I would agree - an element of a portfolio at least.
But you do need a good art dealer, one who is good at spotting talent early.
Mate of mine bought some art last year..... without first discussing it with his wife. It cost him a significant wedge. It was a painting of some Paris street scene. (Like that hasn't been done before). Snag was it was too big to hang on any of his walls and he had to get an extension built to accommodate it. Wifey not best pleased. Even less so, when I visited and pointed out that the cafe in the painting looked like a branch of Cafe Rouge.
If anyone is interested, I'd suggest a browse round the Surrey Sculpture Park where all the works (not all outdoor) are for sale. https://thesculpturepark.com/ Pub opposite - Bel & The Dragon - is good for some nosh too. (I don't know why there is only one "l" in "Bel"). A good day out even if you don't buy anything.
Hi all, help please. I have a decent lump sum to invest, and I am told putting it in a tracker is the way to go, confusion reigns however when I look into them as they seem to suggest starting with circa 1000, and paying monthly. Not adverse but want to stash the lump somewhere. Any advice on that?
If the tracker is stock linked, have I missed the boat with both ftse and Dow being so high? Any industry advice? I think US defence will be a good shot in the next 2 years.
I may need a chunk of it some time in the next 2 years as have baby 6 weeks out and will outgrow my flat/finish the fixed term of my mortgage by then.
So in summary:
- looking for a good place to stash a lump sum - can afford circa 500 a month after that - should I split this around investments? Worth noting I will monitor the movements but am a bit lazy in this regard. - may need access within 2/3 years
Hi all, help please. I have a decent lump sum to invest, and I am told putting it in a tracker is the way to go, confusion reigns however when I look into them as they seem to suggest starting with circa 1000, and paying monthly. Not adverse but want to stash the lump somewhere. Any advice on that?
If the tracker is stock linked, have I missed the boat with both ftse and Dow being so high? Any industry advice? I think US defence will be a good shot in the next 2 years.
I may need a chunk of it some time in the next 2 years as have baby 6 weeks out and will outgrow my flat/finish the fixed term of my mortgage by then.
So in summary:
- looking for a good place to stash a lump sum - can afford circa 500 a month after that - should I split this around investments? Worth noting I will monitor the movements but am a bit lazy in this regard. - may need access within 2/3 years
Thanks in advance!
Tracker funds are no more safe than any other fund, what they are is a low cost guarantee of your investments moving in line with the market you choose to track. It takes away the risk of a fund manager getting his bets wrong and returning less than the average for then market. You give up the chance of the fund manager getting lucky and beating the market. The chances of you picking an active fund that outperforms the market net of the higher fees you will pay are small, so that's why a tracker fund makes sense.
If you are "stashing" a lump sum it suggests you want it back, in which case you are saving, not investing, so don't invest (specuklate in a tracker fund unless you don't mind the risk of not getting all your money back.
There isn't a decent place to stash away cash for a short period that is safe, you might get 1%+ interest with a post office or bank savings bond, but anything else will be putting your money at risk. Which is why even Premium Bonds can look exciting.
You can't split investments yourself to spread the risks as effectively as a "Diversified" growth fund, but don't think you can't lose your money, you just would lose less of it.
If you think you can "monitor" your investments and take an informed decision, particularly if it's intermittent. forget it The market will have moved against you long before you get wind of any strategic move to enhance returns or protect against losses. Traders now pay £billions to get a thousandth of a millisecond extra speed in receiving market information, if you get it the same day it might just as well have been last year.
If you consider most of the market surge in recent weeks has been on the back what Trump has been saying, nothing to do with the performance of the real economy, be wary. The market has no rational sense check, it takes what Trump says, translates it as data and processes it. Understand he can open his mouth one day, or Congress refuses to back him, and the markets could fall through the floor.
Thanks @Dippenhall I didn't mean monitor in terms of moving it around, I was thinking more in terms of fees I'm paying for the fund on things like nutmeg or HL. Taking advantage of new customer offers and such.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
Thanks @Dippenhall I didn't mean monitor in terms of moving it around, I was thinking more in terms of fees I'm paying for the fund on things like nutmeg or HL. Taking advantage of new customer offers and such.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
If you are investing in stocks and Shares, you should be prepared to leave them for 6 years minimum. This doesn't mean you have to, but you should be able to. The logic is that over a 6 year period markets are usually up.
Thanks @Dippenhall I didn't mean monitor in terms of moving it around, I was thinking more in terms of fees I'm paying for the fund on things like nutmeg or HL. Taking advantage of new customer offers and such.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
Always take professional advice. If you had toothache would you come on here asking for a cure ? No, you'd go to your dentist. Financial advice is no different.
