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Starting out investing but later in life - thoughts please
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Stew49
Posted: 04 October 2023 17:23:10(UTC)
#1

Joined: 04/10/2023(UTC)
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Hi All,

Read a great amount of info on here but only registered today to finally post. Biggest regret I think is not getting to grips with financies earlier.

Feels like I have missed the party (or rather the big gains) and keen to understand if it's worth jumping in.

Full time paye job, 49 years of age just about to be 50, no mortgage as paid off, but small house,

Will be looking to move to a bigger house in 2-5 years,

Have a small shareholding in barc, RR, lloyds and similar that have just been sat for years,

I have been making big overpayments to pension to save on 40% tax, with a hope to retire at 55.

My mistake is to have been saving in Cash ISA's for many years and not been using stocks and shares ISA's except for a very small amount in single stocks.

With inflation it feels like my cash in the Cash ISA and savings accounts is being erroded away even though I have moved to higher variable and some fixed ISA accounts.

At 49 is it still worth moving a large portion of my savings into Stocks and Shares ISA, say using a Vanguard VUSA S&P tracker or should I be looking to remain in higher interest Cash ISA's. I did look for a accumating version of the VUSA to use in Vanguard but could only see these if I was USA based. For the VUSA do you reinvest any dividends manually or does an option to reinvest exist in the Vanguard Stocks and Shares ISA?

Trying to answer my own question, in that we have sources of other funds not in an ISA (a second property that will be sold in years to come which belongs to my partner) that can help when we sell/buy a new house. Wondering if these Cash ISA funds will just sit there anyway until retirement so given it might be 5 years or in fact longer before I start to draw some out for spending that letting them sit for even longer in Cash ISA accounts is just being even more unwise.

Feels like if we are entering a longer period of inflation (others have mentioned on here for maybe the next 10 years) that staying in Cash ISA's will just make my lack of investing for the past many years even worse.

Grateful for any thoughts or info on others that might have moved into funds later on in life please,

Thanks

Stew
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5 users thanked Stew49 for this post.
Tplease Parrish on 09/10/2023(UTC), Harry Trout on 09/10/2023(UTC), Tim D on 09/10/2023(UTC), William P on 10/10/2023(UTC), Guest on 13/01/2024(UTC)
Law Man
Posted: 09 October 2023 12:59:05(UTC)
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Joined: 29/04/2014(UTC)
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First, you have done well by recognising that you need to consider your personal finances.

I understand that:

(1) You can finance the bigger house from partner’s house sale, and have no other ‘big spends’ to come

(2) You will retire within 6 years and will need your savings to finance living

(3) You have saved into a private pension: consider who runs that, can you draw from Age 55, how much you will draw from it, etc.

I am not clear (and need not be) how much of your living expenses at Age 55 will be taken from your pension. Do make sure you understand the principles of 25% lump sum, taxation of the rest, etc. if your pension will subsist for many years then consider how you will invest it - what funds etc.You could engage a good IFA.

You indicate that the main source of money in retirement is your non-pension savings. Given your investment period starts within only 5-6 years be careful; but if your savings will subsist throughout your retirement - 30 year plus? - you need to consider Equities..

You need a plan projecting your future income, the sources of that income, and expenses. Then you can assess how much, and when, you will need those savings. From that you can devise an investment plan.

You mention VUSA and American Equities. Ouch. Before this evaluate your investment plan, asset allocation, and how much in Equities. At present the US stock market is horribly over priced. Look at Europe and, some would say, the UK.

Standing back, you may benefit from advice from an IFA. Find a good one from personal recommendation. Set out clearly what you want, and do not want. Agree a fixed fee or hourly rate with estimate. Do not get suckered in to paying x% of your investments every year.

I wish you well but plan first and be careful.
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4 users thanked Law Man for this post.
WillG on 09/10/2023(UTC), William P on 10/10/2023(UTC), Sinic on 10/10/2023(UTC), Lu Mingyan on 27/12/2023(UTC)
Thrugelmir
Posted: 09 October 2023 13:35:38(UTC)
#4

Joined: 01/06/2012(UTC)
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Stew49;281354 wrote:

Feels like I have missed the party (or rather the big gains) and keen to understand if it's worth jumping in.




Markets will always rise and fall. Big gains can quickly be erased. Slow and steady is the best approach.
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5 users thanked Thrugelmir for this post.
MartinY on 09/10/2023(UTC), Newbie on 09/10/2023(UTC), Tim D on 09/10/2023(UTC), William P on 10/10/2023(UTC), Sinic on 10/10/2023(UTC)
WillG
Posted: 09 October 2023 16:09:42(UTC)
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Joined: 28/10/2019(UTC)
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You do need to consider equities as an investment vehicle. Law Man's advice is very helpful and relevant to you. You are planning to have an awfully long retirement to fund (assuming you are in normal health). I agree that a good IFA at very least for a review of your options would be appropriate. It is difficult to offer maore advice here as we don't have a full picture of your circumstances. Don't rush into anything without careful thought and some professional input.
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1 user thanked WillG for this post.
William P on 10/10/2023(UTC)
Learner
Posted: 09 October 2023 18:08:00(UTC)
#3

Joined: 04/08/2023(UTC)
Posts: 69
[quote=Law Man;281750]

[ Set out clearly what you want, and do not want. Agree a fixed fee or hourly rate with estimate. Do not get suckered in to paying x% of your investments every year.]


What level of fixed fee or hourly rate should one expect to pay? And where can one find a good IFA who doesn't want ~1.1% of investments?
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xxd09
Posted: 09 October 2023 19:35:26(UTC)
#6

Joined: 23/01/2012(UTC)
Posts: 1,203
Jumping into the deep end indeed so take it steady and be sure you understand each step you take
Some thoughts
Equities-use a global equities index tracker only-cheap and easy to understand
Bonds -use a global bond index tracker hedged to the pound only -cheap and easy to understand
A 60/40 equities/bond portfolio historically would produce £3000+ pa without reducing capital
Work out what your living expenses are so you have some idea of the income you would need-most retirees spend at the same level as when working-more time more travelling
Most retirees keep 2-3 years living expenses in cash
Monevator .com has some interesting reading on investing for amateur investors
xxd09
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Simon53
Posted: 09 October 2023 20:11:49(UTC)
#7

Joined: 06/03/2019(UTC)
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Over the years regular drip feeding into predominantly ITs, with an eye on the 'dividend heroes', has served me well and allowed me to sleep.

Took the view that I dont have time or skill to time entry / exit into the markets, and happy for professionals to do so

https://www.theaic.co.uk...-finder/dividend-heroes

You can also use the AIC website to compare performances across sectors if that resonates
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3 users thanked Simon53 for this post.
William P on 10/10/2023(UTC), Sinic on 10/10/2023(UTC), Lu Mingyan on 27/12/2023(UTC)
The Spanish Inquisition
Posted: 16 October 2023 09:40:09(UTC)
#8

Joined: 02/04/2014(UTC)
Posts: 231
Apologies if its already been mentioned but VUAG is the accumulation version of VUSA but it doesn't appear to be available on Vanguards UK platform as you stated. I've checked and its available on both Hargreaves Lansdown and AJ Bell.
I hold VUSA in my AJ Bell account and U.S. Equity Index Fund - Accumulation in my Vanguard account.
Both have performed very well and between them account for 38% of my equity exposure.
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