We're first time investors in our 50s - how should we allocate our money?
03 March 2021
Question by Gareth
As a non investor ready to start, is it possible to have a SIPP and ISA on the same platform, straddling the same funds as it were?
We have a lump sum of £50,000 to use in this way with no previous investments. In our mid fifties but hoping for at minimum 5 years as you advise and hopefully to keep it all going for longer.
Answered by Boring Money
It’s great to hear that you’re in a place that you feel comfortable investing some of your savings. Before we launch in to the where, I thought it would be helpful to make sure that you have enough cash set aside so that you can invest this money for 5+ years.
Before you invest
In case anything happens, it’s best to keep at least 3-6 months of expenditure aside in an accessible cash account along with any money that you will need for single expenses that you expect to take place in the next 2-3 years such as buying a new car or home improvements.
If you have any expensive debts, then you should consider paying them down before investing to avoid losing money to high interest rates.
Where to invest
I’m sure you’ve seen that there are many options for platforms and a lot of these will be able to provide you with both an ISA and a SIPP. If they include the features you are looking for, there is no need to use a separate platform for each wrapper.
The two ‘wrappers’ will be treated independently of each other, in the same way as if you help money in two savings accounts with the same bank that have different interest rates. You can select the same or different investments in each account and the investment performance will only be applied to the account it is held in.
Just be aware with investments comes the risk that the value of your money can (and will!) go up and down. The longer the money is left invested, the more likely it is to provide a positive return, which is why we recommend investing for at least 5 years.
You haven’t mentioned how you plan to split the £50,000 across accounts. The benefits of each option will depend on your circumstances. There is no tax on investments held in ISA or SIPP accounts, however the treatment of contributions and withdrawal are different for each. I would recommend reading through the Investing Guides to help you make the most of your investments.
I hope this helps and good luck!