Investment advice for the next 5 years Jimbouk

#1
Hi all .

First i must appologise for my inactivity over the past year as posted a similar thread last year but due to a lot of unexpected upheaval and change all plans went on hold until now.



My wife and I are looking to maximise our savings over the next five years prior to retiring

Both now 50 , no mortgage and zero debt, daughter through university and in work / own house good job .

Both of us have company final salary pension schemes which will cover our monthly needs at 55 even taking in to account the actuarial reduction.

Although my wife is still in her company scheme , I am now a deferred member of my final salary scheme but have a new defined benefits company scheme.

Between myself and my employer around 18% of my salary is paid in to it each month.



We currently we have 50k between us in cash ISAS paying the usual low rate of interest and plan to invest an additional £1000 per month for the next five years with a view to maximizing our pot . The money will not be needed during this period and we have a cash float in a standard account for any emergency's etc .

We are looking for something that will give us a better return than your standard cash isa don't want too much risk and also don't mind committing to a 5 year plan.

I don't really want to sit and watch funds and move things around so would a switch to a passive fund within a stocks and shares isa be worthwhile / feasible ?



It was previously mentioned that something like Vanguard lifestrategy 80 may be suitable



Thanks in advance ,any advice would be much appreciated



Jim

#2
Why are you thinking of a 5 year plan? Will you need it all in cash in 5 years time? The problem with 5 years is that it is rather short term for investing - if there's a crash in say 3 years time you could end up with less than you started. In my view, at 50, you should be managing your money with a 45 year outlook, just needing to drawdown different amounts at different times. If the 5 year deadline is real just keep the money in cash and accept the low returns, or you could put some into P2P.



The option isnt between sitting and watching funds and moving things around and buying passive funds. You can sit and watch passive funds and move them about, or you can buy appropriate active funds and leave them to do their own thing.

#3



Both of us have company final salary pension schemes which will cover our monthly needs at 55 even taking in to account the actuarial reduction.


How about funding the gap to reduce the need to suffer an actuarial reduction?






We are looking for something that will give us a better return than your standard cash isa don't want too much risk and also don't mind committing to a 5 year plan.


So, is your plan to spend every penny of it in 5 years time?






I don't really want to sit and watch funds and move things around so would a switch to a passive fund within a stocks and shares isa be worthwhile / feasible ?


A single sector passive fund is not good quality investing. It would likely be above your risk profile too and maybe not suitable for the period if your plan is to spend all the money in 5 years.






It was previously mentioned that something like Vanguard lifestrategy 80 may be suitable


Straight up to nearly the top end of the risk profile. Why do you think that fits with your objectives? (from what you have said it doesnt appear to). Plus it is not a passive fund. It is a multi-asset fund.

#4
Thanks for all the replies much appreciated.




How about funding the gap to reduce the need to suffer an actuarial reduction?


My wifes pension has little in the way of deductions at 55 and poss even none in the right scenario so we will access that @ 55

I plan to use my new company pension to fund years 55 to 60 before my pension would kick in to minimize its actuarial reductions

I have a figure in mind that i needs to be in that fund @ 55 and we are at present on track to exceed that figure.




So, is your plan to spend every penny of it in 5 years time?


No not at all we were just looking at maximizing our savings and would dip into the pot as and when required.



May be it turns out that we will have to pay for financial advice as we are complete newbies to anything other than standard savings / Isa hence me being on this forum , and any information or advice will be of huge benefit to us. .



Thanks again



Jim

#5



No not at all we were just looking at maximizing our savings and would dip into the pot as and when required.


In which case, you need to stop thinking 5 years. You will handicap any plan or solution if you keep thinking in 5 year chunks. it is not unusual for some to think that way but you need to stop that as it is a bad habit and leads to poor solutions to match poor planning.

#6
First things first: is either of you a higher rate taxpayer? If so, nothing will beat extra pension contributions e.g. to a SIPP.



Secondly: when the first DB pensions begin at age 55 (if they both do) is either of you going to have an income below the Personal Allowance against income tax? If so, will that person have enough money in some sort of personal pension (e.g. a SIPP) to let him/her drawdown income to use that Personal Allowance.

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