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SIPP Allocations
Joe 90
Posted: 20 March 2018 18:52:42(UTC)
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I’ve recently taken the plunge and arranged for my pension fund with Royal London to be transferred (in cash) into my shiny new SIPP. I now need to decide what investments to buy with it.

The fund is worth £600k. I also expect to inherit £300k in the next couple of years. I have money tied up in a business that will pay out when I retire in 4 years giving me £200k. I also have various investment ISAs.

If I was willing to fork out for some financial advice, all of my assets and circumstances would doubtless be taken into account. As it is, my RL pot is structured in the ‘orthodox’ fashion (80% equity 20% property 10% bonds). However, these allocations take no account of my other investments.

I’m tempted to put the full £600k into global equity. With 5 years’ living worth of cash coming from my business when I retire I figure I can comfortably sit out a market correction. Taking account of all of my assets (including what I expect to inherit) this would translate into an allocation of 70% equities, 20% cash and 10% bonds which according to received wisdom seems a bit aggressive but not overly so. I am mortgage free.

Finally I’m thinking of dividing the equities equally between a low-cost global tracker fund and Fundsmith.

This all looks sensible on paper but feels quite a big step. Thoughts gratefully received.
Jim S
Posted: 20 March 2018 19:32:55(UTC)
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Joe 90;59048 wrote:

Finally I’m thinking of dividing the equities equally between a low-cost global tracker fund and Fundsmith.


Hi Joe.

Broadly speaking, I think you're doing the right thing. However, putting 50% of your 600k into one fund, however 'global' it is, however great its past performance, does add to your risk.
I think a better approach might be 50% passive, then choosing 5-10 funds/trusts for the 50% active part.
Fundsmith, LTGE, SMT, JEO, PHI, FCSS...there are many well run funds out there.

Also, don't rush and feel you have to invest in week 1. You've taken a big step, I think it will work out well, but spend some time on educating yourself and also learning about options for active investments which you are both comfortable with & enthusiastic about.
Without wanting to plug Money Observer, the March issue has a supplement which could give you good ideas for funds and trusts in a range of categories.

Do keep us posted how things go & good luck!
1 user thanked Jim S for this post.
Harry Trout on 20/03/2018(UTC)
Balvenie
Posted: 20 March 2018 20:05:23(UTC)
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I stated on another thread I'm not convinced with FS compared to other global funds. Also not convinced of FS wisdom in buying Facebook. Just my personal opinion.

My core Global is LT.

It is a minefield though with so many potential funds to chose from. I personally would not be comfortable with 50% of that amount into any single fund, even a tracker.
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Joe 90 on 20/03/2018(UTC), Andrew Smith 259 on 25/03/2018(UTC)
Alan Selwood
Posted: 21 March 2018 00:28:55(UTC)
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My own gut feeling is that, taking into account a £1 million pot before too long, I would divide it into at least 6 chunks, if not 10.

Given that life and investment conditions are erratic and uncertain at best, though in the long run generally favouring equities from what we've seen for a very long time in the past, I would start by looking at areas of allocation, and then try to find at least 1 but preferably 2 or 3 places to put each chunk.

I know that some people will say that I'm simply creating a worldwide tracker with extra fees, but their arguments would not convince me.

So what are the areas to consider?

Equities (with a global spread, to avoid wipe-out if one part of the world has a severe downturn or a political upheaval or a geography-based problem like earthquakes, nuclear accidents or major terrorist problem) : purpose longer-term growth of capital and increasing dividends.

Property (again some sort of global spread) : purpose diversification from equities, with daily value volatility smoothed, and growth of capital and generation of rising dividends.

Fixed-interest or other guaranteed/predictable return (global spread if possible) : purpose to have some sort of guarantees, but also the possibility of results not normally being too linked to equity returns (traditionally, though not lately, equities and bonds had inverse trends in the marketplace).

Alternatives (gold, silver, other precious metals, various commodities) : purpose to counteract long-term erosion of paper values of money by using gold, and tying into cyclical trends with silver, other metals, other commodities (for example, in the 1970s, when inflation was rampant, gold and commodities were much better performers than other equities or bonds).

Again, going with a broad-brush, gut-feeling approach, how about 10% in gold and similar, 10% in fixed-interest, 20% in property, 60% in equities?

Gold and similar precious metals are probably best bought through BullionVault if you're dealing in £100,000 amounts, because of the relative dealing, annual and storage costs that are then in your favour because of scale, compared to ETF- type funds and trackers.