Yes, I have a vested interest being an IFA, but it baffles me why people think they can do it themselves or speak to their "mate down the pub" who will, of course, know it all.
Thanks @Dippenhall I didn't mean monitor in terms of moving it around, I was thinking more in terms of fees I'm paying for the fund on things like nutmeg or HL. Taking advantage of new customer offers and such.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
Always take professional advice. If you had toothache would you come on here asking for a cure ? No, you'd go to your dentist. Financial advice is no different.
Yes, I have a vested interest being an IFA, but it baffles me why people think they can do it themselves or speak to their "mate down the pub" who will, of course, know it all.
I know Dippy doesn't like so-called active fund managers (and the fees they rake in) and I have some agreement with him on that. But the really good ones do earn their corn. One of my favourite funds, for reasons that will shortly become obvious, is the Old Mutual UK Smaller Companies Fund. Over 15 years the FTSE Small cap index has provided a little over 100% growth. That's what you would have got with a small cap tracker - there or thereabouts anyway. The Old Mutual fund has achieved 725% growth. I put £7k as an ISA into that fund; it's now worth over £63k. Risk, yes. But reward also if you (or your adviser) pick the right funds.
Thanks @Dippenhall I didn't mean monitor in terms of moving it around, I was thinking more in terms of fees I'm paying for the fund on things like nutmeg or HL. Taking advantage of new customer offers and such.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
Always take professional advice. If you had toothache would you come on here asking for a cure ? No, you'd go to your dentist. Financial advice is no different.
Yes, I have a vested interest being an IFA, but it baffles me why people think they can do it themselves or speak to their "mate down the pub" who will, of course, know it all.
Dippenhall knows his stuff though, Golfie.
There are also numerous cases of dentists persuading patients to agree to expensive procedures when a cheaper solution would do just as well. Not to mention the unexplained differences in fees between dentists for the same procedure. So if my mate down the pub also happened to be a dentist, I would definitely ask his opinion about the choice I need to make between implant or bridge, because I would know his advice isn't driven by money.
The cynic in me says that your main objection to Dippenhall's advice is that Super Eddie won't need an IFA in order to carry it out. I'd be less cynical if you pointed to some rational reasons why Dippy's advice might not be the best.
Thanks @Dippenhall I didn't mean monitor in terms of moving it around, I was thinking more in terms of fees I'm paying for the fund on things like nutmeg or HL. Taking advantage of new customer offers and such.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
Always take professional advice. If you had toothache would you come on here asking for a cure ? No, you'd go to your dentist. Financial advice is no different.
Yes, I have a vested interest being an IFA, but it baffles me why people think they can do it themselves or speak to their "mate down the pub" who will, of course, know it all.
Point taken, if you don't mind me asking, would you disagree that money I need within a couple of years is best of in a savings isa?
If it sets your mind at ease, my mate down the pub is a wealth manager, he just wants me to do some more work on the sort of avenues I want to look at.
Thanks @Dippenhall I didn't mean monitor in terms of moving it around, I was thinking more in terms of fees I'm paying for the fund on things like nutmeg or HL. Taking advantage of new customer offers and such.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
Always take professional advice. If you had toothache would you come on here asking for a cure ? No, you'd go to your dentist. Financial advice is no different.
Yes, I have a vested interest being an IFA, but it baffles me why people think they can do it themselves or speak to their "mate down the pub" who will, of course, know it all.
Point taken, if you don't mind me asking, would you disagree that money I need within a couple of years is best of in a savings isa?
If it sets your mind at ease, my mate down the pub is a wealth manager, he just wants me to do some more work on the sort of avenues I want to look at.
Yes, as long as you appreciate that you are not going to get much of a return & the only reason it is in there is that it is A) the interest is tax free & it is safer than keeping it under the mattress. My main concern with people who say that they are "risk averse" is that they don't really understand what "risk" is.
Anyone thinking about investing money should make sure that they invest in a range of funds, covering the 4 main asset classes (equities, fixed interest, property and cash). Usually I wouldn't hold the cash in the portfolio but either already as a cash isa or bank account. Once this area is covered, then the remaining money can be split between the other 3 areas. The % split will all depend on your attitude to risk, with conservative investors having a greater proportion in fixed interest than a more balanced or adventurous investor.
