My L&G Stakeholder Fund Choices

Dithering_Dad

Please feel free to comment, critique, destroy or dare I say it, praise the following fund choices I have selected in my Legal & General Stakeholder pension.

For info, I have £83k in there and I'm 39 Yrs old, hoping to retire at 60. My stakeholder AMC averages out at about 0.5%.

10% L&G Fixed Interest
8% L&G Cash
3% L&G UK Recovery Fund
3% L&G Smaller Companies Fund
30% Newton Income
30% Aberdeen Global Growth Ex UK
8% L&G European Equity Index
6% AllianzRMC Global Equity
2% L&G Far East

I have gone for "Adventurous Growth" with 83% of my portfolio in Equities with the following geographical split:

UK - 46%
EU - 24%
US - 13%
JP - 7%
APAC - 8%
Other - 2%

I'd be very interested in any recommendations, please bear in mind that I have no interest in moving to SIPPS, ISAS, PPs, etc. and that I can only invest in the following funds:

L&G Funds available to my Stakeholder

Cheers!

EDIT: I decided not to bother with the property fund at the moment, so changed my fund selection to add more into cash. I've now sent in my investment selections to L&G and so hopefully in a year's time I'll have a larger pot than I do now!

shaunrc

Hi Dithering Dad

I dont think it is a matter of criticising as you have clearly put a lot of thought into it by the choices you have made.It is after all your investment.....

However how much are you paying in each month? My suggestion would be to mentally split things as follows . As you have pound cost averaging from monthly contributions you can afford to be very aggressive. However as you build a lump sum fund and you get into your last 5 years before retirement then for the lump sum you may want to be more conservative.

One personal suggestion is that I am nervous of inflation picking up so I would prefer an index linked fund to fixed interest.

Good Luck!

Dithering_Dad

Hi Shaun, thanks for your comments. I pay £300 per month into the pension at the moment, but this will rise once I've finally completed my Mortgage Free challange. I am also paying £300 per month into my wife's stakeholder, and again, once I pay off our mortgage I'll be blitzing her pension as the pot is pretty small.

I'm hoping to retire with a 500K pension pit for me and a 200K pot for my missus, plus I'll have ISAs and savings, etc. Should be enough hopefully.

I took on board your comment about the index, and would look to add a UK index (I have the EU index already) if I see inflation creeping up. At the moment though, with shares falling I'm happy to have some of my pension in the fixed interest fund.

shaunrc

Hi Again

I forgot to say that I work as an IFA but that what I say should not be taken as advice as it has a specific meaning for a regulated person like me.

As I said I am concerned about inflation so I meant index linked gilts in case I was unclear.

Also with the fund value and contribution level you mention it is likely to be worth your while to look at some personal pensions as the charges are likely to be lower. There was a time the L&G stakeholder was very cheap if you did it online but personal pensions have reformed and improved so it is likely you can combine lower charges with an improved fund choice. Over the years it mounts up particularly with the fund sizes you are aiming for. Also as you are taking an interest in where you invest a wider fund choice gives you more options.

Food for thought anyway.

farhad1965

I will be 43 in a few weeks and have been paying into a private pension plan for past 19 years. I have been looking in depth at my pension pot (with my IFA) which has a fund value of £137k at today’s prices. Having built such a large fund and with decent growth over the last few years we felt we need to go cautious for the fund to ensure it is not dragged down with stock market losses.

Therefore I have sliced and diced my pot and future monthly premiums as follows:

5% Property
10% Cash
10% Corporate Bond
10% Indexed Stock
15% JPMorgan Cautious Total Return
20% Invesco Perpetual High Income
10% Schroder Income
10% Merrill Lynch Emerging
5% Newton Oriental
5% Fidelity European

I am paying £700 gross into the pot each month (direct contribution from my Ltd company, not from my wages) and will up this to £1,000 from April. Like Dithering Dad I am aiming for a £500k pot by the time I am 60 and £200k within the next 2 years.

I have no idea if £500k is a good size pot to have in 17 years time or not. Will that be enough at that time for me & Mrs to enjoy our golden years.

dunstonh

I have no idea if £500k is a good size pot to have in 17 years time or not. Will that be enough at that time for me & Mrs to enjoy our golden years.

Working on the 5% income rule (5% has always been achievable) then thats £25,000 a year.

Remember to make sure you use your spouse for the retirement planning as well and that its not all in your name.

£25,000 split equally between you means only £5,000 is liable to tax which means you lose £1,000. £25,000 in one name means not only means £3,000 in tax but also the removal of the age allowance which is a further £465 tax, Failure to plan equally would increase your tax bill by £2465 each year for life.

Dithering_Dad

The 500k pot will give us 125k tax free and £375k to buy an annuity. If we go with Dh's 5%, then that will provide £18,750 per year, plus state pension. If I manage to get Mrs D's pension to 200k, that'll provide a further 10k per year, plus her state pension.

That should see us with a pleasant retirement. Now all that remains is to spend the next 20 years paying into it .

Retired_I.F.A.

shaunrc wrote: »

Hi Dithering Dad

I dont think it is a matter of criticising as you have clearly put a lot of thought into it by the choices you have made.It is after all your investment.....

However how much are you paying in each month? My suggestion would be to mentally split things as follows . As you have pound cost averaging from monthly contributions you can afford to be very aggressive. However as you build a lump sum fund and you get into your last 5 years before retirement then for the lump sum you may want to be more conservative.

One personal suggestion is that I am nervous of inflation picking up so I would prefer an index linked fund to fixed interest.

Good Luck!

Ah the old pound cost averaging salesmans ploy rears it's head again hahah
How many l's in b******s

shaunrc

Hi Retired IFA

I am a little curious as to your post and frankly feel rather insulted and belittled by it.

Whatever dithering dad does has no financial benefit to me at all so it is hard for me to be considered as a salesman. So my thoughts can be considered to be under the old fashioned definition of disinterested. In other areas people have helped me on this site and I like to try and return the compliment.

Also if a person pays into a plan monthly they buy units at the going price each month which should a market fall would mean that they would get more units. Again I am giving him a suggestion which is of no benefit to me and he felt was helpful.He is free to do as he likes. Also if you bother to read his post it is something that he is actually doing already.

So at no gain to myself I have given dithering dad some suggestions which he has thanked me for and he is free to take up or ignore. I would be grateful if you could explain to me how that justifies your description of my behaviour.

Retired_I.F.A.

Nothing personal as it wasn't directed at you but to the bull that is pound cost averaging. However you are a salesman, all IFA's are.

For anyone whose ever fallen for the pound cost averaging bull or who doesn't know of it click on a link or two after googling it and then read .. http://en.wikipedia.org/wiki/Dollar_cost_averaging

dunstonh

Pound cost averaging or phased investments has pros and cons. In volatile times it can be beneficial. The phasing on regulars can mean you take on a bit more risk than you would with a single contribution.

It can work against you if the market has a sustained period of growth as you will miss out on that growth by not being in there all at once.

However, those that are more concerned with losses than gains could see the benefit.

Also, pound cost averaging with multiple funds covering a diverse range with annual rebalancing can really make a big difference to the performance of a portfolio.

However you are a salesman, all IFA's are.

No we are not. Transactional IFAs maybe but servicing/NMA IFAs or those that specialise find business comes in quicker than you can deal with it. There is a demand for quality.