Fixed-interest : Best bought directly via a broking platform, and concentrate on high-quality exchanges such as London and New York, with some fixed-rate and some index-linked holdings, of various maturity dates, short, medium, long. Don't go too heavily into these at this stage in the cycle.

Equities : A mix of large-cap, mid-cap and small-cap. USA, UK, Western Europe, Japan, Far East. For example:
Fundsmith Equity Fund,
Lindsell Train Global Equity,
Jupiter European Opportunities,
Baillie Gifford Shin Nippon or J P Morgan Japanese,
a global small-cap holding,
a Far East fund such as Pacific Assets IT, Schroder Oriental, Fidelity Asian Values,
perhaps a bit in a racier Far East fund like Pacific Horizons or Vietnam Enterprise [VEIL],
a UK mid-cap like Old Mutual or J P Morgan mid cap, or the Buffettology fund or Mark Slater's funds,
a UK ultra-small companies fund like Marlborough Micro Cap,
and finally the arch-disruptor fund (higher risk but potentially higher-reward) Scottish Mortgage Trust.

And I'm already using more funds than I started with, but there is diversity there.

I reckon you're at 13 or 14 or 15 holdings in total.

Buy Fundsmith direct from the managers (T Class)
Use about 3 or 4 other platforms to spread the rest (A J Bell, Hargreaves Lansdown, iWeb, Baillie Gifford?).

DYOR!!
11 users thanked Alan Selwood for this post.
Guest on 21/03/2018(UTC), Mike L on 21/03/2018(UTC), Joe 90 on 21/03/2018(UTC), sarah b on 22/03/2018(UTC), Aminatidi on 25/03/2018(UTC), Andrew Smith 259 on 25/03/2018(UTC), Margaret D on 25/03/2018(UTC), Guest on 25/03/2018(UTC), Guest on 26/03/2018(UTC), Raj K on 03/04/2018(UTC), J Thomas on 26/05/2018(UTC)
Jon Snow
Posted: 21 March 2018 00:42:59(UTC)
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FWIW

In my SIPP I currently hold -

NCYF
HFEL
CTY
GCP
SLI
Liontrust monthly income bond

I take about 50% of the dividends/payments as pension income and leave the rest in the SIPP for my heirs.



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Vince. on 21/03/2018(UTC), Joe 90 on 21/03/2018(UTC), sarah b on 22/03/2018(UTC), Andrew Smith 259 on 25/03/2018(UTC), Margaret D on 25/03/2018(UTC), Kevin Crane on 16/04/2018(UTC)
Chris Moore
Posted: 24 May 2018 10:25:03(UTC)
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I'm in a similar position. I have a number of DC pots from various jobs and am now looking to consolidate into a SIPP (total will be approx £600K). I also have a DB pension worth about £9K/year.

I've looked at a few platforms and am currently favouring Interactive Investor as they charge a flat fee of £90/year for all accounts (SIPP,ISA,General Trading) which I think is pretty good. The only other charge is the SIPP admin which is a further £120/year.

I've also thought long and hard about the portfolio. I've researched Funds, ETF's, IT's Bonds looked at the pro's and cons of passive vs active.

Like many other readers on this forum I am reluctant to use an IFA as they almost always have a view of what is best for them as opposed for you. I guess that's what they're in business for.

Anyway, I've decide to split the pot into a number of distinct portfolio's (within one SIPP):-


£50K - Cash
£125K - Blackrock Consensus 85 - Index Fund for low cost / steady growth.
£125K - Vanguard LS 100 - Index Fund for low cost / more aggressive growth
£150K - John Baron (Winter) - IT Portfolio for income
£150K - Money Observer (India) - IT/UT Portfolio for income

Plan is to take the income/yield from each portfolio on a yearly basis and rebalance. Guessing this will be between 3% and 4% with the £50K cash to see me through any downturns until I can add my state pension in 3 years time which should then total about £40K/year to retire on.

I was hoping to maximise up to the 20% tax allowance (ie £46,350) but I'm conscious about introducing too much out of the pot and increasing the risks at this stage.

Thoughts?
Chris Moore
Posted: 26 May 2018 09:50:25(UTC)
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I'm in a similar position. I have a number of DC pots from various jobs and am now looking to consolidate into a SIPP (total will be approx £600K). I also have a DB pension worth about £9K/year.

