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    • dqnet
    • By dqnet 9th Feb 18, 3:15 PM
    • 213Posts
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    dqnet
    SIPP + Investment Options
    • #1
    • 9th Feb 18, 3:15 PM
    SIPP + Investment Options 9th Feb 18 at 3:15 PM
    Hello experts,

    I'm 35 and own my property with around 10k that I wish to do something with. I'm a low rate tax payer and because of a few health issues I will be taking some time out of work [living costs are covered from a separate source until I am back in work]. I would like to use some of the money I've saved over the last few years (10k) specifically for investment purposes and to drip feed around 250 a month into some sort of private pension / SIPP to accommodate the state pension later down the line. The 250 a month will be completely individual to the 10k one time investment.

    I have a basic understanding of what a SIPP is and a basic understanding to investing and its risks. I've looked into the VLS60 and VLS80 options by vanguard and a few stocks and shares ISA's options. I've also looked into Hargreaves for SIPP options. From what I understand LISA's aren't as good as SIPPs in the long term.

    I was wondering what your advise was on starting this path. I mean from the 10k I don't mind splitting this into smaller amounts to gain wider coverage while leaving the 250 a month to just go into a SIPP or private pension. I plan on retiring around 65 and was hoping to be able to utilise this money going forward.

    Can someone advise..?

    I know you experts have been asked this 100,000,000 odd times but maybe you could add a 1 to that number

    Thanks.
Page 1
    • mjfp509
    • By mjfp509 9th Feb 18, 5:13 PM
    • 148 Posts
    • 47 Thanks
    mjfp509
    • #2
    • 9th Feb 18, 5:13 PM
    • #2
    • 9th Feb 18, 5:13 PM
    To be honest, SIPP probably would be best route as you get 25% uplift, e.g. put 100 in, 25 returned back from government = 125 total, but you won't be able to have access to it until you are 55 and is going to 57 I think in 2028.

    You can put as much in as your wages to get the tax relief.

    If you are taking time off from work and are not getting paid, this would be limited to 2880 net (3600 gross) in any tax year.

    The VLS funds you talk about are decent choices. Vanguard also do a target retirement fund you could look into as well.
    • cloud_dog
    • By cloud_dog 9th Feb 18, 5:19 PM
    • 3,654 Posts
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    cloud_dog
    • #3
    • 9th Feb 18, 5:19 PM
    • #3
    • 9th Feb 18, 5:19 PM
    If you are taking time off from work and are not getting paid, this would be limited to 2880 net (3600 gross) in any tax year.
    Originally posted by mjfp509
    This is a very valid point. If you are comfortable with regard to putting 10k in to a pension then you need to get it done within the tax year where you have sufficient earnings. Even if you choose to stagger the actual investment of the monies over the coming months.

    With the lump sum money you are talking about I don't think you should be thinking of more than one or maybe two investment options and if you wish you could direct the 250pm in to a second or third investment option.

    I'm a little unsure if you are looking for responses that offer up actual investment options (funds etc).
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • dqnet
    • By dqnet 9th Feb 18, 6:56 PM
    • 213 Posts
    • 68 Thanks
    dqnet
    • #4
    • 9th Feb 18, 6:56 PM
    • #4
    • 9th Feb 18, 6:56 PM
    Thank you both for your responses. In answer to the points raised;

    Yes, unfortunately I wont be working for at least 4 months but since I've never had a private pension / SIPP I was wondering if this was a good option or would it be better to just invest the money into a few funds? Maybe put the entire 2880.00 into the SIPP and the remaining 7000 into two VLS options?

    Presently I haven't been doing any future planning and I really need to wake up to the options and was wondering if you could point me in the right direction and advise me.?

    Thanks.
    • cloud_dog
    • By cloud_dog 9th Feb 18, 7:02 PM
    • 3,654 Posts
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    cloud_dog
    • #5
    • 9th Feb 18, 7:02 PM
    • #5
    • 9th Feb 18, 7:02 PM
    Yes, unfortunately I wont be working for at least 4 months but since I've never had a private pension / SIPP I was wondering if this was a good option or would it be better to just invest the money into a few funds? Maybe put the entire 2880.00 into the SIPP and the remaining 7000 into two VLS options?
    Originally posted by dqnet
    Have you been working this FY? If so, do you have sufficient earnings this FY to deposit the 10k (or most)?

    If you do, then why wouldn't you just deposit the money this FY, and then you can do the 2880 next FY. It really doesn't take long to open a SIPP/pension and deposit money.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • dqnet
    • By dqnet 9th Feb 18, 8:01 PM
    • 213 Posts
    • 68 Thanks
    dqnet
    • #6
    • 9th Feb 18, 8:01 PM
    • #6
    • 9th Feb 18, 8:01 PM
    Unfortunately I haven't been working this FY no (which I believe restricts me to the 2880). Yes, the 10k is completely money that I can utilise for SIPP / Investments. I have another guaranteed source of income to keep me going for the time out of work which also gives me that extra 250 a month.

