I'm about to move all my pension investments and timing is not the essence.
I'll explain what's going on and why this huge change in one go for me.
So I'm Eric and I run this channel Time to Retire with my wife Tracy and we talk about
all things pension and retirement.
So if this is something you're interested in, please subscribe to check in with what's
going on on our retirement journey.
So what's the big change?
And for those of you who watch regularly, you'll be saying I should stop mucking about
with my pension investments and stick to the plan.
But the first of the reasons is I click out of my hands really.
The second one, okay, you got me guilty of charge.
I'll hold my hand up.
It's more than you fiddle in with my portfolio.
But the first reason is the easy one.
I have to move my platform.
So about a year ago, I consolidated my seven old pensions into a single sip.
And at the time I chose free trade.
I chose this platform because I knew that I'd be making lots of trades in my first year.
And as the name free trade suggests, they charge a yearly fee, but they don't charge
for each trade.
So great.
So why the move?
Well, unfortunately, free trade doesn't allow me to draw down my pension.
So when I retire, I'll have to move all my investments into an account that facilitates
pension draw down.
And I don't really intend to go and just buy an annuity with my pension pot.
What I intend to do is to draw it down flexibly between the ages of 56 and 67.
And at that point, my retirement stay pension kicks in.
And I also have some DB pensions that will ensure I got enough in my retirement to take
me up to that date.
And I'll actually get them DBs from 56 until the day I die.
So I'm happy with the plan, but I've still got to move all my investments before I retire
so that I can start the draw down.
So this is where I'm at.
I've spent a couple of months exploring all the different sip providers that allow draw
down.
And I brought down a list of 12 platforms down to my final two.
So the final two candidates were Vanguard and Interactive Investor.
And let me tell you why I discounted the other 10 platforms.
It's all about what's important to you.
So look at this table produced by Wich on SIP platforms, Vanguard and Interactive Investor.
They're actually quite low down on the list, but then look at the criteria they use to
rate them.
Typically, these high rated platforms cost about £200 per year, more than Vanguard or
Interactive Investor.
But apparently they offer better support.
Whilst I was with Free Trade, I contacted their support once in 12 months.
Would I pay an extra £200 per year to get a slightly better response time?
Not really, no.
I'd be happy to wait a few hours for a response rather than fork out an extra £200 per year.
And the other criteria is the level of research information that they provide about the investments.
But there's a million websites out there that offer this kind of research for free.
And if I had to spend an extra £200 per year on research data, I think I could do a lot
better than the internal research on any of these particular platforms.
So me, with these things sway me towards these more expensive platforms.
For me, it's all about the platform costs.
Now Interactive Investor and Vanguard are both less than £200 per year.
And this is kind of my limit, the limits I have set on what uncomfortable paying for
a platform fee.
So now choosing between both of these platforms, I actually went for Interactive Investor.
So last night I opened an Interactive Investor SIP account.
And really I'm looking forward to letting you all know how I get on, setting it up and
moving all my funds across.
But I mentioned that there's two parts to the change in my funds.
Well the second part relates to the type of investment I'll be making going forward.
When I first set up my SIP, I leave the time to find my feet before it plunged into anything
risky.
So about 80% of my pensions into an overnight Sonya tracker.
This was a low risk option for me.
It gives a solid 5.3% each year.
Doesn't go up and down with the markets.
And I know that inflation was likely to be under 3% for the year.
So at least I wouldn't be doing anything catastrophic.
However, there's cause and downside to this.
With my 20% in equities, I still managed to pull off 9.5% return over the year, which
I'm happy with.
But if I've gone with 60% equities, as everyone was advising me, then this would have been
near 15%.
In the last three months, I've gone the other way.
I've moved 80% into equities and left 20% in the overnight tracker.
But it's time for a change, time for a rebalance.
So an entering year two, I have one big worry.
It's related to a stock market crash, but not in a direct way you might think.
It's all about FOMO, my fear missing out.
If the stock market drops 20% in January, then I wouldn't be overly worried, as most
of my withdrawals won't be for at least five years.
But this gives me plenty time for the market to recover.
My worry is that if we did see a crash, then I wouldn't have enough unaffected liquid funds
to be able to move into the market whilst it was down.
So let me explain.
I do not think I'm going to lose 20% of value in stocks.
This recovers back to the same level in five years time.
Or option two, I have 50% portfolio in Sonya Tracker and the market loses 20% and I move
my funds in.
Now in five years time, I'm not just even, I'm actually 20% up.
So it's about liquidity.
Too much equities, too little moveable cash to take and find out if it happens.
So the plan before January 6th and the transfer of power in the US is for me to move 50% of
my investments back into Sonya Tracker.
Ready to put back in if we see a fall in 2025.
So thanks for tuning in and I promise to keep you up to date on my interactive investor
move and also do you risk a map portfolio.
See you on the next one.
Thanks.