SIPP and ISA savings and tax efficiency

kempiejon

cockerWalker said:.

Thanks, I will most likely get some financial advice rather nearer the time I'd be accessing it. At the moment I don't have near that amount, but at current saving plus a high end of realistic returns it's possible I could get there. In the short term it's a given that all my savings will go into pension, but in the medium term it may not be such a given.

Given that you could be investing for 1, 2, 3 or even more decades knowing your attitude to risk and asset allocation for your ever growing pot of funds might be beneficial. Do you know where you're invested just now and how that has performed and costs? If you're considering advice taking it sooner rather than later has merit in my view. However I'm a confirmed DIYer.

cockerWalker

kempiejon said:

cockerWalker said:.

Thanks, I will most likely get some financial advice rather nearer the time I'd be accessing it. At the moment I don't have near that amount, but at current saving plus a high end of realistic returns it's possible I could get there. In the short term it's a given that all my savings will go into pension, but in the medium term it may not be such a given.

Given that you could be investing for 1, 2, 3 or even more decades knowing your attitude to risk and asset allocation for your ever growing pot of funds might be beneficial. Do you know where you're invested just now and how that has performed and costs? If you're considering advice taking it sooner rather than later has merit in my view. However I'm a confirmed DIYer.

I'm pretty risk tolerant and stress test scenarios including 50% fall and 2 year recovery, and 25% fall with decade of relative stagnation. At thus stage I'm all in on equities, and will likely stay that way until 2-5 years before retirement, when I'll gradually focus more on income production and a cash buffer rather than growth. At the moment I'm reducing my US exposure as I don't see the current CAPE as sustainable.
Fees are pretty good with II SIPP. Charges on my Aviva workplace pension is a rip off, but not much I can do about that other than periodically transfer a portion out.
I only use passive ETFs or investment trusts as sipp investments. Higher risk but pretty diversified by geography, style and theme.

kempiejon

cockerWalker said:
I'm pretty risk tolerant and stress test scenarios including 50% fall and 2 year recovery, and 25% fall with decade of relative stagnation. At thus stage I'm all in on equities, and will likely stay that way until 2-5 years before retirement, when I'll gradually focus more on income production and a cash buffer rather than growth. At the moment I'm reducing my US exposure as I don't see the current CAPE as sustainable.
Fees are pretty good with II SIPP. Charges on my Aviva workplace pension is a rip off, but not much I can do about that other than periodically transfer a portion out.I only use passive ETFs or investment trusts as sipp investments. Higher risk but pretty diversified by geography, style and theme.

Thanks for coming back, so what about this advice? Perhaps not, it looks like you're OK on your own, same vein as myself though some of my investments are for income and some for growth already. My catastrophe is based and a halving of income and capital and 4 years to recover, worse than that I'll make a new plan. I have ~15% in fixed interest, government and corp bonds and gold, I am increasing that percentage over a couple of years as I look to minimise sequence of returns risk being more dependant on investment income than wages just now.

cockerWalker

kempiejon said:

cockerWalker said:
I'm pretty risk tolerant and stress test scenarios including 50% fall and 2 year recovery, and 25% fall with decade of relative stagnation. At thus stage I'm all in on equities, and will likely stay that way until 2-5 years before retirement, when I'll gradually focus more on income production and a cash buffer rather than growth. At the moment I'm reducing my US exposure as I don't see the current CAPE as sustainable.
Fees are pretty good with II SIPP. Charges on my Aviva workplace pension is a rip off, but not much I can do about that other than periodically transfer a portion out.I only use passive ETFs or investment trusts as sipp investments. Higher risk but pretty diversified by geography, style and theme.

Thanks for coming back, so what about this advice? Perhaps not, it looks like you're OK on your own, same vein as myself though some of my investments are for income and some for growth already. My catastrophe is based and a halving of income and capital and 4 years to recover, worse than that I'll make a new plan. I have ~15% in fixed interest, government and corp bonds and gold, I am increasing that percentage over a couple of years as I look to minimise sequence of returns risk being more dependant on investment income than wages just now.

