My first question is why you want to look to set up a pension elsewhere.

There are benefits in having your ISA and pension managed in the same place.

Ring Fencing

Nutmeg and most other investment providers will ring fence client money from their account.

So if anything goes wrong, your money is held by what we call a custodian. They are also covered by the Financial Services Compensation Scheme (FSCS), which covers you for up to £85,000 we hold with any one provider, if they get into troubles. So do have a look at that. 

If you still want to look elsewhere, not so many of the robo advisers have pensions. You could, if you're worried about security, look to stick with a household name such as Aviva, who will let you buy a DIY pension online from them.

Robo advisers

Other options would be to use more of what we call an investment supermarket. Hargreaves Lansdown is the country's biggest. It's a FTSE 100 firm, if you're worried about security. So that might be a good place to look. They can be expensive for much larger accounts, but if you're getting started with the pension and their service is good, then the fees won't be relatively out of line with with the market.

Ready meals

Other places you could look to start a DIY pension, would be AJ Bell Youinvest. Unlike with Nutmeg and Aviva, both of whom offer ready-made pension investment packages, with Hargreaves and AJ Bell Youinvest you will have to pick the investments you actually put into your pension.

If you want the investment equivalent of a ready meal, then have a look at what we call multi asset funds to put inside your pension. Vanguard's Lifestrategy range or BlackRock's Consensus range are two such options. 

Result:

On balance, if you've got a relatively small amount in your ISAs and are starting off with a pension, I think it sounds like it may make sense just to stick with the provider you're with and the service that you know.

Hope this helps,

Holly

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Hi Joy,

Great to hear that you're eager start investing, and are particularly interested in ethical/socially responsible investing. 

This is an area of the investment world that has been seeing a lot of interest recently. More platforms are introducing ethical ESG (Environmental, Social and Governance) options for their customers to choose from.

Why invest ethically?

There are many naysayers who dislike ethical investing because they feel that, while being a nice tree-hugging hippy thing to do, your investment returns will be poorer for it. However with the UN’s Intergovernmental Panel on Climate Change warning in October 2018, that we only have 12 years to bring global warming under control and avoid a 'climate catastrophe' - the support for ethical is growing. 

As is the performance of the ethical options which already exist. If we look at three different funds ranging from ethical to not-so-ethical, we can see that ethical performance has been on the up ever since 2014. (For more detail - take a look at our full article).

• FTSE4Good Global - which only includes socially responsible businesses
• FTSE All Share - which tracks the entire investment market: good, bad and ugly
• The Vice Fund - which invests in tobacco, gambling, booze and weapons

While the Vice Fund doubled investors’ money in its first five years (2002–2007), by the start of 2019 the FTSE4Good was the leading fund of these three. It even beat the benchmark set by the all-encompassing FTSE All Share.

This just goes to show the naysayers, that you don’t have to sacrifice returns anymore to invest in the future of the planet. But then again, nothing with the stock market is ever certain.

More info on ethical investing

As we are pretty interested in ethical investing here at Boring Money (having written a report all about it in 2018), our Best Buys page and a few of our articles might be helpful to you. Why not take a look at:

Our Best Buys page - use our 'ethical investments' filter to whittle down the list providers to just those who market their own ethical options. As of April 2019, the only providers on our Best Buys page who offer ethical options are: Vanguard, Nutmeg, Wealthify, PensionBee, Barclays Smart Investor, Wealthsimple, and Moola.

Of these ethical options, we review all seven as suitable for beginner investors. However you can filter them again, using other filters such as: 'Low cost for small portfolios (<50k)' and 'Start with £100 or less', to find the best providers for you to explore further.

• Ethical Investing: What is it? And who’s doing it?
• Holly's blog: Ethical investing. Fad or the future?
• Good vs Evil: You'd be a fool to rule out ethical investing

How to compare 'socially responsible' criteria

There is a lot of confusion about what counts as 'socially responsible', ‘ethical’ or 'ESG'. Some of this is due to the fact that one person’s ethics are not always in line with another’s.

• Negative screening - Most investors think of ethical investing as just blacklisting certain types of companies or industries from their portfolio - according to our research, consumers most want to avoid: arms, tobacco, gambling and pornography.
• Impact investing – where money is actively funnelled towards certain projects to support positive change – is less recognised, but once offered to people it is more popular than blacklisting. Our survey respondents named healthcare, green energy and sustainable agriculture as the areas they most wanted to see their money put to positive use.

Unfortunately, because of the relative youth of ethical investing, and all the confusion over how to define 'ethical' options, there is currently no easy way to compare the ethical options out there. Beyond reading up on them and doing your homework, there's no quick way to see at a glance how one ethical investing option differs from another. You just need to comb through the details yourself, and see how these ethical options measure up to your ideas of what 'ethical investing' means.

This being said, Morningstar are working toward creating a tool which could be really helpful for investors who'd like to do this. And we are hoping to have the functionality to help readers compare ethical investing products in the future. Unfortunately though, these projects are still in development.

