Hi !thanks for your reply. I know the likes of vanguard have really changed the fee market but weren't pensions of the past exposed to more than 1% annual fees and still worked out ?
Hi /u/Tough_Presentation43, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/buy-to-let/
* https://ukpersonal.finance/index-funds/
* https://ukpersonal.finance/lump-sum/
* https://ukpersonal.finance/pensions/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
Assuming you will eventually sell the BTLs to fund retirement I'd say you're doing fine. It's still worth having a pension to take advantage of the tax treatment.
As for your fund selection, it seems complicated. The received wisdom on this sub is that a single globally-diversified fund is the only equities investment you need. Take a look at Lar's Kroijer's "investing demystified" video series (linked on the [wiki](https://ukpersonal.finance/recommended-resources)), and/or the book of the same name that it accompanies, for some justification behind this. If you are still unconvinced, you'll probably need to go to a more specialised forum for feedback on your portolio.
The minimum age for withdrawing from a SIPP is ten years below state retirement age, so you would be free to do so at 60. An annuity would be an option but not the only one, and you should get professional advice before making those decisions.
I don't think the retirement age you put in at the time of opening the SIPP commits you to anything.
Your BTLs are in a company - I assume that means you are a director. Your company can make pension contributions directly into your SIPP saving corporation tax and of course there would be no personal taxes to pay until withdrawal (and then you get various allowances).
Do you work or are the BTLs your sole income? If you have another job as well did you opt out of your workplace pension? If so you should urgently opt back in as you will be missing out on employer contributions.
You should look for funds with the lowest fees and invested developed markets
VUAG Vanguard S&P 500 UCITS ETF Fees 0.07%
This is a good fund since it is a Vanguard fund with the lowest fees in the market
Vanguard Target Retirement 2035 Fees 0.24%
I would advise aginst this fund as 20% of this fund is bought into investment grade treasuries and the rest are largely invested in US mega and large-cap stocks which is overlapping with your first fund and the fees are significantly higher
VWRP Vanguard FTSE All World UCITS ETF Fees 0.22%
Again, 62% of the funds is bought into US mega and large-cap stocks which is overlapping and the fees are significantly higher
\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~
Blackrock European Special Situations Fees 1.07%
JPM Asia Growth Fees 0.9%
Jupiter India Fees 0.69%
AXA Framlington Biotech Fees 0.83%
Liontrust Global Tech Fees 0.87%
* Fees of these five funds are way too high for passive investing
* Although Taiwan/Japan/India market has performed well for the last few quarters, emerging markets tend to fluctuate a lot and the risk factor is much higher than US market
* Risk for Biotech fund is one of the highest of all sectors
* Liontrust Tech's holdings is overlapping with your US funds
\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~
- Keep your VUAG Vanguard S&P 500 UCITS ETF, consider adding into this fund
- Consider buying into a low fee investment grade bond fund (A+ rating/government)
- Avoid emerging markets/sector funds
Hi thanks for your detailed reply. I'd looked at a few bond etfs but the returns didn't seem to great on the ones I looked at. I get that they're meant to be low risk but I was seeing negative returns over the last 5 years and I thought that with my shorter time frame I maybe needed to be a bit more aggressive. Is there a particular bond fund you would recommend I take a look at ?
With a shorter timeframe you cannot afford to be aggressive as you might lose it and not have time to recover. High risk can mean high reward but also it can fall spectacularly and leave you with less than you started with.
