Portfolio Indecision, Much needed Help please

mears1

As part of IHT planning , I opened a small SIPP but now the IHT rule changes has scuppered that as it could incur a 60% tax to the beneficiaries. This SIPP is surplus to requirements. I suppose, at some point I should be gradually drawing down to give away (maybe in 6yrs).

 

Meanwhile, the SIPP has 30% in cash (2% interest) to invest. The rest are in a bunch of Global index trackers      

 

 Have considered something non equities but the recent posts on gilts are so bewildering.

 Would  LifeStrategy LS80 be a good idea, as it already a bond component?

 Or a bond from the  LS80  eg Vanguard Global Bond Index Fund GBP Hedged Acc (VANGRSA)

or just go for VWRP if there is a drop in price.

 

Can anyone recommend which Vanguard products that might be suitable for a buy and hold investor? Thanks in advance

handful

LS80 is 80% equity and 20% bonds. You really need to be clearer about what your intentions/attitude to risk are and don't take anyones advice without doing a lot of your own research first. In theory it "could" be a good time to invest cash into equities at the moment but who knows what will happen next. The other day the bottom was falling out of the bond market after the markets got spooked about the American economy, a bit like when Truss did her thing a few years ago.

El_Torro

In your position if I was going to start drawing down in 6 years I would probably go with VLS60. Or perhaps something with even fewer equities. 

It also depends on what the people you gift the money to are going to do with it. If they're going to invest it straight away then it doesn't really matter if equities are having a hard time in 6 years time, since they'll be buying equities with the money anyway. 

kempiejon

@mears1 Currently your small SIPP is 30% cash 70% global tracker. Where did the cash come from? As another poster said LS80 is 80% equity 20% bonds so you are currently less exposed to stock markets than that. Has your attitude to risk changed much such that you want more equity exposure?
If you're sure your other assest outwith the SIPP will take your estate into inheritance tax liability and you want to avoid that I agree with your thoughts to draw it down tax efficiently and distribute to your potential heirs while you're still alive, so by that rational are you adding to the SIPP?

If you are interested in gilts persevere, they are not too hard once you have understood the terms. UK gilts with 4% or so, looks a better return than having cash in the account.

DRS1

First your SIPP is fine for your IHT planning until 2027 (maybe later if they can't sort out how to implement the change).

Second if you have given up on the SIPP why wait six years to implement Plan B?  The sooner you give away what you don't need the better.

mears1

@kempiejon The cash was from my income.  I can pay in £2,800. This would help a little to keep within the basic rate tax allowance but not sure whether I should be contributing as there are costs to hold on Vanguard of 0.15% and 0.22%.

mears1

@kempiejon
 
About the gilts offering 4%, is this what you are referring to 
Global Short-Term Bond Index Fund (VGSTBGA)?  

 

mears1

Thank you for your comments. What are the name/code of suitable bonds?

kempiejon

mears1 said:

@kempiejon
 
About the gilts offering 4%, is this what you are referring to 
Global Short-Term Bond Index Fund (VGSTBGA)?  

 

No, I wasn't suggesting any particular bond nor fund, just that there are a few options of gilts offering a 4% ish yield which would be an improvement on the 2% you said you're getting at the moment.