    What do you think?
    • cjv
    • By cjv 9th Feb 18, 11:43 PM
    • 201 Posts
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    cjv
    • #7
    • 9th Feb 18, 11:43 PM
    • #7
    • 9th Feb 18, 11:43 PM
    Not an expert here, but I opened a SIPP a few months ago through Cavendish if you would like to look at more options.

    https://www.cavendishonline.co.uk/pensions/

    Their fees are low for smaller amounts and my Impressions so far have been good, they have replied to my questions/SIPP instructions promptly.

    Vanguard have stated plans to provide a SIPP this year. If you are only going to hold a Vanguard Fund it may be a cheaper option in the future. This is from their Twitter account:

    Lots of you are asking us about Vanguard SIPPs. We are planning to offer one in 2018.

    Cavendish do not charge for transfers out, so you could open one with them and Transfer to Vanguard when they offer their SIPP, or if you are not happy with their service.
    • dqnet
    • By dqnet 10th Feb 18, 11:31 AM
    • 213 Posts
    • 68 Thanks
    dqnet
    • #8
    • 10th Feb 18, 11:31 AM
    • #8
    • 10th Feb 18, 11:31 AM
    Thanks cjv, I'll have a look into them. Have you used these Vanguard funds? Maybe even these Vanguard retirement funds?

    It's just I had this money and would immediately like to get it invested into my future pension plan but just don't know where to start.
    • dunstonh
    • By dunstonh 10th Feb 18, 11:55 AM
    • 92,222 Posts
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    dunstonh
    • #9
    • 10th Feb 18, 11:55 AM
    • #9
    • 10th Feb 18, 11:55 AM
    Maybe even these Vanguard retirement funds?
    A niche fund. Unsuitable for most. More expensive than their non risk-reducing funds. Start higher risk than the average risk profile and end up lower than the average. Not much to like about them unless you hapen to fit the exact niche.
    Last edited by dunstonh; 10-02-2018 at 12:58 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • dqnet
    • By dqnet 10th Feb 18, 11:59 AM
    • 213 Posts
    • 68 Thanks
    dqnet
    dunstonh, thanks for that mate. So if one was to go ahead with this SIPP, do you have any recommended SIPP providers / funds to choose when opened (HL, Cavendish or maybe wait for Vanguard)? Also, since I would be putting my total allowance for this year, which would leave me with the remaining 7000.00 would you advise half and half VLS60 and a VLS 80..? Thanks again.

    Oh and one other thing, if I dont have a stocks and shares ISA, should I be considering that Vanguard ISA first before the VLS range?
    Last edited by dqnet; 10-02-2018 at 12:05 PM.
    • Lungboy
    • By Lungboy 10th Feb 18, 12:55 PM
    • 1,333 Posts
    • 1,285 Thanks
    Lungboy
    I think you're getting a bit muddled, you buy VLS or an alternative from within the ISA or SIPP.
    • dunstonh
    • By dunstonh 10th Feb 18, 1:03 PM
    • 92,222 Posts
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    dunstonh
    dunstonh, thanks for that mate. So if one was to go ahead with this SIPP, do you have any recommended SIPP providers / funds to choose when opened (HL, Cavendish or maybe wait for Vanguard)?
    There is no point me telling you which providers (even if the FCA allowed it). I deal with the advice market. The providers that cater for advisers are different to the DIY market. I will leave that for others.

    Also, since I would be putting my total allowance for this year, which would leave me with the remaining 7000.00 would you advise half and half VLS60 and a VLS 80..?

    What do you gain by doing 50/50 into each?

    Oh and one other thing, if I dont have a stocks and shares ISA, should I be considering that Vanguard ISA first before the VLS range?
    I personally wouldnt go with a tied provider offering own brand funds. We are already seeing alternative fund houses come in with similar options and undercutting Vanguard. If the provider can only offer their own funds, then you are stuck with them until you transfer out. That means being out of the market for upto a week and at this level of margin, the movement in prices is likely to be greater than the reason you are transferring. If you want VLS, then fine. However, stick with a provider that gives you choice in the market.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • dqnet
    • By dqnet 10th Feb 18, 3:11 PM
    • 213 Posts
    • 68 Thanks
    dqnet
    I think you're getting a bit muddled, you buy VLS or an alternative from within the ISA or SIPP.
    Oh, but in the Vanguard case, they don't offer a SIPP so when buying one of their VLS funds wouldn't I be opening a general account and then the chosen VLS option (60,80, etc.)? Just out of interest isn't a VLS basically Vanguard Life Strategy Funds or is it a common name for something else?