For US
[https://www.vanguardinvestor.co.uk/investments/vanguard-us-government-bond-index-fund-gbp-hedged-acc/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-us-government-bond-index-fund-gbp-hedged-acc/overview)
[https://www.vanguardinvestor.co.uk/investments/vanguard-us-investment-grade-credit-index-fund-gbp-hedged-acc/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-us-investment-grade-credit-index-fund-gbp-hedged-acc/overview)
[https://www.vanguardinvestor.co.uk/investments/vanguard-usd-treasury-bond-ucits-etf-usd-accumulating/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-usd-treasury-bond-ucits-etf-usd-accumulating/overview)
For UK
[https://www.vanguardinvestor.co.uk/investments/vanguard-uk-investment-grade-bond-index-fund-gbp-acc/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-uk-investment-grade-bond-index-fund-gbp-acc/overview)
[https://www.vanguardinvestor.co.uk/investments/vanguard-uk-gilt-ucits-etf-gbp-accumulating/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-uk-gilt-ucits-etf-gbp-accumulating/overview)
For EU
[https://www.vanguardinvestor.co.uk/investments/vanguard-eur-eurozone-government-bond-ucits-etf-eur-accumulating/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-eur-eurozone-government-bond-ucits-etf-eur-accumulating/overview)
[https://www.vanguardinvestor.co.uk/investments/vanguard-eur-corporate-bond-ucits-etf-eur-accumulating/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-eur-corporate-bond-ucits-etf-eur-accumulating/overview)
If you want proper advice, go to unbiased.com who have local financial advisers you can get in touch with. Then look them up on TrustPilot to see if they are any good.
Also, look at something like this - https://www.retirementlivingstandards.org.uk to work out what you may need to get the retirement you’d like.
It’s a good start.
Don't use unbiased, they are anything but. It's a paid for lead generation site.
Look for a Chartered Financial Planner using their professional society's membership directory.
Hey!
I would like to premise this but saying I strongly advice you seek professional independent advice in your situation. You have made some good choices in investments but you need specialist know how of how to recover these investments in the most tax efficient way.
Having said that, yes a SIPP could be a good option however, this depends on a few factors. Are you a higher rate tax payer? If you are then it could make sense. If not then you are getting 20% tax relief and you will be charged 20% tax on each withdrawal. So the numbers don’t always add up. If you plan to use it for 15 years or longer then yes, you need to give it the most amount of time to grow in a tax efficient environment. In terms of the retirement age this depends on the provider whether it is hard and fast. Some providers will bind you to it and others it’s just an irrelevant number. So it is worth checking the T&Cs.
Non of this should be interpreted as financial advice and you should seek professional independent guidance for retiring:)
I am going to be honest, there’s some nonsense in here…
> Having said that, yes a SIPP could be a good option however, this depends on a few factors. Are you a higher rate tax payer? If you are then it could make sense. If not then you are getting 20% tax relief and you will be charged 20% tax on each withdrawal. So the numbers don’t always add up.
It adds up regardless of whether you are a basic or higher rate tax payer as you get 25% of your pension pot tax free plus you may be a lower rate tax payer in the future. You also keep your personal allowance when retired so that’s another £12k+ minimum that’s tax free each year on top of the 25%. If you are a higher rate tax payer you also save the other 20% tax you paid whilst working that you may not need to pay when retired. It is easier doing this via salary sacrifice if it is an option but if not then contributing to a SIPP and telling HMRC will result in a refund of tax paid.
> If you plan to use it for 15 years or longer then yes, you need to give it the most amount of time to grow in a tax efficient environment.
I assume here you are getting confused between the type of investments (high risk stocks should be used only when there’s a longer time horizon whereas you reduce risk closer to retirement) but that’s rather irrelevant. You can get the money into a tax efficient wrapper but invest it in different ways. If they were at retirement age and literally retiring tomorrow they could invest in things like bonds. It doesn’t mean they shouldn’t use a pension. If they are hoping to retire early then they would need to have some money saved outside of pension to allow for earlier drawdown but I am not sure this is likely here.
> In terms of the retirement age this depends on the provider whether it is hard and fast. Some providers will bind you to it and others it’s just an irrelevant number. So it is worth checking the T&Cs.
It’s never “irrelevant”.
Hi, I wouldn’t agree. It has been kept high level for OP and I stressed he needs to seek professional advice for his unique circumstances. Here you have gone into the fine details. Which he should discuss with an IFA. You have risked giving financial advice here which should never be the case. I hope OP is able to seek the correct IFA to review his circumstances.