I've looked at a few platforms and am currently favouring Interactive Investor as they charge a flat fee of £90/year for all accounts (SIPP,ISA,General Trading) which I think is pretty good. The only other charge is the SIPP admin which is a further £120/year.

I've also thought long and hard about the portfolio. I've researched Funds, ETF's, IT's Bonds looked at the pro's and cons of passive vs active and have decided to include a mix of both.

Like many other readers on this forum I am reluctant to use an IFA as they almost always have a view of what is best for them as opposed for you. I guess that's what they're in business for.

I also quite like the idea of following a couple of tried and tested model portfolios which I've been researching. The one's that I'm particularly impressed with are the John Barron IT based portfolio's (particularly Winter) and Money Observers India Portfolio.

So I've decide to split the pot into a number of distinct portfolio's (within one SIPP):-


£50K - Cash

£150K - John Baron (Winter) - income
£150K - Money Observer (India) - income

£125K - Blackrock Consensus 85 - low cost / steady growth.
£125K - Vanguard LS 100 - low cost / more aggressive growth.

This works out to be about 25 funds altogether.

Plan is to take the income/yield from each on a bi-annual basis. Guessing this will be between 3% and 4% with the £50K cash to see me through any downturns until I can add my state pension in 3 years time which should then total (including £9K DB) about £36K/year.

I'd be interested in any members experiences using a similar approach particularly the JB or MO portfolio's as well as the Interactive Investor platform.
1 user thanked Chris Moore for this post.
Andrew Smith 259 on 26/05/2018(UTC)
Andrew Smith 259
Posted: 26 May 2018 10:35:11(UTC)
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Chris Moore;62936 wrote:
I'm in a similar position. I have a number of DC pots from various jobs and am now looking to consolidate into a SIPP (total will be approx £600K). I also have a DB pension worth about £9K/year.

I've looked at a few platforms and am currently favouring Interactive Investor as they charge a flat fee of £90/year for all accounts (SIPP,ISA,General Trading) which I think is pretty good. The only other charge is the SIPP admin which is a further £120/year.

I've also thought long and hard about the portfolio. I've researched Funds, ETF's, IT's Bonds looked at the pro's and cons of passive vs active and have decided to include a mix of both.

Like many other readers on this forum I am reluctant to use an IFA as they almost always have a view of what is best for them as opposed for you. I guess that's what they're in business for.

I also quite like the idea of following a couple of tried and tested model portfolios which I've been researching. The one's that I'm particularly impressed with are the John Barron IT based portfolio's (particularly Winter) and Money Observers India Portfolio.

So I've decide to split the pot into a number of distinct portfolio's (within one SIPP):-


£50K - Cash

£150K - John Baron (Winter) - income
£150K - Money Observer (India) - income

£125K - Blackrock Consensus 85 - low cost / steady growth.
£125K - Vanguard LS 100 - low cost / more aggressive growth.

This works out to be about 25 funds altogether.

Plan is to take the income/yield from each on a bi-annual basis. Guessing this will be between 3% and 4% with the £50K cash to see me through any downturns until I can add my state pension in 3 years time which should then total (including £9K DB) about £36K/year.

I'd be interested in any members experiences using a similar approach particularly the JB or MO portfolio's as well as the Interactive Investor platform.


Very interesting plan. I use Hargreaves Lansdown for my SIPP. They only charge an annual fee of 0.45% capped at £200.00 (if I remember correctly) provided you only hold shares and ITs. Also if you plan to draw an income from your SIPP HL do not charge an income drawdown fee either.

I follow JBs Dividend IT portfolio, which has a few cross holdings with Winter. I have no experience with Money Observer portfolios.
1 user thanked Andrew Smith 259 for this post.
Chris Moore on 26/05/2018(UTC)
Samual Saunders
Posted: 26 May 2018 12:06:30(UTC)
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HL charge higher rates if you hold Funds. The 0.45 is part of it but looking at factsheets, the ongoing charges are higher.
2 users thanked Samual Saunders for this post.
Chris Moore on 26/05/2018(UTC), Andrew Smith 259 on 26/05/2018(UTC)
Andrew Smith 259
Posted: 26 May 2018 13:06:53(UTC)
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Samual Saunders;62944 wrote:
HL charge higher rates if you hold Funds. The 0.45 is part of it but looking at factsheets, the ongoing charges are higher.


Not a problem for me as I only hold Shares and ITs in my SIPP, but worth bearing in mind if you want to hold funds.
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