Accumulation or Income
Confuciusone
Posts: 20 Forumite
Hi, I've just opened a H & L SIPP with first £2880, choosing 4 funds from there DIY Master Portfolio 150 funds taking a chance with Adventurous, to get me started, wanting medium term growth.
Noticed one fund is Income with a income reinvestment charge of 1% selected minimum £100, before investing income fee £1.
Is it better to avoid Income Funds in favour of Accumulation Funds.
Noticed one fund is Income with a income reinvestment charge of 1% selected minimum £100, before investing income fee £1.
Is it better to avoid Income Funds in favour of Accumulation Funds.
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Comments
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choosing 4 funds from there DIY Master Portfolio 150 funds taking a chance with Adventurous
That is rather overkill for just £2880 isnt it? Wouldnt a simple multi-asset fund be better for such a small amount? You appear to have fallen for marketing.
its a bit daft. If an IFA was to do that with such a small amount, the FOS would likely call it a mis-sale. DIY providers do it and as there is less consumer protection, they get away with it.Is it better to avoid Income Funds in favour of Accumulation Funds.
Personally i prefer inc units as it feeds the cash account and makes re balancing easier. However, it makes little difference. You will just need to keep a couple of percent in the cash account and ensure when you rebalance the funds, you keep the cash topped up if you use acc units.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
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Confuciusone wrote: »Hi, I've just opened a H & L SIPP with first £2880, choosing 4 funds from there DIY Master Portfolio 150 funds taking a chance with Adventurous, to get me started, wanting medium term growth.
Noticed one fund is Income with a income reinvestment charge of 1% selected minimum £100, before investing income fee £1.
Is it better to avoid Income Funds in favour of Accumulation Funds.0 -
Why? What difference does it make, unless there are flat (rather than %) charges on the funds? £2880 or £28000 would still grow in the same proportion.
The OP is picking a handful of single sector funds. Those funds need to be rebalanced. Is it worth all that effort on £2880. Its not worth it on £28000 either.You'd be best avoiding income reinvestment charges, so if you don't want to take any income, you may as well use accumulation units.
Or pick a platform where there is not an issue.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
The OP is picking a handful of single sector funds. Those funds need to be rebalanced. Is it worth all that effort on £2880. Its not worth it on £28000 either.Or pick a platform where there is not an issue.0
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Thanks all for your comments and advice.
I opened a SIPP, put a small amount in to get a feel and learn how it all works, to decide if transfering my wifes £100k pension pot to a SIPP is an option for us.
The more I learn the more complicated it gets.0
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