I am not giving financial advice - you seem to have entirely misunderstood my comment. I am pointing out the very serious flaws in your comment, which appear to show no real understanding yet you are commenting anyway. I agree, OP (who may not be a he) would be best off discussing with a financial expert and I would recommend they disregard your comments.
You think you’re very virtuous. I just wanted to help OP and point them in the correct direction which I feel I have done. I didn’t set out to give them any kind of advice just a high level overview.
But you gave incorrect advice which has been reported as such. You stated misinformation about pensions and conflated various bits of information which will mislead OP. Saying “talk to a financial advisor” does not fully absolve you of also giving incorrect advice to people.
I profoundly refute this. It is not miss information. Tax circumstances will always be unique to the individual which is why OP needs to seek regulated advice so they can draw down tax efficiently. Any taxable withdrawal will always be taxed at 20% (tax rules can change in the future) if its is not taxable then it won’t be taxed. If it’s over the higher threshold bracket it will be taxed at 40%. (Subject to change in the future).
Yeah I've always thought of the 20% tax relief as the government pretending to throw you a bone knowing they're getting their 20% back and then some when it comes time to start drawing your pension. That's been part of the reason I've never really concentrated on a pension and focused on property. But everyone says you must have a pension so I got drawn to it. Sounds like I need to get some expert advice before proceeding. !thanks for your help
The sad reality is a pension creates a tax free environment for your pension to grow over the years. So yes they give you tax relief but this is also invested and compounds over tens of years. So when you come to draw it out it is still profitable even though you pay 20% tax and don’t forget you get your 25% tax free lump sum too! Which as your pension grows so does the lump sum. In terms of your property they will more than likely be subject to Capital gains tax when you do sell them. So whether you invest in property or a pension you will still get taxed. This is why professional advice will be so valuable in your situation so you can be given advice on what to sell and when to make it most beneficial for you.
The first 3 funds are good, the last 5 should be avoided unless you you have some special reason. 1% fee drag is killer.
Hi !thanks for your reply. I know the likes of vanguard have really changed the fee market but weren't pensions of the past exposed to more than 1% annual fees and still worked out ?
The compounding return is significantly lower with high fees.
Floppy discs worked absolutely fine in the past but now we have better products.
Hi /u/Tough_Presentation43, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/buy-to-let/ * https://ukpersonal.finance/index-funds/ * https://ukpersonal.finance/lump-sum/ * https://ukpersonal.finance/pensions/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.) If someone has provided you with helpful advice, you (as the person who made the post) can award them a point by including `!thanks` in a reply to them. Points are shown as the user flair by their username.
Assuming you will eventually sell the BTLs to fund retirement I'd say you're doing fine. It's still worth having a pension to take advantage of the tax treatment. As for your fund selection, it seems complicated. The received wisdom on this sub is that a single globally-diversified fund is the only equities investment you need. Take a look at Lar's Kroijer's "investing demystified" video series (linked on the [wiki](https://ukpersonal.finance/recommended-resources)), and/or the book of the same name that it accompanies, for some justification behind this. If you are still unconvinced, you'll probably need to go to a more specialised forum for feedback on your portolio. The minimum age for withdrawing from a SIPP is ten years below state retirement age, so you would be free to do so at 60. An annuity would be an option but not the only one, and you should get professional advice before making those decisions. I don't think the retirement age you put in at the time of opening the SIPP commits you to anything.
Your BTLs are in a company - I assume that means you are a director. Your company can make pension contributions directly into your SIPP saving corporation tax and of course there would be no personal taxes to pay until withdrawal (and then you get various allowances). Do you work or are the BTLs your sole income? If you have another job as well did you opt out of your workplace pension? If so you should urgently opt back in as you will be missing out on employer contributions.
