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    • Rich99
    • By Rich99 7th Jan 18, 6:07 PM
    • 50Posts
    • 12Thanks
    Help deciding which multi-asset fund to invest in
    • #1
    • 7th Jan 18, 6:07 PM
    Help deciding which multi-asset fund to invest in 7th Jan 18 at 6:07 PM

    I'm looking to dip my toes in the investing waters. I started a thread a while back to get my head around various terms, and now am back with some more questions. Basically, I'm 25 years from retirement, and would like to start investing for retirement as an addition to my pension. I don't have the time or expertise to do any active management of portfolios etc, so am looking for a recommendation for a single place to invest, where my money is spread across a range of funds, aiming to leave it alone for ~25 years. I'm tempted by passive trackers, and Blackguard & Vanguard were both mentioned in my previous thread. Reading their websites, both the Vanguard Lifestrategy (probably the 80% equity) and the Blackrock consensus (probably the 85) look good to me, and seem to have reasonable reviews and acceptable costs. Does anyone have any reasons why I shouldn't go with one of them? Have I missed a major player out of my research, or misunderstood anything major that means my plan is bad?

Page 2
    • Linton
    • By Linton 8th Jan 18, 9:57 AM
    • 9,394 Posts
    • 9,527 Thanks
    Thanks all for the helpful comments so far. Just trying to get my head around SIPP vs ISA. From what you've all said, SIPP gives me tax relief when I deposit, so I get 'free' money added to my investment. However when I withdraw from the SIPP, I'll be taxed. With ISA, there's no initial uplift, but anything I withdraw is tax free?

    So which actually works out better in the long run?
    Originally posted by Rich99
    Correct - just one extra which makes a lot of difference. When you withdraw money from a SIPP you get 25% tax free.

    Which works out better in the long run depends on your tax situation, the figure below assume that all your contributions and pension are each taxed at the same rate.

    If you pay basic rate tax payer whilst working and pay no tax in retirement SIPP wins by 20%.

    If you pay basic rate tax or higher rate tax both whilst working and in retirement SIPP wins by 20% X 25% =5%

    If you pay higher rate tax whilst working but basic rate in retirement SIPP wins by 25%

    If you pay basic rate tax whilst working but higher rate in retirement ISA wins by 10%.

    The danger is that if you put too much in a SIPP:
    a) You could exceed your LTA with dire tax results
    b) You cant withdraw all the money in the SIPP during your lifetime without paying higher rate tax.

    In practice to enable very early retirement and retain flexibility it is sensible to use both SIPPs and S&S ISAs. Perhaps put enough into your employers pension to gain the maximum employer contribution and if necessary enough into your SIPP to get you down a tax band if you are a higher/top rate tax payer with the rest going into S&S ISAs. The extra flexibility being worth a 5% reduction in net value.
    Last edited by Linton; 08-01-2018 at 10:08 AM.
    • AnotherJoe
    • By AnotherJoe 8th Jan 18, 10:18 AM
    • 9,604 Posts
    • 10,680 Thanks
    As a noob who leans active more than average on here on a personal level I don't mind being overweight in UK equity, but not large cap.
    Originally posted by Filo25
    I'm with what A_T posted, LS overinvests in the UK which means first that it overinvests in just one economy, and secondly that overinvestment is not only focussed on just a handful of industry sectors but a major one of those sectors is oil that you would not expect to do well in the long term and another is tobacco, same comment.

    My only concern with tracking global markets in line with market cap is how heavily it would leave me exposed to the US market.
    Originally posted by Filo25
    Thats a reasonable position but in that case picking one global fund isnt appropriate.

    With regards to the original poster though I would say as someone starting out your main decision will be deciding what level of risk you can live with and go ahead with investing at that level, and given that you don't want to spend much time researching, monitoring and rebalancing I would personally say a low cost diversified global passive fund is the way to go.
    Originally posted by Filo25
    Agree and in that case i think the HSBC fund is a better choice for the long term for the reasons of not overinvesting in the UK / handful of large caps, even if short term the US market seems high - then again people said that one and two years ago as well and its gone higher since.
    • greenglide
    • By greenglide 8th Jan 18, 10:21 AM
    • 3,104 Posts
    • 2,020 Thanks
    A pension also (currently) gives a 25% tax free lump sum as well which often gets overlooked here.
    • Rich99
    • By Rich99 8th Jan 18, 10:59 AM
    • 50 Posts
    • 12 Thanks
    OK, thanks all for the (as always) helpful advice.
    • EJS_Superted
    • By EJS_Superted 8th Jan 18, 2:08 PM
    • 64 Posts
    • 39 Thanks

    If you pay basic rate tax or higher rate tax both whilst working and in retirement SIPP wins by 20% X 25% =5%

    If you pay basic rate tax whilst working but higher rate in retirement ISA wins by 10%.
    Originally posted by Linton
    If either of these situations are likely, particularly the second one you should consider a Lifetime ISA. You get a 25% uplift when contributing and don't pay any tax when withdrawing. The catch is money is locked up until 60 and you can only deposit 4k per tax year (which gets topped up to 5000). That doesn't stop you putting the remaining 16k in a normal S&S ISA though. You also have to be under 40 to open one.
    Last edited by EJS_Superted; 08-01-2018 at 2:14 PM. Reason: error
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