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Pensions - general advice
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E73
Posted: 17 July 2012 18:12:30(UTC)
#1

Joined: 17/07/2012(UTC)
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I feel I have paid too much in the past to IFA's and some time ago decided, rightly or wrongly, to deal with my personal investments myself.

A few stats about me:
1. I am 38, so have at least 17 years until retirement if not longer
2. I have commercial property in a Sipp fully paid for which generates a rent every quarter
3. I also invest a lump sum into my Sipp every year
4. I would be prepared to invest half in medium and half in high risk investments - I would not panic sell easily.

The question is where should I invest the money in my Sipp? I have bought some shares in the Sipp already and a bought into two funds, but there is so much choice that I am unsure where to invest.

Any suggestions please?
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PensionMan
Posted: 18 July 2012 11:35:01(UTC)
#2

Joined: 05/10/2006(UTC)
Posts: 33
I suggest you get some proper, paid for advice!

Why do you feel that you have paid too much to IFA's in the past?
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Once bitten!
Posted: 18 July 2012 12:00:44(UTC)
#3

Joined: 25/02/2012(UTC)
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I agree - IFAs generally are simply money sucking parasites. One charged me 3% on £200K invested in a SIPP and all they did was fill in some tick sheets provided by the pension company...... I later found out that they paid £1K commission to my accountant, as an introductory sweetener. Needless to say I reminded him it was my money and demanded it back!

This is the problem with the U.K. There are just too many middlemen creaming off percentages of our money. Find me an IFA who will look after my investments and take a percentage profit of the gains, rather than a fixed fee, regardless of how they perform, and I will talk seriously to him/her.
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5 users thanked Once bitten! for this post.
banjofred on 18/07/2012(UTC), Guest on 18/07/2012(UTC), AJMcG on 18/07/2012(UTC), colin wilson on 18/07/2012(UTC), Guest on 05/08/2012(UTC)
sgjhaghsdg
Posted: 18 July 2012 12:11:58(UTC)
#4

Joined: 07/01/2011(UTC)
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I suggest you read "Smarter Investing" by Tim Hale to get the fundamentals of constructing a portfolio and also the importance of keeping fees low.

I have paid IFAs in the past but now DIY for our SIPPs, ISAs and unwrapped investments. My fees are lower, performance is better, and my retirement plans are now solid and achievable.

The book referenced above does have a check-list for whether you're likely to be better going the IFA or DIY route.
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2 users thanked sgjhaghsdg for this post.
banjofred on 18/07/2012(UTC), Guest on 18/07/2012(UTC)
J Thomas
Posted: 18 July 2012 13:55:02(UTC)
#5

Joined: 22/02/2012(UTC)
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You will never make a more significant improvement in your financial life than to stop using IFAs and manage your own pension and investments. Almost everyone on these forums will tell you the same thing, they wish they had started not using an IFA twenty years ago.
Trust me, a reasonably well off person can easily be worse off by six figure sums when fees, comissions ( initial, and trail ), charges, bad advice and losses, are all factored into the equation.
My own suggestion is Standard life My Folio Funds. I transfered my pension directly with no transfer fee, and no fee or comission payable to an IFA . Annual Management Fee is 0.8% including large fund discount with no other charges. The result? My pension has performed better in the last three months than the last five years with my previous provider. I keep track of the funds from my last pension for comparision and I am 8% better off in capital value.
The reason? No middle man/woman or IFA.
Also buy direct and manage your own Cash ISA, and Shares for dividend income.
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3 users thanked J Thomas for this post.
banjofred on 18/07/2012(UTC), Guest on 18/07/2012(UTC), colin wilson on 18/07/2012(UTC)
David Chapman
Posted: 18 July 2012 16:35:48(UTC)
#6

Joined: 08/04/2008(UTC)
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I gave up on pension providers and IFAs many years ago - did my own research - and gave up the tax relief and put money into PEPs and ISAs - I have just retired and now enjoy a substantial tax free income
As a matter of record I invested in Inv Perp Income and Hi Inc, M& G Recovery and JPM Natural Resources
The secret is sticking with it, paying in regularly monthly or quarterly,whatever the state of the economy or stock market
And finally dont dip into it!!


















ecovery, and JPM Natural Resources
The secret is sticking with it - paying in monthly or quarterly whatever the economic climate is or the state of the stock market and NOT dipping into it
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Michael Hellman
Posted: 18 July 2012 21:22:58(UTC)
#7

Joined: 26/06/2009(UTC)
Posts: 12

Was thanked: 4 time(s) in 3 post(s)
E73, its the age old question, where to invest. If we are to have low inflation for the next few years and only moderate economic growth I would be picking high yielding blue chips and re investing and also looking at global funds or trackers. Or maybe do another commercial property!
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banjofred
Posted: 19 July 2012 05:08:50(UTC)
#8

Joined: 14/03/2011(UTC)
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You have the benefit of time to compund interest and to see the mistakes made by others and avoid them

Dont use IFAs, you are peeing money up the wall and paying him commission upfront and hidden, for attachment to funds which may him the most

Dont think a spread of funds and shares will protect your cash. When one tanks they all tank. I have yet to find a fund which grows when the rest are tanking.

Yes minimise costs, but I have found some funds which are high cost but are still performing in the period when others are losing me a lot of money. The are plenty of posts on here suggesting good funds and strategies from those more knowledgable than I.... I like Troy Trojan which has made me 12% in last months, but has high charges

You can now buy into trackers very cheaply and with a 20 year timescale can ride out the bumps. Where will gold be in 20 years - buy some Sovereigns and hide them - no vat no capital gains tax, no quantitive easing eroding your value.