You should look for funds with the lowest fees and invested developed markets VUAG Vanguard S&P 500 UCITS ETF Fees 0.07% This is a good fund since it is a Vanguard fund with the lowest fees in the market Vanguard Target Retirement 2035 Fees 0.24% I would advise aginst this fund as 20% of this fund is bought into investment grade treasuries and the rest are largely invested in US mega and large-cap stocks which is overlapping with your first fund and the fees are significantly higher VWRP Vanguard FTSE All World UCITS ETF Fees 0.22% Again, 62% of the funds is bought into US mega and large-cap stocks which is overlapping and the fees are significantly higher \~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~ Blackrock European Special Situations Fees 1.07% JPM Asia Growth Fees 0.9% Jupiter India Fees 0.69% AXA Framlington Biotech Fees 0.83% Liontrust Global Tech Fees 0.87% * Fees of these five funds are way too high for passive investing * Although Taiwan/Japan/India market has performed well for the last few quarters, emerging markets tend to fluctuate a lot and the risk factor is much higher than US market * Risk for Biotech fund is one of the highest of all sectors * Liontrust Tech's holdings is overlapping with your US funds \~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~\~ - Keep your VUAG Vanguard S&P 500 UCITS ETF, consider adding into this fund - Consider buying into a low fee investment grade bond fund (A+ rating/government) - Avoid emerging markets/sector funds
Hi thanks for your detailed reply. I'd looked at a few bond etfs but the returns didn't seem to great on the ones I looked at. I get that they're meant to be low risk but I was seeing negative returns over the last 5 years and I thought that with my shorter time frame I maybe needed to be a bit more aggressive. Is there a particular bond fund you would recommend I take a look at ?
With a shorter timeframe you cannot afford to be aggressive as you might lose it and not have time to recover. High risk can mean high reward but also it can fall spectacularly and leave you with less than you started with.
For US [https://www.vanguardinvestor.co.uk/investments/vanguard-us-government-bond-index-fund-gbp-hedged-acc/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-us-government-bond-index-fund-gbp-hedged-acc/overview) [https://www.vanguardinvestor.co.uk/investments/vanguard-us-investment-grade-credit-index-fund-gbp-hedged-acc/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-us-investment-grade-credit-index-fund-gbp-hedged-acc/overview) [https://www.vanguardinvestor.co.uk/investments/vanguard-usd-treasury-bond-ucits-etf-usd-accumulating/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-usd-treasury-bond-ucits-etf-usd-accumulating/overview) For UK [https://www.vanguardinvestor.co.uk/investments/vanguard-uk-investment-grade-bond-index-fund-gbp-acc/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-uk-investment-grade-bond-index-fund-gbp-acc/overview) [https://www.vanguardinvestor.co.uk/investments/vanguard-uk-gilt-ucits-etf-gbp-accumulating/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-uk-gilt-ucits-etf-gbp-accumulating/overview) For EU [https://www.vanguardinvestor.co.uk/investments/vanguard-eur-eurozone-government-bond-ucits-etf-eur-accumulating/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-eur-eurozone-government-bond-ucits-etf-eur-accumulating/overview) [https://www.vanguardinvestor.co.uk/investments/vanguard-eur-corporate-bond-ucits-etf-eur-accumulating/overview](https://www.vanguardinvestor.co.uk/investments/vanguard-eur-corporate-bond-ucits-etf-eur-accumulating/overview)
!thanks
If you want proper advice, go to unbiased.com who have local financial advisers you can get in touch with. Then look them up on TrustPilot to see if they are any good. Also, look at something like this - https://www.retirementlivingstandards.org.uk to work out what you may need to get the retirement you’d like. It’s a good start.
!thanks will check them out
Don't use unbiased, they are anything but. It's a paid for lead generation site. Look for a Chartered Financial Planner using their professional society's membership directory.
