What would you do?

Onamatappear

Hello,
I am on the cusp of turning 52.
Had a few ups and downs financially and lost a lot of money for various reasons. 
Despite these setbacks I have a chance to turn this around.
Working very hard and now making some good money.
I am in the fortunate position of having minimal overheads 
so i survive on my yearly taxable allowance and some small savings.
All profit from my business goes into my private pension. This comes with the obvious benefit of eliminating tax but raises concerns about sensible but profitable investing.
I have around £150k, in three years that should be approx. £380k-400k which would be almost enough for my overseas retirement. I plan a budget of £1600 a month in my retirement.
I currently have my money invested in Vanguard, mostly the S&P 500.
Historically its reliable despite the recent upheaval.
Each year i can increase my investment by approx £70k. Just had a thought, something is telling me there is a 40k maximum for what im doing but i will check.
So if all goes to plan around 56 i will stop slogging my guts out. 
The masterplan is with around 330k in my PP and around 70k in available money I can make this work without reducing the gross, living off the investment profit.
I can take the £12570 each year tax free from my pension will top it up with my savings.
Also at 57 i can take 25% out which will be around 85k.
Can i reinvest that in a ISA which the government will top up?
I know diversification is key when investing but with the S&P 500 being a big mix of companies am i better putting everything in that fund?
I have considered property but I am no expert.
Let me know what you think because at my age I cannot screw this up. 
Thanks for your time

Dazed_and_C0nfused

Onamatappear said:

Hello,
I am on the cusp of turning 52.
Had a few ups and downs financially and lost a lot of money for various reasons. 
Despite these setbacks I have a chance to turn this around.
Working very hard and now making some good money.
I am in the fortunate position of having minimal overheads 
so i survive on my yearly taxable allowance and some small savings.
All profit from my business goes into my private pension. This comes with the obvious benefit of eliminating tax but raises concerns about sensible but profitable investing.
I have around £150k, in three years that should be approx. £380k-400k which would be almost enough for my overseas retirement. I plan a budget of £1600 a month in my retirement.
I currently have my money invested in Vanguard, mostly the S&P 500.
Historically its reliable despite the recent upheaval.
Each year i can increase my investment by approx £70k. Just had a thought, something is telling me there is a 40k maximum for what im doing but i will check.
So if all goes to plan around 56 i will stop slogging my guts out. 
The masterplan is with around 330k in my PP and around 70k in available money I can make this work without reducing the gross, living off the investment profit.
I can take the £12570 each year tax free from my pension will top it up with my savings.
Also at 57 i can take 25% out which will be around 85k.
Can i reinvest that in a ISA which the government will top up?
I know diversification is key when investing but with the S&P 500 being a big mix of companies am i better putting everything in that fund?
I have considered property but I am no expert.
Let me know what you think because at my age I cannot screw this up. 
Thanks for your time

A few things you may find useful to be aware of.

The current annual allowance for pension contributions is £60,000.  So you would need unused relief to be available for carry forward to add £70k each year.  And you can only carry forward from a maximum of 3 years ago.

There is no "top up" of any sort with ISA's.  If you add £100 then you have £100 in the ISA.  Any gain, dividend income or interest is exempt from tax though.

Have you considered professional advice?

wmb194

Re government top-ups and Isas, the OP's thinking of a LISA but once you're past 40 you cannot open one.

Onamatappear

Thanks for your replies.
Yes I am aware of no 'top-up' with company contributions into the PP.
I can get by on my taxable allowance and some savings so all profit, hopefully 70k can be invested into my PP. 
A few years of hard craft and frugality in the hope that the investments will sustain my retirement.
7-10% return on average from money invested will be more than enough.
I was quite comfortable with the bulk of my money tied up in the S&P 500. However, due to the orange man and the chaos I am concerned, although despite recent calamities it has nearly made a full recovery. I just thought the S&P 500 was my safest bet but now I'm not so confident.
I suppose there's no definitive answer but i was curious what others would do in this situation.
I could keep working (miserable) for a few more years up to 60 and I will not have any worries but could be dead by then

QrizB

Onamatappear said:

I can get by on my taxable allowance and some savings so all profit, hopefully 70k can be invested into my PP.

As mentioned above, unless you have carry-forward available the max you can contribute to a pension is £60k per year. Not £70k.

Onamatappear said:
7-10% return on average from money invested will be more than enough.

That seems quite optimistic.

Onamatappear

Really?
I only based that on last 10, 15 and 20 year average yearly increase on the S&P500 which has been a minimum of 10%.
What is a realistic return?

Eyeful

1. Read this:
 https://monevator.com/best-global-tracker-funds/

2. At 56, stop slogging your guts out. Ease off and continue working  to 60 (may be part time) preferably in a job you like.

3.Whats the work that makes you so unhappy?
  

dunstonh

All profit from my business goes into my private pension. This comes with the obvious benefit of eliminating tax but raises concerns about sensible but profitable investing.

Limited company or sole trader?

I currently have my money invested in Vanguard, mostly the S&P 500.
Historically its reliable despite the recent upheaval.

You mean recently. Not historically.  It was an awful place to be in the first cycle of this millennium.   Its been the best place in the second cycle (not unexpectedly as it does historically alternate).   Some think that we may be moving back in the cycle again but only time will tell.

if sterling rises against the dollar by 50% and the S&P500 goes up 50%.  You get zero return.  
One of the reasons it was good in the last cycle is that it went up and sterling went down.  For UK investors it was a double win.

I know diversification is key when investing but with the S&P 500 being a big mix of companies am i better putting everything in that fund?

We know from history that for UK investors domiciled in Sterling, that US equities cycle between good and bad.  Going 100% into any one county is not a great idea.

I was quite comfortable with the bulk of my money tied up in the S&P 500. However, due to the orange man and the chaos I am concerned, although despite recent calamities it has nearly made a full recovery. I just thought the S&P 500 was my safest bet but now I'm not so confident.

it hasn't recovered from peak for UK investors.   Most of the gains on the S&P500 in the recovery have not yet been seen in the UK due to movements in Sterling.

Really?
I only based that on last 10, 15 and 20 year average yearly increase on the S&P500 which has been a minimum of 10%.
What is a realistic return?

Which S&P500 return are you referring to?  The S&P500 with or without dividends?   The S&P500 adjusted for GBP or in USD?
Don't look at recent returns and expect that to be normal. It is not.

kimwp

Don't forget you need to consider real return, which takes into account inflation.

HedgehogRulez

A real return of 1 or 2% tops is more prudent 

Eyeful

Onamatappear said:

Really?
I only based that on last 10, 15 and 20 year average yearly increase on the S&P500 which has been a minimum of 10%.
What is a realistic return?

In simple terms what they are suggesting to you on the forums you have posted this same question is:

1. To expect a lower return going forward of say 5%.
2. Do not have everything in the S&P 500.
3. Diversify your assets using a Global Multi Asset Fund with a share/bond split you are happy with. 
https://monevator.com/passive-fund-of-funds-the-rivals/
https://www.kroijer.com/
4. I suggest that you investigate the "sequence of risk at retirement":
https://www.youtube.com/watch?v=oyzR7tMmj9o