    What do you gain by doing 50/50 into each?
    Possibly a misunderstanding, I read a few posts here doing that to get an overall 70 product as such.

    Yikes, I feel so new to this!
    • Eco Miser
    • By Eco Miser 10th Feb 18, 4:12 PM
    • 3,444 Posts
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    Eco Miser
    Yes , VLS is Vanguard Life Strategy, and the funds are available, in an ISA, SIPP or unwrapped, on virtually any funds platform, not just Vanguard's own.
    Eco Miser
    Saving money for well over half a century
    • dunstonh
    • By dunstonh 10th Feb 18, 4:57 PM
    • 92,222 Posts
    • 59,400 Thanks
    dunstonh
    Possibly a misunderstanding, I read a few posts here doing that to get an overall 70 product as such.
    The difference in return between 60 and 80 is small. So, trying to build a 70 (which would go out sync and head towards 75 in growth periods and to 65 in negative is just overdoing the micromanagement. Pick one or the other.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • cjv
    • By cjv 10th Feb 18, 6:09 PM
    • 201 Posts
    • 100 Thanks
    cjv
    Thanks cjv, I'll have a look into them. Have you used these Vanguard funds? Maybe even these Vanguard retirement funds?

    It's just I had this money and would immediately like to get it invested into my future pension plan but just don't know where to start.
    Originally posted by dqnet
    I do have a Vanguard fund in my Cavendish SIPP, yes. I did not bother with the retirement funds as I want to control my own equity allocation.

    I kept it simple until I can educate myself more, I split my monthly contributions 50/50 between Vanguard LS80 and HSBC Global Dynamic. The no fee for transfers out was important to me as a new investor as my outlook may change in the future and I will not feel locked in to one provider.

    It was very simple and straight forward to open the SIPP. You sign up, setup your Direct Debit and pick your funds and the share of your contribution you wish to go to each. You can switch or add new funds at anytime easily.

    Then you sit back and relax, I hope
    • dqnet
    • By dqnet 10th Feb 18, 7:22 PM
    • 213 Posts
    • 68 Thanks
    dqnet
    Simply brilliant. I think i've finally come to understand how it works.
    I'll drop a message here if I need a little more help.

    Thank you all. You've been fantastic
    • dqnet
    • By dqnet 15th Feb 18, 12:39 PM
    • 213 Posts
    • 68 Thanks
    dqnet
    Hi again, I've decided to go ahead and open my SIPP this week. I know the funds I'll be buying too but my question was how does the technicalities work..?

    So when I put the full 2880.00 does the taxman automatically make these 3600.00 immediately or do I have to wait a certain period of time?

    Also, If I was to purchase funds using the 3600 (when they are available) and I start to work later this year, I can always add more money up to the 40k allowance and continue as usual right (buying more of the same funds or just others)?

    Cheers folks

    p.s. what would you recommend I do with the remaining 7k. I'd like to invest these longterm and since I would have used my unemployment SIPP allowance do you advise I put the remaining amount into a lifetime ISA or S&S ISA or both..? (4k lifetime, 3k S&S) for example?

    Thanks!!
    • dunstonh
    • By dunstonh 15th Feb 18, 1:03 PM
    • 92,222 Posts
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    dunstonh
    So when I put the full 2880.00 does the taxman automatically make these 3600.00 immediately or do I have to wait a certain period of time?
    Depends on the provider. Some prefund the tax free cash and add it at the same time. Others wait 6 weeks until HMRC have paid them and add it to your pension then.

    Also, If I was to purchase funds using the 3600 (when they are available) and I start to work later this year, I can always add more money up to the 40k allowance and continue as usual right (buying more of the same funds or just others)?
    Yes. it is tax year earnings as a whole that matters. Not when they were paid in the tax year
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • ColdIron
    • By ColdIron 15th Feb 18, 1:05 PM
    • 4,052 Posts
    • 5,024 Thanks
    ColdIron
    So when I put the full 2880.00 does the taxman automatically make these 3600.00 immediately or do I have to wait a certain period of time?
    Originally posted by dqnet
    Your pension manager will request it from HMRC, some are fast, others can take a month or so

    Also, If I was to purchase funds using the 3600 (when they are available) and I start to work later this year, I can always add more money up to the 40k allowance and continue as usual right (buying more of the same funds or just others)?
    There is an earnings limit as well as the 40,000 allowance. If you earned 15,000 this financial year then that is the maximum you can contribute (12,000 by you and 3,000 by HMRC) regardless of the 40,000 allowance. If you had already contributed 2,880/3,600 you would need to deduct it
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