Therefore, to answer Super Eddie Youds - if you need the money in the next 2-3 years make sure you park some in cash ( maybe even as much as half) & then you can think about investing the rest in a mix of funds as above. Any growth in the next year or two could be skimmed off & put back into your cash pot so that the gain is protected . This should limit any loses, but if you dont think you could stomach any loses, dont invest,
Question. Golf Addick I'm sure you can answer this. I have. DB pension employed by a bank, my lifetime allowance used is calculated as about £700,000. Now if i asked for a CETV I'm told it would be about £1.5 Million. As that breaks the £1 MIllion LTA, would I have to pay 55 % tax on the £500,000 over LTA. Thus having £1.225 Million to invest.
Just about to take my first dip into the car market and purchase a couple of 40 year old run of the mill Fords that require a little bit of tlc.
Have some help, obviously, but components are plentiful and cheap and current demand for these types of vehicles from the baby boomers in incredible.
I'd agree, classic car prices have gone crazy. Had an old 911 in 2010 that I got just over £20k for (thought I'd done well doubling my money), that'd be worth £50-60k now.
I laugh at the old fords, had many in the late 80's including an escort harrier that I paid £200 for, add two 0's on that now!!
That said they might have peaked...... I replaced my 911 with a kitchen and a 968 (£7k) that's worth near £30k now. Sadly was talked out of buying a 993 Turbo by my wife (£30k), they're £150k now..... I remind her on a regular basis though
Question. Golf Addick I'm sure you can answer this. I have. DB pension employed by a bank, my lifetime allowance used is calculated as about £700,000. Now if i asked for a CETV I'm told it would be about £1.5 Million. As that breaks the £1 MIllion LTA, would I have to pay 55 % tax on the £500,000 over LTA. Thus having £1.225 Million to invest.
Thanks @Dippenhall I didn't mean monitor in terms of moving it around, I was thinking more in terms of fees I'm paying for the fund on things like nutmeg or HL. Taking advantage of new customer offers and such.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
Always take professional advice. If you had toothache would you come on here asking for a cure ? No, you'd go to your dentist. Financial advice is no different.
Yes, I have a vested interest being an IFA, but it baffles me why people think they can do it themselves or speak to their "mate down the pub" who will, of course, know it all.
Point taken, if you don't mind me asking, would you disagree that money I need within a couple of years is best of in a savings isa?
If it sets your mind at ease, my mate down the pub is a wealth manager, he just wants me to do some more work on the sort of avenues I want to look at.
Therefore, to answer Super Eddie Youds - if you need the money in the next 2-3 years make sure you park some in cash ( maybe even as much as half) & then you can think about investing the rest in a mix of funds as above. Any growth in the next year or two could be skimmed off & put back into your cash pot so that the gain is protected . This should limit any loses, but if you dont think you could stomach any loses, dont invest,
I'm a retired FA and I would respectfully disagree. If you are not 100% sure that you won't need the cash in the next 5/6 years, then you should not be investing in risk based products.
If you need that money in say 4 years and your risked based investment has fallen, which is more than possible, then you would not be able to proceed with what the money was intended for and you may even have grounds for a legal claim against an adviser that recommended you invest that money in a risk based product for 2-3 years.
Cash ISA's may not have the importance they did, as we now have a tax free interest allowance in any case.
High interest current a/c's, you can have one each and a joint one ie 3 could be the way to go, together with instant access savings a/c's, Cash ISA's and fixed rate bonds, which are risk free.
You should not invest any money in risk based products if you will need that money before 5/6 years and anyone telling you different is offering bad advice for whatever reason. In my opinion.
Thanks @Dippenhall I didn't mean monitor in terms of moving it around, I was thinking more in terms of fees I'm paying for the fund on things like nutmeg or HL. Taking advantage of new customer offers and such.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
Always take professional advice. If you had toothache would you come on here asking for a cure ? No, you'd go to your dentist. Financial advice is no different.
Yes, I have a vested interest being an IFA, but it baffles me why people think they can do it themselves or speak to their "mate down the pub" who will, of course, know it all.
Point taken, if you don't mind me asking, would you disagree that money I need within a couple of years is best of in a savings isa?
If it sets your mind at ease, my mate down the pub is a wealth manager, he just wants me to do some more work on the sort of avenues I want to look at.
Yes, as long as you appreciate that you are not going to get much of a return & the only reason it is in there is that it is A) the interest is tax free & it is safer than keeping it under the mattress. My main concern with people who say that they are "risk averse" is that they don't really understand what "risk" is.
