bogleheads in England?

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singletond
Posts: 27
Joined: Mon Mar 22, 2010 6:15 pm
Location: San Antonio Texas

bogleheads in England?

Post by singletond »

HI, I am researching saving for retirement for a British citizen living in England. I need to find out about UK tax protected accounts, etc. Does anyone know about this?
Dave
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NightOwl
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Re: bogleheads in England?

Post by NightOwl »

singletond wrote:HI, I am researching saving for retirement for a British citizen living in England. I need to find out about UK tax protected accounts, etc. Does anyone know about this?
Dave
Hi Dave,

I don't know anything about this topic, but here's a link to the Bogleheads Wiki page on UK Investing -- scroll down to "Pensions and ISA wrappers" -- is that what you are looking for?

Here's the Pensions and ISA wrappers section quoted:
Bogleheads Wiki wrote:The portfolios outlined above, and the example funds and ETFs listed, work equally well both for ordinary and for tax advantaged investments. Tax advantaged investments in the UK are, most commonly, pensions and Individual Savings Accounts (ISAs).
For ISAs, a UK investor can hold funds or ETFs inside a self-select ISA wrapper. These wrappers are offered by almost all discount brokerages or fund supermarkets, and usually operate like a normal trading account with a few added features and limitations (typically a limit on the total amount that can be investing in a single year, in line with annual ISA allowances).
For pension savings, a UK investor can hold funds or ETFs inside a Self Invested Personal Pension(SIPP) wrapper. Many of the usual discount brokerages offering trading and ISA accounts also offer SIPP accounts, and though there may be a few extra restrictions on what investments an investor may hold, SIPP wrappers generally operate like both ordinary trading accounts and ISA wrappers.
For account balances where a SIPP is impractical, UK investors might instead use a stakeholder pension scheme. These usually offer a limited range of funds, and have capped fee structures. Stakeholder pensions are generally not as flexible as a SIPP, but can be cost effective for low balances when weighed against annual SIPP administration fees. The funds listed above are unlikely to be available directly from stakeholder plans, but it is often possible to find index and tracker funds within the plan that can be substituted.
TD Waterhouse, Fidelity, Hargreaves Lansdown, Interactive Investor and Alliance Trust all offer both offer ISA and SIPP wrappers. Cavendish Online specializes in cutting costs by refunding IFA commissions, and offers a selection of stakeholder pension plans.
And here's a post by Valuethinker that you might want to check out -- perhaps he will weigh in here.

NightOwl
"Volatility provokes the constant dread that some investors know more than we do, making us fearful of ignoring such powerful price movements." | Peter Bernstein, "The 60/40 Solution."
Topic Author
singletond
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Joined: Mon Mar 22, 2010 6:15 pm
Location: San Antonio Texas

Re: bogleheads in England?

Post by singletond »

Thanks Nightowl,

Yes that info is very useful. I phoned Vanguard (they want 100,000 pounds for an individual account) and Allied Trust which offers a fair range of VG funds, several of which do not carry an "ATS initial charge". Of those the lowest annual management charge (for equities) is 0.25%. And Alliance charges 12.50 pounds per transaction to buy a fund. Just shows how fortunate we are under the US financial system.

I had hoped to find a good UK retirement planning calculator, but haven't found it yet.

Dave
Chrysalis
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Re: bogleheads in England?

Post by Chrysalis »

Yes you are fortunate indeed! There is a good UK based blog, Monevator, which has the best Uk relevant index investing information bar none. It includes a summary of the handful of brokers who provide access to Vanguard funds (but our range is tiny compared with yours).
as for retirement calculators, if you're looking for something like FIRECalc, there isn't, as far as I know. The most relevant thing I've read on UK based withdrawal rates is Wade Pfau when he reviewed withdrawal rates in international (I.e. non US) markets - suggests that Uk investors have lower SWR than US.
I'll try and help with specific questions (I'm a Uk resident).
Chrysalis
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Re: bogleheads in England?

Post by Chrysalis »

Sorry, to add - the Vanguard ETFs (small range available in Uk) are probably the cheapest for total expense ratios.
Chrysalis
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Re: bogleheads in England?

Post by Chrysalis »

the post by valuethinker is a little out of date now. As well as the availability of vanguard funds and ETFs, there are also a good range of ishares ETFs.

regarding tax advantaged savings -tax advantaged pension savings limits have been reduced considerably in recent years. Pension contributions that can be made free of tax are now limited to £40,000 per year (from next tax year) and there is a lifetime limit of £1.25m for an individual's entire pension pot. Pension withdrawals are taxed as income.

ISA limits are around £11,000 per year - these are savings from taxed income but which are free of capital gains tax and income tax.

you'll need to find out what pension provision your friends employer provides and what employer contributions if any, and whether your friend has other pension savings.

I have to say I have hardly begun to work out all your 401, 539, IRAs and Roth IRAs - all seems very different to our system...
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rgb73
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Re: bogleheads in England?

Post by rgb73 »

Hi,

I used to live in England (we are on sabbatical in New Zealand), and we intend to move back to the UK in the near future. I haven't delved into SIPPs (self invested pension plans) but I know you get very good tax relief on them (contributions are topped up by the government for the amount of tax you may have paid before receipt, I think). I believe when you draw down you have to pay tax on the income (I could be wrong about that).

My investing was based on ISA's: put money in and pay limited tax on any dividends (10% - http://www.hmrc.gov.uk/taxon/uk.htm), and no capital gains tax.

I hold an HSBC account where I used to buy individual shares. Since coming to the bogleheads I've seen the light and now invest solely in Vanguard's range of ETF's. They have a very low expense ratio and being Vanguard, you would expect it to stay low.
ThSGM
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Joined: Thu Jul 11, 2013 12:38 pm

Re: bogleheads in England?

Post by ThSGM »

Just checking in as well into the England thread: I'm getting into the Boglehead way of investing; anybody know a good forum for this, which is specific to UK?
terminer
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Joined: Tue Sep 01, 2009 3:26 pm

Re: bogleheads in England?

Post by terminer »

No I haven't found any UK forums that come close to Bogleheads.

BTW One of the differences I've noticed between the US and UK is that in the UK CD's (building society/bank fixed term accounts) offer higher rates relative to UK government bonds than the US. The gap has narrowed in the last couple of years with the UK funding for lending scheme reducing rates, however it's still true to a material extent.

So for example the best US 5 yr CD is ~2% and a 5 yr US govt bond yields around 1.6%.
In the UK a 5 yr CD is 3% and a 5 yr UK govt bond yields around 1.6%.

A couple of years ago the gap was even wider and I'd bear this in mind when reading the (excellent) threads discussing the pro's/con's of bond funds vs CD's on the board.

Personally while I have significant UK govt bond fund holdings within my SIPP/ISA wrappers, outside of those wrappers I'm more biased towards having CD ladders.
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