Wise to have a second lower risk SIPP with Vanguard in the current climate?

Nova1307

Hi, 

51 yo with a Nutmeg SIPP (4/5 risk rating). In order to reduce my higher rate tax bill I am interested in investing more but into a separate lower risk pension pot. With the stock markets looking a bit overheated I am considering opening a second lower risk SIPP with a provider such as Vanguard.

I assume I can select a risk rating like I did with Nutmeg in order to guard against potential stock market falls? Happy to keep my Nutmeg on 4/5 but feel like adding to it would be a bit unwise with the stock markets looking a bit toppy at the moment. Any thoughts on this strategy would be appreciated. 

Thanks

dunstonh

Wise to have a second lower risk SIPP with Vanguard in the current climate?

What current climate?

I assume I can select a risk rating like I did with Nutmeg in order to guard against potential stock market falls?

Vanguard, is an investment platform that offers a selecton of its own-brand funds.    You select the funds.

Some of the funds are multi-asset and they are risk rated but you have to select the fund or funds.

Whilst Vanguard is a basic SIPP (its not really a SIPP as its only own-brand funds and not all of them at that), it is a step up from Nutmeg in terms of functionality and options and needs you to make more decisions.

InvesterJones

Nova1307 said:

Hi, 

51 yo with a Nutmeg SIPP (4/5 risk rating). In order to reduce my higher rate tax bill I am interested in investing more but into a separate lower risk pension pot. With the stock markets looking a bit overheated I am considering opening a second lower risk SIPP with a provider such as Vanguard.

Good thinking to invest more in your pension, and if you're not comfortable with the risk level of your existing investments then definitely worth either addressing your comfortableness or dialling down the risk.

I assume I can select a risk rating like I did with Nutmeg in order to guard against potential stock market falls? Happy to keep my Nutmeg on 4/5 but feel like adding to it would be a bit unwise with the stock markets looking a bit toppy at the moment. Any thoughts on this strategy would be appreciated. 

This bit however is less sound. Risk is not just about stock market falls - you'd need to check what nutmeg use to assign a risk score, something like Vanguard uses a different scale and tend to measure volatility rather than risk, so don't directly guard against stock market falls.

But back to the addressing comfortableness side of things - it's worth reading up on long term investing and whether you should be concerned with short term 'toppy' trends as you put it - how are you assessing that? I've been researching for years and I wouldn't begin to imagine I could call a short term maximum, much less have enough confidence in it to materially change my long term strategy.

Bravepants

Other risk mitigation strategies include keeping two or three years' worth of drawdown in cash or cash-like funds (Short Term Money Market Funds for example), and keep the rest fully invested.. 

SVaz

Rather than Vanguard and their restricted choices,  you could open a Sipp with Hargreaves or AJ Bell and invest in a mixed asset fund of your choosing.
Low cost ones include the HSBC Global Strategy range, where you choose your risk level.   Sipp Companies have their own versions of these too,  AJ Bell have a hands off ‘Balanced’ fund but the charges are a bit higher than the HSBC ones. 

Age 51 seems a bit young to drop too far, unless you plan on very early retirement. 

Baldytyke88

dunstonh said:

Wise to have a second lower risk SIPP with Vanguard in the current climate?

What current climate?

The FTSE risk level is currently elevated due to global trade tensions, domestic fiscal concerns including potential tax rises, and ongoing geopolitical uncertainty. 

Nova1307

Thanks for the responses - some very good food for thought. I'll do some further research before making a final decision. I'm conscious of the age/risk trade off and recognise that I still have quite a few years before reaching my retirement age. 

My plan is to invest enough to offset the higher rate tax portion of my 2025-26 income and dollar/pound cost invest into a pension fund on a monthly basis between now and 5th April. 

Coincidentally I opened an account with AJ Bell a couple of months ago but haven't invested with them yet. 

Exodi

It seems not a day goes by where someone suggests that 'now' is a bad time to invest.

If the market is up, the justification is it's ready to crash at any minute. If the market is down, why would you invest during such bleak times.

If you didn't invest during ATH's - you wouldn't be doing much investing!

Some bedtime reading to give background to what I mean: https://www.ii.co.uk/analysis-commentary/should-you-invest-when-markets-are-all-time-highs-ii535985

Albermarle

Nova1307 said:

Thanks for the responses - some very good food for thought. I'll do some further research before making a final decision. I'm conscious of the age/risk trade off and recognise that I still have quite a few years before reaching my retirement age. 

My plan is to invest enough to offset the higher rate tax portion of my 2025-26 income and dollar/pound cost invest into a pension fund on a monthly basis between now and 5th April. 

Coincidentally I opened an account with AJ Bell a couple of months ago but haven't invested with them yet. 

Nutmeg is a robo platform. You are paying higher fees in return for some basic advice as to what fund (s) to invest in.
With the other platforms, they will only offer general guidance ( subtle difference).