Opening first SIPP

topyam

Very new and to all this and have been trying to learn...

I want to take advantage of the govt tax relief on pensions...

Thinking of opening a SIPP and depositing £2880 as a lump sum.

In terms of an investment strategy, I was thinking of putting 100% into Fidelity Index World Acc. Using Fidelity as the platform...

Somebody suggested a 80/20 split might be better.. I have hear about gilts or bonds, but still not sure what they are. 

I don't want anything very risky. Something that will grow over the years if i add the £2880 each year..



Thanks in advance! 

mebu60

If you don't want anything very risky you might want to look at short term money market funds. e.g. Royal London.

I set my SIPP up a few years ago putting in £2880 on 6 April and getting the £720 mid June. I went with HL and split across HSBC Global Strategy Balanced and Dynamic. But this SIPP is only a small % of my overall pot. 

topyam

I'm 44 and looking to take advantage of pension tax relief. 

Have £ in other relatively okayish interest easy access accounts and have maxed cash isa. All safe investments but not earning loads.

So wouldn't need the £2880 any time soon. Maybe out in the same the next tax year..
Just grow the SIPP..

mebu60

What are your current pension arrangements? 

Safe investments will not earn loads (and be subject to the effects of inflation). 

InvesterJones

topyam said:

Very new and to all this and have been trying to learn...

I want to take advantage of the govt tax relief on pensions...

Thinking of opening a SIPP and depositing £2880 as a lump sum.

In terms of an investment strategy, I was thinking of putting 100% into Fidelity Index World Acc. Using Fidelity as the platform...

Somebody suggested a 80/20 split might be better.. I have hear about gilts or bonds, but still not sure what they are. 

I don't want anything very risky. Something that will grow over the years if i add the £2880 each year..



Thanks in advance! 

Timeframe is important - how long roughly until you'll be accessing the pension? You've identified a low-medium appetite for risk, it's good to be really honest about that as making changes after the fact is usually costly. The consequence of avoiding risk however is a lower return over the long run - so you may be able to take on a bit more risk if you have the discipline to wait things out over a multi-decade timespan. 

Equities (shares in companies, either individually or combined into funds) are on the risky/volatile side of things, but they have historically performed well. Bonds, including UK treasury bonds (called 'gilts') have tended to be less volatile, but performed less well - they are loans to either governments or companies which they pay you interest for. Cash/cashlike assets take the lack of risk/return even further. Within all of those categories are a range of choices, some more or less risky.

Theory goes that if you add some cash or bonds into your equity portfolio then you dampen down some of the volatility, at the cost of a little return potential - this is because different asset classes do not always perform in lockstep. But past performance isn't a great guide for future.

Keeping it simple and being disciplined however is a really wise approach - you can buy a single multi-asset fund like Vanguard Lifestrategy 80% which will do the 80/20 split for you, and keep it rebalanced so you don't have to.

topyam

Not be accessing for 10 years at min...
£2880 a year isn't a dent in the finances tbh.
Trying to use the pension as I haven't paid into a pension in a long while, and it seems a better idea rather than it sitting in an account earning okay interest.
Would plan on reinvesting anything gained, and putting in 2880 a year.

Labtebricolist

Fidelity is a decent platform, especially if you hold ETFs in your SIPP and don’t trade frequently, as the fees are then very low.

The Index World fund is not an ETF so the fees will be a bit higher.  Also, it is 100 percent equity, so may not be consistent with your risk appetite, which sounds more like it is moderate to low.

The Vanguard lifestrategy funds are good for keeping it simple, but you might want to find a platform that charges a lower fee for funds as again it’s not an ETF.

Alternatively, you could put 60-80 per cent in a global tracker ETF (I use VWRP) and the balance in a global bond ETF to reduce the volatility.  Vanguard have a few of these - for example VAGS (global bonds) or VGVA (UK gilts).  The only downside is that you may wish to rebalance to maintain your preferred percentage split, though probably just once a year to keep trade fees low.

topyam

Have about £300k from inheritance

Want to get rid of mortgage - £150k - on high interest rate
Leaves me £150k which is sitting in rel high interest accounts atm

Maxed out ISA this year

Haven't worked in 15 years. Have a pension from last workplace but just going to leave it there for the moment i think.

Adding 2880 is really to get some good returns and obv avoid tax