£200 spare a month do I split between sipp and s&s isa?

[Twinmama32]

I’m 40 and haven’t got a pension (have about £4K in an old work one but that’s it). I’m kicking myself for not sorting earlier, but high debt and sahm status prevented it. I’ve now paid off the debt and working part time, hoping to go full time in 3 years. I can spare £200 a month should I split it between a sipp and a stocks and shared isa? Or shall I put it all in the sipp? Any advice would be appreciated thank you

I’m up to date on my NI contributions so my state pension is on track.

Do you already have an emergency fund in instant access of 3-6 months of expenses?

Pension/SIPP: Advantage is that you get tax relief on your contribution, so if you paid in £100, then £125 is going in once the tax relief has been claimed by the pension company.
Disadvantage: The money is locked away until retirement, maybe age 57 earliest (it varies depending on your state pension age) and on withdrawal it is part of taxable income, though 25% tax free lump sum may be possible - depends on pension rules at the time you retire.

S&S ISA: Advantage: Access at any time, tax free growth, tax free on withdrawal. Disadvantage: No tax relief on contribution.

Generally I would say to do both until you have what you feel is a reasonable sum of money in the ISA. Then if you need to reduce working in your 50's you have a pot of money you can access.

Do you have a workplace pension in your current job? It can sometimes be better to increase your monthly payments there as you get tax relief and also find out if your employer's contributions would increase too?

I would say that with the s&s isa, save up for a while.before you buy any as the cost of buying eats into your savings each time. I don't have a pension either but I do have the isas I've bought into, you're still you g so as long as you are able.to see this as an at least decade long investment for the long run it's worth it, done wisely.

Have a watch/listen to the first 15 minutes of this which discusses the various wrappers, ISA, LISA, Defined Contribution and Defined Benefit pension schemes. meaningfulmoney.tv/2020/11/25/the-ultimate-guide-to-platforms-pensions-isas/

If you are a higher rate tax payer then in the Pension vs ISA debate the pension wins, due to the amount of money that goes in to it with the tax relief you get being a higher rate tax payer... assuming you will be a lower rate tax payer when you retire.
You need to look at things from your own personal circumstances.

Read up on the difference between a SIPP and an 'ordinary' personal pension. I am not a specialist but I remember clearly an IFA friend-of-a-friend explaining to my that most people with a SIPP are wasting their money because SIPPs have higher management fees than ordinary PPs to give the holders the flexibility to actively manage their investments within the pension "wrapper" but if you aren't going to be monitoring your investment performance and making regular tweaks to how your investments are balanced those fees are paying for something you don't need or want. Most big financial providers have a simple PP scheme you can join with relatively little hassle.

Some SIPPs now have lower charges than personal pensions. I had a personal pension with Friends Life which cost 1% AMC. Moved it to Vanguard where it costs me 0.37%. Some SIPPs are restrictive on what can be held in them which keeps costs low. Others can have all sorts of assets in them, such as property, so one SIPP is not the same as another.

Before opening any type of account, research the fees both for whilst you are accumulating wealth and when it comes to withdrawal (such as fees for entering drawdown).

nannynick I have 3 month of expenses saved up, I’d like to increase this to 6 over this year.

wintertime6 no workplace pension unfortunately as I’m self employed.

YouJustDoYou
I would say that with the s&s isa, save up for a while.before you buy any as the cost of buying eats into your savings each time. I don't have a pension either but I do have the isas I've bought into, you're still you g so as long as you are able.to see this as an at least decade long investment for the long run it's worth it, done wisely.

So I have to put £500 in to start, am I better to save up say £1000 then invest in the s&s isa and not do dribs and drabs each month eg £100 and any extra I can skim?

I was looking at the vanguard sipp as it’s often recommended and their fees are lower, whilst I was browsing their site I saw the s&s Isa which is what got me wondering if I’m better to have half as it’s easily accessible.
It’s quite depressing when I do the pension calculations, hopefully when my children are older I can get a job with a workplace pension so I can top it all up.

In the past year I’ve totally overhauled my finances so I’m pleased I can finally sort a pension I just hope it’s enough.

So I have to put £500 in to start, am I better to save up say £1000 then invest in the s&s isa and not do dribs and drabs each month eg £100 and any extra I can skim?

I think it depends on the platform you use. I use Vanguard Investor and there is no fee for buying a fund but there is a annual management charge, billed quarterly, based on a percentage of total holdings across S&S ISA and SIPP if both held with Vanguard.

So if I have £100 available, I pay it in as soon as I can. I don't worry that it creates a fee as part of my annual management charge and fund charge, as the fee is low and would be there eventually anyway.

I think the SIPP is a better idea @Twinmama32, provided you don't need to access it before you reach the age of 55, because it's like a pension and the government pay tax relief on it, whereas S&S ISA you don't have this benefit. So if you pay £800 into a SIPP, the government will restore the tax you paid so it would be worth £1000.

Given what you are asking..... i would take a step back and look at the free resources and advice provided by DaveRamsey.com Yeah it's an annoying american perspective, but the same steps are valid for anyone in the uk...

honestly wish i'd had access to such resources when i was 20, i'd be a deccamillionaire by now....

When you do come back to the SIPP/ISA approach, if you want to retire before 55 or 57, then the ISA needs to be factored in, by that will be using post-tax funds... The sipp should benefit from the tax rebate and you'll see that added quickly and of courses gives you an investment boost right away...

once investing, pension expert.com is also on youtube, and gives great lnformation out too, the kind that only IFA's have access and depth of knowledge too.. all for free...

good luck, and whatever you decide to invest in, and how, best wishes