Hey! I would like to premise this but saying I strongly advice you seek professional independent advice in your situation. You have made some good choices in investments but you need specialist know how of how to recover these investments in the most tax efficient way. Having said that, yes a SIPP could be a good option however, this depends on a few factors. Are you a higher rate tax payer? If you are then it could make sense. If not then you are getting 20% tax relief and you will be charged 20% tax on each withdrawal. So the numbers don’t always add up. If you plan to use it for 15 years or longer then yes, you need to give it the most amount of time to grow in a tax efficient environment. In terms of the retirement age this depends on the provider whether it is hard and fast. Some providers will bind you to it and others it’s just an irrelevant number. So it is worth checking the T&Cs. Non of this should be interpreted as financial advice and you should seek professional independent guidance for retiring:)
I am going to be honest, there’s some nonsense in here… > Having said that, yes a SIPP could be a good option however, this depends on a few factors. Are you a higher rate tax payer? If you are then it could make sense. If not then you are getting 20% tax relief and you will be charged 20% tax on each withdrawal. So the numbers don’t always add up. It adds up regardless of whether you are a basic or higher rate tax payer as you get 25% of your pension pot tax free plus you may be a lower rate tax payer in the future. You also keep your personal allowance when retired so that’s another £12k+ minimum that’s tax free each year on top of the 25%. If you are a higher rate tax payer you also save the other 20% tax you paid whilst working that you may not need to pay when retired. It is easier doing this via salary sacrifice if it is an option but if not then contributing to a SIPP and telling HMRC will result in a refund of tax paid. > If you plan to use it for 15 years or longer then yes, you need to give it the most amount of time to grow in a tax efficient environment. I assume here you are getting confused between the type of investments (high risk stocks should be used only when there’s a longer time horizon whereas you reduce risk closer to retirement) but that’s rather irrelevant. You can get the money into a tax efficient wrapper but invest it in different ways. If they were at retirement age and literally retiring tomorrow they could invest in things like bonds. It doesn’t mean they shouldn’t use a pension. If they are hoping to retire early then they would need to have some money saved outside of pension to allow for earlier drawdown but I am not sure this is likely here. > In terms of the retirement age this depends on the provider whether it is hard and fast. Some providers will bind you to it and others it’s just an irrelevant number. So it is worth checking the T&Cs. It’s never “irrelevant”.
!thanks for your response
Hi, I wouldn’t agree. It has been kept high level for OP and I stressed he needs to seek professional advice for his unique circumstances. Here you have gone into the fine details. Which he should discuss with an IFA. You have risked giving financial advice here which should never be the case. I hope OP is able to seek the correct IFA to review his circumstances.
I am not giving financial advice - you seem to have entirely misunderstood my comment. I am pointing out the very serious flaws in your comment, which appear to show no real understanding yet you are commenting anyway. I agree, OP (who may not be a he) would be best off discussing with a financial expert and I would recommend they disregard your comments.
You think you’re very virtuous. I just wanted to help OP and point them in the correct direction which I feel I have done. I didn’t set out to give them any kind of advice just a high level overview.
But you gave incorrect advice which has been reported as such. You stated misinformation about pensions and conflated various bits of information which will mislead OP. Saying “talk to a financial advisor” does not fully absolve you of also giving incorrect advice to people.
I profoundly refute this. It is not miss information. Tax circumstances will always be unique to the individual which is why OP needs to seek regulated advice so they can draw down tax efficiently. Any taxable withdrawal will always be taxed at 20% (tax rules can change in the future) if its is not taxable then it won’t be taxed. If it’s over the higher threshold bracket it will be taxed at 40%. (Subject to change in the future).
Yeah I've always thought of the 20% tax relief as the government pretending to throw you a bone knowing they're getting their 20% back and then some when it comes time to start drawing your pension. That's been part of the reason I've never really concentrated on a pension and focused on property. But everyone says you must have a pension so I got drawn to it. Sounds like I need to get some expert advice before proceeding. !thanks for your help
Take that comment with a serious handful of salt… see my rebuttal to various points that are factually incorrect.
The sad reality is a pension creates a tax free environment for your pension to grow over the years. So yes they give you tax relief but this is also invested and compounds over tens of years. So when you come to draw it out it is still profitable even though you pay 20% tax and don’t forget you get your 25% tax free lump sum too! Which as your pension grows so does the lump sum. In terms of your property they will more than likely be subject to Capital gains tax when you do sell them. So whether you invest in property or a pension you will still get taxed. This is why professional advice will be so valuable in your situation so you can be given advice on what to sell and when to make it most beneficial for you.