Anyone thinking about investing money should make sure that they invest in a range of funds, covering the 4 main asset classes (equities, fixed interest, property and cash). Usually I wouldn't hold the cash in the portfolio but either already as a cash isa or bank account. Once this area is covered, then the remaining money can be split between the other 3 areas. The % split will all depend on your attitude to risk, with conservative investors having a greater proportion in fixed interest than a more balanced or adventurous investor.
Therefore, to answer Super Eddie Youds - if you need the money in the next 2-3 years make sure you park some in cash ( maybe even as much as half) & then you can think about investing the rest in a mix of funds as above. Any growth in the next year or two could be skimmed off & put back into your cash pot so that the gain is protected . This should limit any loses, but if you dont think you could stomach any loses, dont invest,
If you're investing money - some you might want to use in a couple of years and some which you invest for the longer term, think about using your ISA for the long term stuff. I think for an ISA all gains are tax free (?) if so it makes sense to park your best potential (long term) gains in the ISA and put your cash, which won't gain much anyway, in a few checking accounts and try to take advantage of the relatively good rates banks might offer for switching to them?
There are some (extreme) examples of investors in Canada who've done clever and risky investing inside their TFSA (Canadian equivalent of an ISA) who have grown their accounts to around $450,000.........not bad when you consider if they'd put their money into a TFSA savings vehicle the most it might be worth is $50,000! To explain, the TFSA scheme has only been around a few years and with the annual limits the most cash anyone has been allowed to put in is $45,000 I believe, so to turn this into $450k is not too shabby is it.
One guy I read about who is in this position is being pursued by Canada Revenue (tax) as they're saying he's not a private individual, he's operating his ISA investments as a business, because he trades "often".
Thanks @Dippenhall I didn't mean monitor in terms of moving it around, I was thinking more in terms of fees I'm paying for the fund on things like nutmeg or HL. Taking advantage of new customer offers and such.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
Always take professional advice. If you had toothache would you come on here asking for a cure ? No, you'd go to your dentist. Financial advice is no different.
Yes, I have a vested interest being an IFA, but it baffles me why people think they can do it themselves or speak to their "mate down the pub" who will, of course, know it all.
To be fair, I didn't read into this you were saying my observations were advice. I read it that you were pointing out that no one can give you advice without stating very clear objectives and receiving clear explanations e.g. of the range of risk/reward strategies available.
My biggest gripe is advisers giving what the punters want to hear rather than tell them they are asking the wrong question or have unrealistic expectations only deliverable with luck.
The truth is that no one has a clue where markets are going or what asset class is going to perform best. Performance is the last thing to worry about, first you decide how thinly or how widely you want to spread risk given the unknowns and what market or mix of markets you want as a benchmark for your objective return. Success is relative to performance against your objectives, not the performance of a market your portfolio is not matched to. Absolute performance is an irrelevance because it can't be benchmarked through a portfolio construction, apart from hedge funds seeking a modest absolute return above cash returns,.
I'm not against active management, I use active management, but only where the activity is aimed at efficient diversification with minimum sacrifice of upside market performance, skill and judgement is involved and results show clearly whether those skills have resulted in out-performance in falling markets and modest gains when markets rise. What is not rewarded, in my personal view is paying through the nose for a manager to seek market out-performance with a portfolio 90% tracking the market and hoping his 10% bets come good. They form the bulk of the investment market, and are the most publicised because that's where managers make money, charging 10 times a tracker fund. 25% (guessing) of active funds do come good over a cycle, the problem is no one knows in advance which 25% will be the winners, nor do many of the winners give a return after costs, much better than a tracker. That metric is never going to be visible unless you pay a measurement analyst £50k to do the monitoring. The funds which are dogs are dropped and re-launched under a new name. As all new funds are more successful than mature funds (due to the effect of having new cash to buy stocks avoiding the costs of selling stocks to buy replacements) they attract more business from investors and the cycle is repeated. To me it's a sophisticated three card trick.
Small cap funds have historically always beaten the global index when market rise, but they fall further when markets fall. Small cap funds tend to give the best long term returns because markets have historically risen more than they have fallen, so because it is a statistically recurring event, with better than a 50% chance of success, they are the core of most long term strategies. The risk is being a short term investor, buying at the top of the market or a forced sale in a falling market, when you would say i wish I was in large cap stocks.
Question. Golf Addick I'm sure you can answer this. I have. DB pension employed by a bank, my lifetime allowance used is calculated as about £700,000. Now if i asked for a CETV I'm told it would be about £1.5 Million. As that breaks the £1 MIllion LTA, would I have to pay 55 % tax on the £500,000 over LTA. Thus having £1.225 Million to invest.