I'd be more likely to take advice at the point of actively de-risking anc preparing a detailed withdrawal plan. 
My current thoughts are an annuity to cover essential spend alongside wife's DB pensions and two state pensions. Still undecided on best way to bridge early retirement until state pension, and will have to wait to see what happens to my retirement age. Use SIPP to provide an income on top of the basics, comprised of a year's cash plus predominantly natural yield. ISA can then remain invested, more in value than growth, to cover extra expenditure and nice to haves.
I'd like an advisor's input for the detail of this, and this would depend on more detail of annuities, bond rates and tax regimes and returns than I can predict in advance.
Additionally, for de-risking, I have to recognise risk around my own mortality or competence. In either case an established relationship with an advisor could assist my wife significantly.

kempiejon

cockerWalker said:
I'd be more likely to take advice at the point of actively de-risking anc preparing a detailed withdrawal plan. My current thoughts are an annuity to cover essential spend alongside wife's DB pensions and two state pensions. Still undecided on best way to bridge early retirement until state pension, and will have to wait to see what happens to my retirement age. Use SIPP to provide an income on top of the basics, comprised of a year's cash plus predominantly natural yield. ISA can then remain invested, more in value than growth, to cover extra expenditure and nice to haves. I'd like an advisor's input for the detail of this, and this would depend on more detail of annuities, bond rates and tax regimes and returns than I can predict in advance. Additionally, for de-risking, I have to recognise risk around my own mortality or competence. In either case an established relationship with an advisor could assist my wife significantly.

You seem to have a good handle on your own mind and investments so cracking on with your plan looks strong.
After decades of investing having built a pot that would just keep me if employment income were stopped I did a fair bit of my own work on tax, pensions, limits, assets etc. The investing bit was easy enough but some of the other technical stuff took me a while to get my head round. I'm reluctant to pay someone for stuff I think I can and do enjoy doing myself. However if I had and known what I know now 5 or 10 years ago when focused on just investing I'd have made slightly different choices and might have wrung a tiny bit more tax advantage and had a slightly different investing bent but not a majorly different plan. And hindsight makes us all smarter.
In my 30s planned to retire at 50 odd and bridging the gap between ending permanent employment and SIPP and state pension access I always hoped would be a few years. Each tax year I focused on filling ISAs and building an income stream unsheltered before extra went in SIPP or company pensions though some bonuses were added to the pension.

cockerWalker

kempiejon said:

cockerWalker said:
I'd be more likely to take advice at the point of actively de-risking anc preparing a detailed withdrawal plan. My current thoughts are an annuity to cover essential spend alongside wife's DB pensions and two state pensions. Still undecided on best way to bridge early retirement until state pension, and will have to wait to see what happens to my retirement age. Use SIPP to provide an income on top of the basics, comprised of a year's cash plus predominantly natural yield. ISA can then remain invested, more in value than growth, to cover extra expenditure and nice to haves. I'd like an advisor's input for the detail of this, and this would depend on more detail of annuities, bond rates and tax regimes and returns than I can predict in advance. Additionally, for de-risking, I have to recognise risk around my own mortality or competence. In either case an established relationship with an advisor could assist my wife significantly.

You seem to have a good handle on your own mind and investments so cracking on with your plan looks strong.
After decades of investing having built a pot that would just keep me if employment income were stopped I did a fair bit of my own work on tax, pensions, limits, assets etc. The investing bit was easy enough but some of the other technical stuff took me a while to get my head round. I'm reluctant to pay someone for stuff I think I can and do enjoy doing myself. However if I had and known what I know now 5 or 10 years ago when focused on just investing I'd have made slightly different choices and might have wrung a tiny bit more tax advantage and had a slightly different investing bent but not a majorly different plan. And hindsight makes us all smarter.
In my 30s planned to retire at 50 odd and bridging the gap between ending permanent employment and SIPP and state pension access I always hoped would be a few years. Each tax year I focused on filling ISAs and building an income stream unsheltered before extra went in SIPP or company pensions though some bonuses were added to the pension.

For quite a while I was reluctant to put more than 10-15% into pension as I was worried about locking it up for the "unimaginably distant" future. Consequently I focused on paying off mortgage and on cash and ISA savings. It's only after reaching later 40s and mortgage being done with that pension's been priority. Didn't want to get used to just spending the former mortgage payment!

