understanding!

If you were in 100% equity in drawdown it could be quite a bumpy ride. In the first year of your retirement it might drop 40% , so you would be very exposed to 'sequence of returns' risk ( google it) .
A mix of 50/60% equities and the rest mainly bonds/gilts/cash is a more usual mix.

Thank you.  I see what you mean.  I think I'm fairly well insured there for two reasons.  One, a chunk of my and my wife's ISA investments are in VLS60, and two, we hold about £85k in cash ISAs.  We should, if all goes well, be able to leave pensions alone for a while in a bear market, and fall back on cash initially, but recognise that a sustained bear market would necessitate cutting some costs or dipping into those investments less affected by drops.

However, I'm naturally quote cautious, so I'd be unlikely to go 100% equities, probably favouring something like the VLS20-80 products.

In my opinion, VLS20 is a bit of a waste of time product. Most likely to be better off in cash at current interest rates.

Aylesbury_Duck

Albermarle said:

Aylesbury_Duck said:

Albermarle said:

Aylesbury_Duck said:

El_Torro said:

Do you plan to buy an annuity? If so the lifestyling makes sense, otherwise it doesn't. 

Vanguard probably offers lower total fees than anything Scottish Widows could offer you, so from that perspective it makes sense to ditch Scottish Widows and move to Vanguard. Just depends on how much the accidental death benefit is worth to you.

If your concern is paying the lowest fees then there are cheaper platforms out there than Vanguard.

Thank you.  Is that because lifestyling is designed to provide the most secure pot by a target retirement age with which to buy an annuity, whereas if I were to invest fully in equity funds, for example, I might use flexible drawdown and therefore would ideally have continual growth of the plan as I draw from it?  If I lifestyled and went for drawdown, I suppose the remainder wouldn't be expected to grow much because it would be in safe, lower-risk assets like bonds and cash?

As you can tell, I'm gradually learning more about all of this, so points like yours are helpful to check my understanding!

If you were in 100% equity in drawdown it could be quite a bumpy ride. In the first year of your retirement it might drop 40% , so you would be very exposed to 'sequence of returns' risk ( google it) .
A mix of 50/60% equities and the rest mainly bonds/gilts/cash is a more usual mix.

Thank you.  I see what you mean.  I think I'm fairly well insured there for two reasons.  One, a chunk of my and my wife's ISA investments are in VLS60, and two, we hold about £85k in cash ISAs.  We should, if all goes well, be able to leave pensions alone for a while in a bear market, and fall back on cash initially, but recognise that a sustained bear market would necessitate cutting some costs or dipping into those investments less affected by drops.

However, I'm naturally quote cautious, so I'd be unlikely to go 100% equities, probably favouring something like the VLS20-80 products.

In my opinion, VLS20 is a bit of a waste of time product. Most likely to be better off in cash at current interest rates.

Thanks.  I remember getting a similar opinion on it when I started ISA investing.  My wife and I have used VLS60 and VLS80, and over the last couple of years have used Vanguard's global equities fund, which has performed nicely.  All on iweb, to save the platform fee, of course!

dunstonh

However, I'm naturally quote cautious, so I'd be unlikely to go 100% equities, probably favouring something like the VLS20-80 products.

VLS20 is not worth the effort.   Being too heavy in one asset class can actually increase the risks.  For example, 20% equities means 80% bonds.   Bonds are currently lower than they were 7 years ago and just when everybody thought they had come through their worst in 2023 and 2024 would see them improve, they have taken a turn for the worse again.

If you had invested in bonds in 2021, you would have suffered a loss similar to a typical stockmarket crash.

My wife and I have used VLS60 and VLS80, and over the last couple of years have used Vanguard's global equities fund, which has performed nicely.  All on iweb, to save the platform fee, of course!

However,  equities, in particular US equities, have been very good performers in the last 7 years.   Better than normal (nearly totally on the back of US equities).       So, so not consider that the equities side of the portfolio that you have seen is the norm.