Your LTA is only calculated when you draw benefits, and from 2018 goes up in line with inflation. So a current CETV can't be compared with the pension value at retirement unless you are about to take your benefits.
A £700k LTA is a DB pension of around £35k p.a. If it's about to be paid, and you could instead have a cash transfer value of £1.225 it does not mean you are able to invest it and guarantee a stream of income bigger than £35k p.a, particularly if the £35k is inflation proofed. So if you are going to invest the £1.225, why bother if it can't match £35k p.a and the DB scheme is already investing it and guaranteeing that amount of income for life without you taking any investment risk and without the risk of you giving too long.
However, you will probably be looking at the vast difference in cash payout, rather than income i'm sure. You can get £250k tax free from the CETV compared to perhaps around £175k from the DB scheme. The 55% only applies to the additional cash you take above the limit, you will still, cash wise be net better off. It's more about what you can do with the extra cash than investing £1.225m, which might or might not beat the £35k p.a. DB pension. It's the net total value after tax that counts, avoiding tax for the sake of it is not necessarily sensible.
You are required by law to take advice before you could take your CETV from a DB scheme, a good adviser will be able to offer a range of scenarios showing worst and best outcomes. If you are concerned with long term security and income guaranteed for life then the DB pension will take some beating, the attraction of cash can mask reality and leaving a small cash pot to last your lifetime can turn out to be a regretted decision. Unless you need the cash to spend, pay off a mortgage etc., it might be the wrong choice to deplete your retirement fund of cash just because you can. If you don't spend the cash you raise, you will need to invest it, presumably for income, which is what your DB pension was doing in the first place. Government is encouraging people to maximise cash because you pay more tax.
This is where IFAs should be earning their corn, it's a real complex area.
Question. Golf Addick I'm sure you can answer this. I have. DB pension employed by a bank, my lifetime allowance used is calculated as about £700,000. Now if i asked for a CETV I'm told it would be about £1.5 Million. As that breaks the £1 MIllion LTA, would I have to pay 55 % tax on the £500,000 over LTA. Thus having £1.225 Million to invest.
Your LTA is only calculated when you draw benefits, and from 2018 goes up in line with inflation. So a current CETV can't be compared with the pension value at retirement unless you are about to take your benefits.
A £700k LTA is a DB pension of around £35k p.a. If it's about to be paid, and you could instead have a cash transfer value of £1.225 it does not mean you are able to invest it and guarantee a stream of income bigger than £35k p.a, particularly if the £35k is inflation proofed. So if you are going to invest the £1.225, why bother if it can't match £35k p.a and the DB scheme is already investing it and guaranteeing that amount of income for life without you taking any investment risk and without the risk of you giving too long.
However, you will probably be looking at the vast difference in cash payout, rather than income i'm sure. You can get £250k tax free from the CETV compared to perhaps around £175k from the DB scheme. The 55% only applies to the additional cash you take above the limit, you will still, cash wise be net better off. It's more about what you can do with the extra cash than investing £1.225m, which might or might not beat the £35k p.a. DB pension. It's the net total value after tax that counts, avoiding tax for the sake of it is not necessarily sensible.
You are required by law to take advice before you could take your CETV from a DB scheme, a good adviser will be able to offer a range of scenarios showing worst and best outcomes. If you are concerned with long term security and income guaranteed for life then the DB pension will take some beating, the attraction of cash can mask reality and leaving a small cash pot to last your lifetime can turn out to be a regretted decision. Unless you need the cash to spend, pay off a mortgage etc., it might be the wrong choice to deplete your retirement fund of cash just because you can. If you don't spend the cash you raise, you will need to invest it, presumably for income, which is what your DB pension was doing in the first place. Government is encouraging people to maximise cash because you pay more tax.
This is where IFAs should be earning their corn, it's a real complex area.
If I could have liked this more than once I would have done so. Deserves a "promote".
I am well out of date on this stuff but it's not just any old IFA either is it? Don't they need to be specialists and have G60 qualifications or something to advise on bailing out of a DB scheme?
One further thought for anyone thinking of cashing in any small pension pots. Take into account that any sudden receipt of capital might have an adverse impact on your ability to claim a wide range of benefits, universal credit or whatever. Is the limit on savings/capital £6k before benefits start to reduce?
I transferred a DB pension into my SIPP on the basis that I felt with 21 years officially to retirement I could do much better. Which since last Feb I have, up over 40%. Also they were paying a silly multiplier (about 35x the indexed amount). So my 125k from that is currently about 185k.
I saw an IFA and another company did a 55 page report on it before either provider would release or receive said monies, all in cost me about £800.