QrizB

cockerWalker said:

Unfortunately my wife's income is too limited at the moment (she's starting a business) to put more than 3600 into her pension.

What exactly do you mean by this?

Is her business making less than £3600, of is it making say £10k but she's spending it?

If the former, it if a business that could have you as a customer? Easier if it's eg. gardening rather than particle physics.

If the latter, can you gift her money from savings or excess income so she can make her pension contributions?

cockerWalker

QrizB said:

cockerWalker said:

Unfortunately my wife's income is too limited at the moment (she's starting a business) to put more than 3600 into her pension.

What exactly do you mean by this?

Is her business making less than £3600, of is it making say £10k but she's spending it?

If the former, it if a business that could have you as a customer? Easier if it's eg. gardening rather than particle physics.

If the latter, can you gift her money from savings or excess income so she can make her pension contributions?

Her income last year was below 3600, so 3600 is the max we can fund for her with tax relief. Also, at this stage when my pension still has significantly further to go, I can salary sacrifice 58p for £1 of contributions (40 tax, 2 ni). It's not something I could be a customer of.

Hoenir

cockerWalker said:

kempiejon said:

cockerWalker said:.

Thanks, I will most likely get some financial advice rather nearer the time I'd be accessing it. At the moment I don't have near that amount, but at current saving plus a high end of realistic returns it's possible I could get there. In the short term it's a given that all my savings will go into pension, but in the medium term it may not be such a given.

Given that you could be investing for 1, 2, 3 or even more decades knowing your attitude to risk and asset allocation for your ever growing pot of funds might be beneficial. Do you know where you're invested just now and how that has performed and costs? If you're considering advice taking it sooner rather than later has merit in my view. However I'm a confirmed DIYer.

I'm pretty risk tolerant and stress test scenarios including 50% fall and 2 year recovery, and 25% fall with decade of relative stagnation. 

SP500 dropped 49% in the Dot Com era fall and took 12 years to recover. The Nikkei index crashed some 80% over 18 years post 1989  before commencing it's recovery. Eventually took 31 years to regain it's former peak. Was the global equity darling as well representing 42% of the MSCI World Index on 1989. 

Financial disasters happen when the last person who remembers the event has left the building and switched the lights off. 

cockerWalker

Hoenir said:

cockerWalker said:

kempiejon said:

cockerWalker said:.

Thanks, I will most likely get some financial advice rather nearer the time I'd be accessing it. At the moment I don't have near that amount, but at current saving plus a high end of realistic returns it's possible I could get there. In the short term it's a given that all my savings will go into pension, but in the medium term it may not be such a given.

Given that you could be investing for 1, 2, 3 or even more decades knowing your attitude to risk and asset allocation for your ever growing pot of funds might be beneficial. Do you know where you're invested just now and how that has performed and costs? If you're considering advice taking it sooner rather than later has merit in my view. However I'm a confirmed DIYer.

I'm pretty risk tolerant and stress test scenarios including 50% fall and 2 year recovery, and 25% fall with decade of relative stagnation. 

SP500 dropped 49% in the Dot Com era fall and took 12 years to recover. The Nikkei index crashed some 80% over 18 years post 1989  before commencing it's recovery. Eventually took 31 years to regain it's former peak. Was the global equity darling as well representing 42% of the MSCI World Index on 1989. 

Financial disasters happen when the last person who remembers the event has left the building and switched the lights off. 

Absolutely. I may not remember it but studied the south sea company.

While CAPE is as high now for the s&p as it was pre .com crash, it's still high enough that I'm reducing US exposure. There is always the risk that you stress test against the last risk and not the next one. Beyond diversification across geography, sectors, company size, growth style and asset class, with planning for a variety of scenarios, what can you do? There's always the possibility of a new worst event. The only way I see to remove all risk is to not be alive in an uncertain world, and that removes the purpose of retirement.

Philosophy aside, I hope to cover basics with pension and annuities guaranteed by government, backed up by owning slices of different asset types worldwide. No, it wouldn't survive unscathed WW3, a 10 degree temperature rise, or a repeat of spanish flu, but then neither would large chunks of society. Some risks one just has to accept.