Making progress

Dh6 · 14 January 2020 at 9:34PM

Hi All.

Since joining the forums I've read a lot of threads past and present and gained some valuable insight and knowledge. I've purchased the John Edwards DIY pensions book and along with browsing this forum I feel a lot better informed to make some decisions on my future.

I've started the process of changing my trading status from self employed to a Limited company as I will be better off financially anyway so pension benefits of paying in via my Ltd company is an added bonus.

My current plan is as follows ;

I'm paying 4K a year into my Lisa ( 5k with government bonus )

I'll be investing £600 per month into a passive global index tracker ( SIPP )

Any extra money I earn over and above what covers, all my bills plus holidays etc I'm willing to invest into the SIPP.

In the mean time I'm working on building up a cash buffer of around 50% of my annual income.

I'm 33 currently with no pension provisions whatsoever.

If you were in my situation what would be your thoughts on my above plan?

I'm keen to find the best platform for paying in monthly or if I'd be better off paying in a lump sum at the end of every tax year?

Many thanks.

Dazed_and_confused · 14 January 2020 at 9:47PM

Not sure I follow your plan.

If you are changing to limited company and intend on contributing via the company why are you paying £600/month into a SIPP yourself?

There may be a valid reason but it's not clear.

Dh6 · 14 January 2020 at 9:58PM

The £600 per month is the contribution from my Ltd company.

My apologies, I've re read my post and I didn't make that clear.

Dazed_and_confused · 14 January 2020 at 10:02PM

An important thing for you to remember going forward is that you are a separate entity to the company.

You may have control over the company but you and the company are separate.

Dh6 · 14 January 2020 at 10:10PM

I understand that.

Am I misunderstanding how my company can pay into my pension as I'm an employee of my own Ltd company?

Can I do the above within a SIPP?

xylophone · 14 January 2020 at 11:57PM

https://www.pensionbee.com/pensions-explained/pension-contributions/contributing-to-your-pension-from-your-limited-company

https://www.hl.co.uk/pensions/contributions/employer

for information.

Dh6 · 15 January 2020 at 12:19AM

Thanks Xylophone, I intend to make contributions through my limited company as a director into my SIPP.

Would it be advantageous to pay monthly or an annual lump sum?

Currently I think that the vanguard platform is one of the better options for me.

Albermarle · 15 January 2020 at 11:07AM

Would it be advantageous to pay monthly or an annual lump sum?

Not a huge amount of difference one way or the other . Depends on market movements which are unpredictable .

Currently I think that the vanguard platform is one of the better options for me

.
Vanguard doe not offer a SIPP just yet , will be about 3 months in theory. Plenty of other platforms available:
https://monevator.com/compare-uk-cheapest-online-brokers/

Notepad_Phil · 15 January 2020 at 5:50PM

Dh6 wrote: »

Would it be advantageous to pay monthly or an annual lump sum?

There's a common saying when it comes to investing: 'time in the market, not timing the market'. Now I know you aren't trying to time your contributions, but the sooner you can get your money in the better it usually is. So if you can contribute monthly, and that has the same initial costs to you as contributing yearly, then that in my opinion is the best way to do it.

atush · 15 January 2020 at 8:18PM

Lump sum or monthly depends on cash flow.

Do you have cash and investments outside of your Sipp? I know you have a lisa (but nto the amt) and i know you will build up a cash sum (but havent finished). It is easier to build u cash while your income is higher. Will you be taking only a min salary and taking dividends instead?

BoGoF · 15 January 2020 at 8:30PM

You will have to make sure they know it's a company contribution and not personal or you will be getting tax relief you are not entitled to.

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