It may turn out to be the right decision or the wrong one but at least I'm in control now, my DB pension halved if I died first, disappears once both my wife and I are gone. Whereas currently I can leave my pot to my children and my plan is to do just that (rather than use it).
I transferred a DB pension into my SIPP on the basis that I felt with 21 years officially to retirement I could do much better. Which since last Feb I have, up over 40%. Also they were paying a silly multiplier (about 35x the indexed amount). So my 125k from that is currently about 185k.
I saw an IFA and another company did a 55 page report on it before either provider would release or receive said monies, all in cost me about £800.
It may turn out to be the right decision or the wrong one but at least I'm in control now, my DB pension halved if I died first, disappears once both my wife and I are gone. Whereas currently I can leave my pot to my children and my plan is to do just that (rather than use it).
The further from retirement the more scope there is for bettering your DB pension. That's because your transfer value assumes trustees investing prudently will achieve low returns. Your TV assumes you need a bigger starting sum because returns will be low. It's not a silly multiplier, it's a multiplier that reflects the cost at the lowest risk. A sillier multiplier is assuming you will out perform the market and will only live for 21 years to enjoy your pension.
So if you can invest your pot and by taking more risk than your DB scheme, you might get a pension pot that buys more than you gave up.
What you can never replace is the risk of outliving your pension pot, a DB pension removes that risk.
I transferred a DB pension into my SIPP on the basis that I felt with 21 years officially to retirement I could do much better. Which since last Feb I have, up over 40%. Also they were paying a silly multiplier (about 35x the indexed amount). So my 125k from that is currently about 185k.
I saw an IFA and another company did a 55 page report on it before either provider would release or receive said monies, all in cost me about £800.
It may turn out to be the right decision or the wrong one but at least I'm in control now, my DB pension halved if I died first, disappears once both my wife and I are gone. Whereas currently I can leave my pot to my children and my plan is to do just that (rather than use it).
this is the main reason I transferred my DB pension to a SIPP as if I died first my wife's pension benefit would have halved and although I have no kids, my nieces and nephews can benefit from the remainder of the pot, or the dogs trust, if they don't look after us in our old age;-))
Just to add that the Government have banned transfers out of all public sector DB schemes, ie The NHS pension Scheme, Civil Service scheme, Local Government etc etc.
so if you are reading this thread and are a doctor, nurse, civil servant ....then you are unable to transfer out of your scheme into a private arrangement.
Comments
It was a painting of some Paris street scene. (Like that hasn't been done before).
Snag was it was too big to hang on any of his walls and he had to get an extension built to accommodate it. Wifey not best pleased.
Even less so, when I visited and pointed out that the cafe in the painting looked like a branch of Cafe Rouge.
If anyone is interested, I'd suggest a browse round the Surrey Sculpture Park where all the works (not all outdoor) are for sale. https://thesculpturepark.com/
Pub opposite - Bel & The Dragon - is good for some nosh too. (I don't know why there is only one "l" in "Bel"). A good day out even if you don't buy anything.
If the tracker is stock linked, have I missed the boat with both ftse and Dow being so high? Any industry advice? I think US defence will be a good shot in the next 2 years.
I may need a chunk of it some time in the next 2 years as have baby 6 weeks out and will outgrow my flat/finish the fixed term of my mortgage by then.
So in summary:
- looking for a good place to stash a lump sum
- can afford circa 500 a month after that
- should I split this around investments? Worth noting I will monitor the movements but am a bit lazy in this regard.
- may need access within 2/3 years
Thanks in advance!
If you are "stashing" a lump sum it suggests you want it back, in which case you are saving, not investing, so don't invest (specuklate in a tracker fund unless you don't mind the risk of not getting all your money back.
There isn't a decent place to stash away cash for a short period that is safe, you might get 1%+ interest with a post office or bank savings bond, but anything else will be putting your money at risk. Which is why even Premium Bonds can look exciting.
You can't split investments yourself to spread the risks as effectively as a "Diversified" growth fund, but don't think you can't lose your money, you just would lose less of it.
If you think you can "monitor" your investments and take an informed decision, particularly if it's intermittent. forget it The market will have moved against you long before you get wind of any strategic move to enhance returns or protect against losses. Traders now pay £billions to get a thousandth of a millisecond extra speed in receiving market information, if you get it the same day it might just as well have been last year.
If you consider most of the market surge in recent weeks has been on the back what Trump has been saying, nothing to do with the performance of the real economy, be wary. The market has no rational sense check, it takes what Trump says, translates it as data and processes it. Understand he can open his mouth one day, or Congress refuses to back him, and the markets could fall through the floor.
