SIPP queries(8 Posts)
Name changed as I don't want to out myself.
I had a large pension pot of £263K from a previous employer, took financial advice and decided not to transfer in to my new employer's scheme (local gov't) but to invest in a SIPP. Main reason was the flexibility of being able to withdraw from 55, and also so that my son (I'm a single parent) would get it all if I died. My adviser put together a SIPP plan for me which I started last Feb (2016). It's a Standard Life SIPP and consists of the following:
MG Property Portfolio feeder - £119.5K (44.9%)
Std Life MyFolio Managed III - £88.2K (33.1%)
CF Woodford Equity income acc - £54.8K (20.6%)
Cash - £3.7K (1.3%)
The total of my fund is now £266K (after fees of £5K) which to say the least I am really disappointed in. I know there's no guarantee of growth etc., but I did query with my adviser at the time the wisdom of investing so much in property and I have looked at each of the fund's performances on HL website and it shows over the last 12 months:
MG - (7.06%)
SL - 10.3%
CFW - 9.68%
I wish I had had the confidence to say I thought he was wrong at the time. However, would it be too soon to change the structure of my plan and move away from putting so much in property?
Also, what should I be expecting from my adviser - I meet with him about every 6 months, the discussions go along the lines of 'it's very uncertain at the moment, Brexit etc'. I'm meeting him this afternoon and expecting it to be 'it's v uncertain, gen election blah blah'. I'm going to ask him about fees as £5K seems a lot.
I would really like to have more knowledge about managing investments so I don't just leave this all to him. I made a huge decision to invest in the SIPP, and this is my retirement fund/my son's inheritance so it's obviously massively important to me. Any advice on what I can do to get that kind of knowledge?
I am 51, and hoping to retire at 60 - although I would still do some kind of 'work' whether it's setting up my own small business online, or doing a couple of days a week somewhere. I just don't want to be in the position I'm in now where I am dependent on my job to pay the bills, and feel like I have to keep pushing myself to earn more money.
I would like to draw 25% of my SIPP when I'm 55 to pay off my mortgage (which is currently scheduled to run for another 15 years from now - I will also be overpaying on this). I am paying in to the Local Gov pension scheme from my current job (been in since I was 50), so will have a small amount from that when I retire (assuming I stay in LG work) but that will be a Brucie Bonus rather than anything substantial.
Any thoughts to help me please?
What did you tell the adviser about your attitude to risk, and what risk level did the adviser say this strategy would be?
Investments need to be looked at long-term (over at least 5 years, ideally 10), so I wouldn't worry about a short term rise or fall. Ask to meet the advisor again and perhaps change the strategy, or find a new adviser.
I've just had one supposedly independent adviser heavily encouraging me to transfer out my final salary scheme (about 4x the size of yours OP), but decided my aversion to risk is too great). I do worry about this being a way advisers are smelling the fees and seeing it as a way to make a lot of cash for themselves rather than acting in the client's best interests.
To answer your question about getting more info: read the weekend papers' money sections but first of all read the Daily Telegraph Guide to Investing book - I recently bought and read this, very plainly written and it sets out risk levels clearly. Lower risk generally equals lower rewards.
I do empathise - I find the whole stock market-type investment prospect very scary, especially when you need to depend on the income to live in retirement.
Pixie - good question about attitude to risk - I had to fill out a questionnaire which (I think) said I had a 'medium' attitude to risk - I will check with him later. I think I am risk averse, however taking the option to move my (guaranteed) final salary scheme pot to a SIPP is risky!! In fairness to him he said he couldn't advise me to move it, as he couldn't guarantee the same level of security so I took the decision based on current and immediate future needs rather than what my pension would look like at 72.
Thanks for the tip about the book - will look that out.
In your case, being able to leave the pot to your son seems like a valid reason to have invested in a SIPP. I am like you, not an expert at all, but I do know you have to hold your nerve and look longer-term.
I would check the fees on these funds, as generally fees are the biggest factor on performance than anything else. If they over 1% or even 0.8% I would certainly think about moving the funds, index trackers generally have the lowest fees. I am surprised that so much is in property as with your house you are already property heavy. I am invested largely in equities and am not too worried about fluctuations in the market as am hoping to create steady income from dividends rather than take out chunks of capital or buy an annuity.
To be honest I would suggest the best thing you can do is read up on personal finance yourself whether by borrowing books or reading personal finance blogs. There are also good magazines out there like money wise or money observer. Ultimately, no one cares about your money more than you do! Advisors are not cheap and offer no guarantee to financial success so if you can educate yourself then you are already winning by saving on fees.
Thanks Trying - I hadn't looked at it that way with property and with my house it would have meant having money in property of £340K. Too much.
So had my meeting this afternoon and he had already come up with a plan to reduce the holding in property by half, and invest that part of the SIPP into two different investments. One is a credit company (steady growth anticipated) and one growth and income (global, with a history of excellent growth). I feel much more comfortable with that strategy.
Fees are 1% for them and 1% for the underlying SIPP - so 2% overall. I could probably save on that by doing more work myself but until I am more knowledgeable I will leave it where it is.
I was at 54% on my risk questionnaire - so more or less in the middle.
You are definitely right about educating myself - any blogs you would recommend? I've already used my Tesco clubcard points for a subscription to Moneywise, so looking forward to getting that!
I would start with the moneysavingexpert to get the basics about investing first as they do explain it very well then if you want more depth you could move onto motley fool and monevator amongst many many blogs and websites! However, I think moneywise is pretty good and their website is also helpful so you may just want to stick with that!
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