Meanwhile, some investment platforms such as Fidelity, do offer investors helpful info to help them find out more about the ethical funds on their platform.

Take a look at the bottom of this page, to see the top 10 most bought and sold ESG funds on the Fidelity website in February 2019: www.fidelity.co.uk/funds/esg-investing

Hope this helps!

Phoebe

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.

Hi Dave,

It is not going to be possible to tell you what you should do in your situation – sadly, this is because we don’t know each other well enough.

However, I can give you some facts that might help guide you.

Firstly...

Your point about whether you need a SIPP? Self-Invested Personal Pensions originated from rules that allowed people to manage a range of different assets and investments, all under one umbrella. Including property. And even fine art.

The flexibility idea took off but sadly, that flexibility came with a high price tag. And when people didn’t use the flexibility – most people as it happened – that price was definitely not one worth paying.

Personal pensions – and stakeholder pensions – on the other hand, have always been more straightforward, offering only a few funds, but with a lower overall price tag.

Today, however, the lines are becoming more blurred.

Price competition is increasing across the pension landscape. As long as the fees you pay for your situation are competitive, the question of whether that is via a SIPP or a Personal Pension is generally less important.

In terms of the actual investment...

The idea of targeting a multi asset, passive fund is a good one. You can choose something that suits your risk profile, benefit from great diversity AND keep your costs down, all within a single fund. After making the decision to save in the first place, these are three of the most important factors in your potential for future wealth.

The Vanguard LifeStrategy funds are excellent examples of multi-asset, passive funds. But they are not the only examples.

And no, Vanguard do not currently offer a SIPP (or any personal pension) via their own platform. But… You can access their funds via another provider (and the Best Buy tables on here include some providers that will allow that) or you can consider the equivalent fund offered by the provider(s) which do not.

Either route, with the appropriate amount of risk, should provide you with a good foundation for that solid pension plan.

Good luck,

Lesley James

Holly Mackay adds:

So you've got about £30,000 to put into a pension.

One of the first things... 

You'll need to choose is where go. Our Best Buys tables will help you.

A robo adviser could be a good idea because they will do a lot of the investment heavy-lifting for you.

When it comes to selecting the type of portfolio you choose, you'll need to work out what your risk profile is.

Nutmeg who you mention, have a questionnaire online which will help you to think about where you sit on the risk spectrum, between their Portfolios 1 - 10.

With the higher risk portfolios you would typically expect to make more over the long run, but it will be a bumpier ride, so there will be some years where they will do much worse than the mid risk lot. There will also be sometimes when they will be much better.

Returns

So the Nutmeg Portfolio 10 is their highest risk portfolio. You can see that over the short time frame you talk about, in one year it did make nearly 8%.

While our Q2 2018 update shows Nutmeg’s Portfolio 10 returned 7.92%, our Nutmeg Best Buys page says it returned -5.9% in 2018 - you're right to read this as a 5.9% loss over 2018.

• So, in the 12 months between 1st July 2017 to 30th June 2018, Nutmeg's highest risk Portfolio 10 returned 7.92%.
• Meanwhile between 1st January 2018 – 31st December 2018, Nutmeg's mid risk Portfolio 5 returned a loss of 5.9%.

There's a few things to note here, however:

• These are two different portfolios, with Portfolio 10 being higher risk than Portfolio 5.
• In the last quarter of 2018, markets fell significantly - the FTSE 100 fell by nearly 10% and globally the MSCI All Country Index fell by 13%. So this would have had a significant effect on the 2018 performance of Nutmeg’s portfolios.
• Both these figures are just looking over a 12 month period, which is a very short time-frame from an investing perspective. To get a better idea of performance, you need to compare years of returns.

At this stage I wouldn't focus too much on specific and short time frames. I would just spend my focus on making sure that you're in the right risk portfolio for you.

Time frames

You're 44, so we're looking at a minimum of a 13 year time frame - the minimum age for access to a pension is rising from 55 to 57 in 2028.

With this time frame, you can afford to take a decent amount of investment risk, so make sure you factor this in to account. Don't just plump for the 'middle toaster' in a range of investment returns, make sure you're really thinking about what's best for you and you will be comfortable with.

The Vanguard LifeStrategy range is a similar type of investment, as in it's pre-packaged and assembled by the experts.

As you say they don't yet have an online pension, although we believe this is launching imminently.

As well as the robo advisers which you can read up about online, you can think about more mainstream investment and pensions companies, such as Aviva, which offer ready-made pre-packaged pensions. Again, see what you think in our Best Buys.

Just be aware...

We are not regulated to give personal financial advice - This isn’t full-fat regulated financial advice. Boring Money is a publisher and not regulated by the FCA. 

This means we can't help with specific personal circumstances or recommend specific investment products. It also basically means that if we say something daft, you have no recourse to come back and complain.

We’re only allowed to give you a steer or share an opinion or tell you the facts - That said, we promise that our answer to you is an independent unbiased perspective with no commercial gain to make. If you need regulated financial advice, you can find a good adviser via sites such as Unbiased & Vouchedfor.