So that's it settled, I'll pick a savings isa just to get the money out of my current account, and under the limit of the Santander one. I don't mind the prospect of losing a bit short term to make longer term gains but I am not sure my current life situation is conducive to this.
I am keen to invest, so I will put a smaller amount into this, any advice on where to go to look at the available funds, is the market you track an industry by industry thing?
https://www.legalandgeneral.com/investments/isas/stocks-and-shares-isa/
In terms of savings a/cs Atom Bank are paying well, but can only be operated on an app. Always ensure you money if FSCS protected.
http://www.moneysavingexpert.com/savings/savings-accounts-best-interest
Yes, I have a vested interest being an IFA, but it baffles me why people think they can do it themselves or speak to their "mate down the pub" who will, of course, know it all.
Over 15 years the FTSE Small cap index has provided a little over 100% growth. That's what you would have got with a small cap tracker - there or thereabouts anyway. The Old Mutual fund has achieved 725% growth.
I put £7k as an ISA into that fund; it's now worth over £63k.
Risk, yes. But reward also if you (or your adviser) pick the right funds.
There are also numerous cases of dentists persuading patients to agree to expensive procedures when a cheaper solution would do just as well. Not to mention the unexplained differences in fees between dentists for the same procedure. So if my mate down the pub also happened to be a dentist, I would definitely ask his opinion about the choice I need to make between implant or bridge, because I would know his advice isn't driven by money.
The cynic in me says that your main objection to Dippenhall's advice is that Super Eddie won't need an IFA in order to carry it out. I'd be less cynical if you pointed to some rational reasons why Dippy's advice might not be the best.
If it sets your mind at ease, my mate down the pub is a wealth manager, he just wants me to do some more work on the sort of avenues I want to look at.
Have some help, obviously, but components are plentiful and cheap and current demand for these types of vehicles from the baby boomers in incredible.
Yes, as long as you appreciate that you are not going to get much of a return & the only reason it is in there is that it is A) the interest is tax free &
Anyone thinking about investing money should make sure that they invest in a range of funds, covering the 4 main asset classes (equities, fixed interest, property and cash). Usually I wouldn't hold the cash in the portfolio but either already as a cash isa or bank account. Once this area is covered, then the remaining money can be split between the other 3 areas. The % split will all depend on your attitude to risk, with conservative investors having a greater proportion in fixed interest than a more balanced or adventurous investor.
Therefore, to answer Super Eddie Youds - if you need the money in the next 2-3 years make sure you park some in cash ( maybe even as much as half) & then you can think about investing the rest in a mix of funds as above. Any growth in the next year or two could be skimmed off & put back into your cash pot so that the gain is protected . This should limit any loses, but if you dont think you could stomach any loses, dont invest,
I laugh at the old fords, had many in the late 80's including an escort harrier that I paid £200 for, add two 0's on that now!!
That said they might have peaked...... I replaced my 911 with a kitchen and a 968 (£7k) that's worth near £30k now. Sadly was talked out of buying a 993 Turbo by my wife (£30k), they're £150k now..... I remind her on a regular basis though
If you need that money in say 4 years and your risked based investment has fallen, which is more than possible, then you would not be able to proceed with what the money was intended for and you may even have grounds for a legal claim against an adviser that recommended you invest that money in a risk based product for 2-3 years.
Cash ISA's may not have the importance they did, as we now have a tax free interest allowance in any case.
High interest current a/c's, you can have one each and a joint one ie 3 could be the way to go, together with instant access savings a/c's, Cash ISA's and fixed rate bonds, which are risk free.
You should not invest any money in risk based products if you will need that money before 5/6 years and anyone telling you different is offering bad advice for whatever reason. In my opinion.
There are some (extreme) examples of investors in Canada who've done clever and risky investing inside their TFSA (Canadian equivalent of an ISA) who have grown their accounts to around $450,000.........not bad when you consider if they'd put their money into a TFSA savings vehicle the most it might be worth is $50,000! To explain, the TFSA scheme has only been around a few years and with the annual limits the most cash anyone has been allowed to put in is $45,000 I believe, so to turn this into $450k is not too shabby is it.
One guy I read about who is in this position is being pursued by Canada Revenue (tax) as they're saying he's not a private individual, he's operating his ISA investments as a business, because he trades "often".
My biggest gripe is advisers giving what the punters want to hear rather than tell them they are asking the wrong question or have unrealistic expectations only deliverable with luck.