Finally, you have your Sipp well sorted. Start thinking that pension money is dead money - the supposed tax benefit is clawed back and the end and even with drawdown you cant get your hands on your money to squander it - its trapped until you die and the govt takes it. The govt record so far proves that it simply wants to plunder your savings ongoing, and erode the value of the pot by QE.

This can only get worse.... in other countries the govt has grabbed pensions for "investment" in,,,, er,,,, the govt. Even the USA did that when its back was to the wall, asking for registration of gold held (I wonder why - its the only thing of value)

Believe me mate, when you hid 50 and then later hit 60 (if God spares you)
you come to what my doctor called " life changes and realisation changes". Basically it means you come around the bend all systems go and at the endo f the final straight you see the Grim Reaper.

You suddenly realise the end is ahead, and what is the point of saving for an old age that probably wont happen, and if it does the govt will grab your dosh and your health will not permit a Hugh Hefner lifestyle.

Much of my dosh is trapped in that SIPP, with 40% tax if i drawdown before retirement, and 20% aftert that.

I say to you keep a lot of your money liquid. Forget pensions they are for losers (like me). ISAs. gold, even property.

Why build up your pension?? When will be planning to spend that money, if ever?

Comments welcomed !!!
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1 user thanked banjofred for this post.
J Thomas on 19/07/2012(UTC)
sgjhaghsdg
Posted: 19 July 2012 09:28:01(UTC)
#9

Joined: 07/01/2011(UTC)
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Pensions work very well if you can get free money from your employer or if you'll pay less tax in retirement than when working (so 20% when working and 0% in retirment, or 40% working and 20% retirement) and there is also the 25% tax free lump sum.

However, you need to model for only being able to draw 5% pa from what's left, which might mean you need investments outside of a pension to bridge between retirement and state pension.

After my tax free sum, I'm looking at having 40% in pensions and 60% in ISAs and unwrapped investments. Others may choose to have a different split, but 0% in pensions is something you should only consider if you've modelling things carefully and are sure this will give you the best outcome.
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2 users thanked sgjhaghsdg for this post.
banjofred on 19/07/2012(UTC), J Thomas on 19/07/2012(UTC)
E73
Posted: 19 July 2012 11:36:58(UTC)
#10

Joined: 17/07/2012(UTC)
Posts: 3

Thanks: 1 times
Thanks for all of your help and suggestions.

I also max out mine and my wife's ISA's every year.

The only reason why I make large pension contributions is to avoid tax.

I do appreciate that if I load my pension up I will have to pay tax when I take an income from it in retirement, but if in a few years I have plenty in my pension I can choose to reduce or stop payments into it. Also whilst I have had a good income over the last few years, that may not always be the case. On balance, I think having too much money in my pension pot would be a nice problem to have.

I put cash in my pension at end of 2011/12 financial year, but didn't start to buy shares and funds with it until late June due to Eurozone turmoil, and even then I have been dripping into a range of fund and shares.

Since June I have invested (all in the Sipp) in a mix of high yield and some higher risk shares in various sectors, and the following funds, in order of investment value:
1. Aberdeen Emerging Markets I Acc
2. MFM Slater Growth Acc
3. GLG Partners UK Ltd Global Corp Bond Retail
4. Scottish Widows American Smlr Companies A Acc

I selected these, without a great deal of research, from looking at past performance over 1, 3, 5 and where applicable 10 years, looking at other funds in the sector, and wanting to ensure a good spread across several sectors.

I plan to keep investing in more shares and funds. All of the ISA funds are sitting in cash ready to be invested, but I just haven't decided where.

Any further suggestions much appreciated.
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J Thomas
Posted: 19 July 2012 12:30:48(UTC)
#11

Joined: 22/02/2012(UTC)
Posts: 55

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E73 - Your actually already doing most of the things people on here would recommend. A higher rate taxpayer should pay into a private pension directly with no IFA and take the 25% tax free cash at age 55. ( Dont bank on the tax free element still being here in ten years time though.) Take the remainder as a basic or non taxpayer and a pension is still a great idea.
Banjo - your gold soverigns are a great idea. I've been collecting them for the last 25 years from auctions, probate estates, etc. Its a fantastic hobby especially when you pick up rare Victorian and Melbourne issues. Most of mine have doubled or more in value even on ebay valuations. Caution though - dont buy any new ones from Royal Mint at £400 each, the value is in coins fifty plus years old.
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1 user thanked J Thomas for this post.
banjofred on 19/07/2012(UTC)
brian bennis
Posted: 29 November 2012 13:37:51(UTC)
#12

Joined: 23/10/2012(UTC)
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E73;15609 wrote:
The question is where should I invest the money in my Sipp? Any suggestions please?


Here's a neat take on how to breakdown the vast array of options, by working out the class and the type of investment that interests you most - SIPPclub
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sgjhaghsdg
Posted: 29 November 2012 13:47:42(UTC)
#13

Joined: 07/01/2011(UTC)
Posts: 222

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Perhaps someone needs to declare an interest?

http://uk.linkedin.com/pub/brian-bennis/8/a78/984
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brian bennis
Posted: 29 November 2012 14:00:46(UTC)
#14

Joined: 23/10/2012(UTC)
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I declare an interest.
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