Retirement investment choices
Posted: July 11th, 2023, 3:58 pm
I have just stopped working (going 63) and have an old-fashioned personal pension pots in Aviva and in Royal London + savings. I am not desperate to start drawdown yet other than being tax efficient and would rather consider carefully my options.
I am unhappy with both Aviva and Royal London as
1. I can only draw down lump sums from the pots and cannot do a flexi-drawdown. This may be painfully slow (I am told) and cumbersome.
2. Performance in both is not something to boast about. In particular the mixed fund in Royal London has given a despicable 1.2% annual return for the past 9 years (with involvement of company financial advisor). It is one of those lifestyle GRIP choices that buy more fixed funds as one approaches retirement age to "secure" the pot. Really stupid old-fashioned algorithm. The Aviva funds are limited and I managed the pot with a few usual mistakes along the way.
3. Customer services is an abomination in both.
I am wondering whether to move to a SIPP with simple choice of diversified index trackers or to use IFA.
I have approached several IFA but I am not impressed with their offers. The "cheapest" one asked for fixed £1500 initial charge and 0.65% ongoing charge. They outsource and use discretionary investment manager with AMC of 0.15%-0.25% and OCF 0.5-0.6%. Add the platform charge of 0.15% and I am told altogether I am looking at fees of ~1.5%. Is it worth it? It seems to me that I will depart with a significant chunk of money without any guarantee for protection/growth. The only sure thing is they will get paid well.
If I go the SIPP way I need to make quite a few choices.
1. Platform: after lots of reading my short list is Interactive investor or AJBell. Both seem to have good customer services and good selection of funds. The first one has cheaper platform fee for me as it is not percentage based. Which one would you choose for the purpose of investing and drawdown? Why?
2. Funds: I am not an active investor so passive funds would suite me more but the choice is vast. Everybody says use Vanguard index funds but it looks like these are long-term buy and hold funds. Can there be "overpriced" index funds? Until last year I thought having bonds was a safe bet. Such a wrong assumption! Yes, I would invest most of my pot long term but I would like to withdraw 3% every year. What funds are sensible in this situation so that the pot can grow and does not diminish quickly? Also I am wondering, 10 years down the line I may loose my faculties and not be able to do even passive investing.
Ideally I would like to pass some money to my children so annuities are not for me.
I am unhappy with both Aviva and Royal London as
1. I can only draw down lump sums from the pots and cannot do a flexi-drawdown. This may be painfully slow (I am told) and cumbersome.
2. Performance in both is not something to boast about. In particular the mixed fund in Royal London has given a despicable 1.2% annual return for the past 9 years (with involvement of company financial advisor). It is one of those lifestyle GRIP choices that buy more fixed funds as one approaches retirement age to "secure" the pot. Really stupid old-fashioned algorithm. The Aviva funds are limited and I managed the pot with a few usual mistakes along the way.
3. Customer services is an abomination in both.
I am wondering whether to move to a SIPP with simple choice of diversified index trackers or to use IFA.
I have approached several IFA but I am not impressed with their offers. The "cheapest" one asked for fixed £1500 initial charge and 0.65% ongoing charge. They outsource and use discretionary investment manager with AMC of 0.15%-0.25% and OCF 0.5-0.6%. Add the platform charge of 0.15% and I am told altogether I am looking at fees of ~1.5%. Is it worth it? It seems to me that I will depart with a significant chunk of money without any guarantee for protection/growth. The only sure thing is they will get paid well.
If I go the SIPP way I need to make quite a few choices.
1. Platform: after lots of reading my short list is Interactive investor or AJBell. Both seem to have good customer services and good selection of funds. The first one has cheaper platform fee for me as it is not percentage based. Which one would you choose for the purpose of investing and drawdown? Why?
2. Funds: I am not an active investor so passive funds would suite me more but the choice is vast. Everybody says use Vanguard index funds but it looks like these are long-term buy and hold funds. Can there be "overpriced" index funds? Until last year I thought having bonds was a safe bet. Such a wrong assumption! Yes, I would invest most of my pot long term but I would like to withdraw 3% every year. What funds are sensible in this situation so that the pot can grow and does not diminish quickly? Also I am wondering, 10 years down the line I may loose my faculties and not be able to do even passive investing.
Ideally I would like to pass some money to my children so annuities are not for me.