poshrule_uk wrote:Does anyone here understand much about pensions?
I have started a new job and my SIPP is with Hargreaves Lansdown investing in the Blackrock Consensus 85 as the default option.
I have always invested in the default options in all jobs but I feel I should maybe take on some more risk which I'm happy to do but I'm not really keen on having something to manage so a passive fund seems good but I'm not really sure where to start. Vanguard LS is always something I hear about but should I lump it all into that or should I split it between different funds?
I also have a previous pot to transfer over (I won't lose any benefits by doing this) worth just under £60k at present which I think is the reason I'm stressing out as it seems a big choice.
Does anyone here have any advice/recommendations/what do you all do?
Blackrock Consensus 85 and Vanguard Lifestrategy both overweight the UK stock market.
By market cap, the UK stock market is around 5% of the global stock market but is 30% of the shares.
There's some logic to over weighting the home market but I think this argument is stronger for people living in the USA than the UK.
With Vanguard Lifestrategy, there's more than 1 version e.g. Lifestrategy 80 is 80% shares and 20% bonds. 60 is 60% shares and 40% bonds etc.
Generally the older you get, the more you want that percentage to tilt in favour of bonds.
I'd have to double check Blackrock Consensus 85 but I reckon it would probably be similar to Vanguard Lifestrategy 80 based on the name and probably look to keep equities and bonds in 80/20 split.
The Vanguard Target Retirement funds are essentially the Lifestrategy fund but aimed towards pensions as the closer you get to your target age for retirement the more it tilts towards bonds. This makes it the lazy invest and forget option which is probably what most people want but I'm not so keen on it. I think it plays it too cautious by moving into bonds too early and too steeply and has the same issue as the Blackrock and Lifestrategy of being too heavily concentrated on the UK stock market.
I'm the best part of 4 decades away from state pension age so I can take on a lot of risk knowing time is on my side to ride out the risks. So I'm 100% equities which suits my risk profile. I don't think I'll change that for a very long time.
My personal strategy is:
Workplace pension is with Aviva SIPP (in the Vanguard FTSE Global All Cap) which I periodically transfer to Vanguard directly.
Vanguard website for their SIPP (far cheaper than Hargreaves Lansdown or Aviva but limited to just Vanguard funds but that's not an issue for me)
And the reason for the FTSE Global All Cap is because it's fully passive (tilting to the UK is an active decision for better, for worse), it's in large cap, mid cap and small cap stocks, it's in essentially every country and only in the percentages that reflect their size, it's diverse as a result too as it's in every sector and geography and it's low cost both as a SIPP platform and the underlying fund itself and has no bonds which I don't want at my age. Basically it's "if you can't find the needle in the haystack, just buy the haystack".