The truth is that no one has a clue where markets are going or what asset class is going to perform best. Performance is the last thing to worry about, first you decide how thinly or how widely you want to spread risk given the unknowns and what market or mix of markets you want as a benchmark for your objective return. Success is relative to performance against your objectives, not the performance of a market your portfolio is not matched to. Absolute performance is an irrelevance because it can't be benchmarked through a portfolio construction, apart from hedge funds seeking a modest absolute return above cash returns,.
I'm not against active management, I use active management, but only where the activity is aimed at efficient diversification with minimum sacrifice of upside market performance, skill and judgement is involved and results show clearly whether those skills have resulted in out-performance in falling markets and modest gains when markets rise. What is not rewarded, in my personal view is paying through the nose for a manager to seek market out-performance with a portfolio 90% tracking the market and hoping his 10% bets come good. They form the bulk of the investment market, and are the most publicised because that's where managers make money, charging 10 times a tracker fund. 25% (guessing) of active funds do come good over a cycle, the problem is no one knows in advance which 25% will be the winners, nor do many of the winners give a return after costs, much better than a tracker. That metric is never going to be visible unless you pay a measurement analyst £50k to do the monitoring. The funds which are dogs are dropped and re-launched under a new name. As all new funds are more successful than mature funds (due to the effect of having new cash to buy stocks avoiding the costs of selling stocks to buy replacements) they attract more business from investors and the cycle is repeated. To me it's a sophisticated three card trick.
Small cap funds have historically always beaten the global index when market rise, but they fall further when markets fall. Small cap funds tend to give the best long term returns because markets have historically risen more than they have fallen, so because it is a statistically recurring event, with better than a 50% chance of success, they are the core of most long term strategies. The risk is being a short term investor, buying at the top of the market or a forced sale in a falling market, when you would say i wish I was in large cap stocks.
Your LTA is only calculated when you draw benefits, and from 2018 goes up in line with inflation. So a current CETV can't be compared with the pension value at retirement unless you are about to take your benefits.
A £700k LTA is a DB pension of around £35k p.a. If it's about to be paid, and you could instead have a cash transfer value of £1.225 it does not mean you are able to invest it and guarantee a stream of income bigger than £35k p.a, particularly if the £35k is inflation proofed. So if you are going to invest the £1.225, why bother if it can't match £35k p.a and the DB scheme is already investing it and guaranteeing that amount of income for life without you taking any investment risk and without the risk of you giving too long.
However, you will probably be looking at the vast difference in cash payout, rather than income i'm sure. You can get £250k tax free from the CETV compared to perhaps around £175k from the DB scheme. The 55% only applies to the additional cash you take above the limit, you will still, cash wise be net better off. It's more about what you can do with the extra cash than investing £1.225m, which might or might not beat the £35k p.a. DB pension. It's the net total value after tax that counts, avoiding tax for the sake of it is not necessarily sensible.
You are required by law to take advice before you could take your CETV from a DB scheme, a good adviser will be able to offer a range of scenarios showing worst and best outcomes. If you are concerned with long term security and income guaranteed for life then the DB pension will take some beating, the attraction of cash can mask reality and leaving a small cash pot to last your lifetime can turn out to be a regretted decision. Unless you need the cash to spend, pay off a mortgage etc., it might be the wrong choice to deplete your retirement fund of cash just because you can. If you don't spend the cash you raise, you will need to invest it, presumably for income, which is what your DB pension was doing in the first place. Government is encouraging people to maximise cash because you pay more tax.
This is where IFAs should be earning their corn, it's a real complex area.
I am well out of date on this stuff but it's not just any old IFA either is it? Don't they need to be specialists and have G60 qualifications or something to advise on bailing out of a DB scheme?
One further thought for anyone thinking of cashing in any small pension pots. Take into account that any sudden receipt of capital might have an adverse impact on your ability to claim a wide range of benefits, universal credit or whatever. Is the limit on savings/capital £6k before benefits start to reduce?
I saw an IFA and another company did a 55 page report on it before either provider would release or receive said monies, all in cost me about £800.
It may turn out to be the right decision or the wrong one but at least I'm in control now, my DB pension halved if I died first, disappears once both my wife and I are gone. Whereas currently I can leave my pot to my children and my plan is to do just that (rather than use it).
So if you can invest your pot and by taking more risk than your DB scheme, you might get a pension pot that buys more than you gave up.
What you can never replace is the risk of outliving your pension pot, a DB pension removes that risk.
so if you are reading this thread and are a doctor, nurse, civil servant ....then you are unable to transfer out of your scheme into a private arrangement.