Practical investing and Retirement Principles
This week we carried on talking about the “sexy” stuff…. investing!
In week 6 we covered the theory behind investing (asset classes, diversification and time horizons, then last week (week 7) we dived into detail on index fund investing and how to build wealth for the long term. Did you catch the special session with Jeremy from Personal Finance Club? You can watch the interview on YouTube Here
This week we rounded off investing with how to actually implement this and buy your first assets. Then we started the retirement planning part of the course and we talked about how to know when you can retire.
Week 8: Platforms, Accounts and Funds
Week 8 Practical Session
Thank you for taking the time in the previous weeks of the course to patiently lay the foundations for a strong, stable base before you get to investing. It’s so important to have that base, and it takes time for us to share all this information with you. We didn’t just want to give you the “answer” of how to invest without a full and thorough understanding of whether you’re ready to invest and why we are such big index investing fans!
Remember, you are only ready to invest if you have no expensive debt (interest rate more than 5%) and you have an emergency fund of 3 to 6 months of living expenses. The only exception to this rule is optimising workplace pensions and existing investments, which you need to do no matter what.
Disclaimer
We are NOT financial advisers. The content of this course, the articles on our blog and these summaries are NOT financial advice. This is our opinion, and we are just sharing what we are doing. DO YOUR OWN HOMEWORK.
Investing part 3: Implementation!
Remember! Learning about investing is like learning a whole new language. There are going to be terms and phrases you don’t understand. Stay calm, look up what it means, or ask us!
These specifics are for people in the UK, but the principles are the same wherever you are in the world.
- There is a TON of information out there for those of you in the USA… we suggest the Mad Fientist’s blog, Mr Money Mustache and JL Collins’ blog and book The Simple Path to Wealth as a good place to start.
- For Canada check out Kristy and Bryce at Millennial Revolution.
- For New Zealand there’s a NZ specific Rebel Finance School Facebook group and have a read of Ruth’s Happy Saver blog.
- For other countries, there’s bound to be someone in your country that’s thought about this before. Look for the Financial Independence groups in your country and if they don’t exist yet maybe you can start one and figure it out together.
We’ve been banging on about Vanguard index funds. How do you actually buy them?
Well first you need to understand the different levels of thinking when buying index funds or any type of investment.
Investing levels of thinking
The key thing to get your mind around for this weeks’ content is that there are three main levels of thinking that you need to consider and optimise in investing. As you go through this I am sure you will be triggered to think “Is my platform any good?” or “do I have my money in the right account type?” or “Is the fund I am invested in any good?”
Our plan is to teach you how to evaluate what you have already got without us. We would genuinely LOVE to look at all the fund fact sheets you send us for review and go through all the platforms out there but there are 6000 of you on the course and only 2 of us and a bunch of incredible Rebel Ninjas. We can’t cope.
Most importantly if we did it for you then we would disempower you. We want to teach you to understand and think about this stuff for yourself. Imagine the power you would have if you could glance at you investments, understand the fact sheets and know what to do next?
We want to empower you to be able to read, understand and make educated decision on your own financial future. Plust this stuff can be fun when you get into it! On to the levels of thinking
1. Platform or provider
This is the company through which you buy the index funds. Vanguard has its own platform. There’s lots of different providers/platform and they all charge different fees! AVOID Wealthify, St James Place, PensionBee and any high fee platforms. Avoid at all costs.
You can read my open letter to Wealthify here to find out why we say this. Use Katie’s Fees Tool to analyse the fees you have got already compared to Vanguard. Your mission at platform level is to minimise fees and get a stable platform with good customer service.
Remember that platform is just one level of thinking and a provide can look good here but then fail spectacularly at a different level.
Now Pension Example
The example we had last night was Now Pensions. which a lady wrote in to ask us to review:
To start reviewing Now Pensions I went to their website and started to read the home page. They had a “lovely” message and branding. Never get sucked in by the corporate mission (normally a load of bullshit) or the branding (you can make the worst provides look awesome!)
Next my job was to look up the fees and I found Now Pension has SUPER cheap platform fees. It was £21 a year which is AMAZING. Wow. So Now pensions seems to have passed the first test. But we will without judgement till we have explored the other levels. Your job is to review your pension providers, ISA providers etc. in exactly the same way.
Let’s move onto level 2
2. Account type
The government incentivises us to save by allowing us to open these things called tax-advantaged accounts.
In the UK we have ISAs (Individual Savings Account) and pensions/SIPPs (self-invested personal pensions). In the USA you have 401ks, Roth IRAs and more. in NZ you have KiwiSaver and Pies.
Every country seems to have one or two options that are designed to incentivise you to save for your future so the government doesn’t have to look after you in retirement. Your job is to take advantage of the tax savings these accounts offer.
Here is a brief description of each one and a copy of the slides from this week’s course to remind you. Remember that tax allowances change every single year and google is your friend. Just google this years allowances and the .gov website has some pretty straight forward explanations and tells you the rules.
The difference between these accounts is when you can get to the money (age restrictions) and when you will be taxed.
- ISAs. You invest money that you’ve already paid income tax on and then the investments grow tax free and you can withdraw money from your account without paying any tax. There is no age restriction on when you can access these.
- Lifetime ISAs (LISAs). A special type of ISA. If you’re aged 18-39 you can open a LISA and invest up to £4k a year until age 50. The government matches 25% of what you put in. You can access the money either when you’re age 60 OR to use as a house deposit IF you’re a first time buyer. You also don’t pay tax on money you withdraw, so you don’t pay tax at either end!
- Pensions or SIPPs. You buy assets in these accounts with money that hasn’t been taxed, or if it has the gov gives you back the tax you would have paid when you put it in. The investments grow tax free, but when you come to withdraw from the account in retirement you have to pay income tax on the money you withdraw. These are age-restricted. You cannot get to these until you are 10 years younger than your state retirement age! For Alan this means he can’t touch his SIPP till he is 58! But have some money put aside to look after yourself till you can get to this.
- General investment accounts (GIA). (also referred to as trading accounts or taxable accounts). These have NO tax advantages. You invest in them with money you’ve already paid income tax on and you have to pay tax on the money you withdraw. In the UK we have very generous annual allowances for ISAs and pensions/SIPPs so these should be used as a last resort! No-one likes being taxed at both ends!
The main difference between the accounts is when and how you get taxed. Your mission at the account level is to minimise tax through use of tax-advantaged accounts.
The first slide shows Alan marching towards his old age. The arrows show the different ages he can get to the different funds. The second slide shows when you are taxed for the different accounts. For example ISA you are taxed on the way in and not on the way out and SIPP and Pension is the exact opposite. You don’t pay tax on the way in (or get the tax back) and then you pay income tax on the way out.
The third slide shows some of the details about each type of account that change each and ever year. Always check online first for new limits, restrictions and rules
Which order should I invest in?
Then comes the question which order should I invest in? Alan spent 2 hours making the next slide in an effort to explain this! This is a flow chart you should be able to work through to come up with an investment order. Please let us know if you have comments or questions using the google question form here
Your mission at this level of thinking is to pay the least tax possible. Do this by taking advantage of tax efficient accounts in your country where ever possible.
Now Pensions Example
Now Pensions only offers SIPPs or employer pensions. Not great as with a platform like II, Fidelity or Vanguard you can get a SIPP, ISA and General account. Also no problem to have your money in different places, it will compound at the same rate.
3. Funds
This is what you stick in your account, the index fund itself.
Vanguard has its own low cost broad based index funds. You can have more than one fund in the same account but you don’t need to! Just buy one passive global index fund. Your job at this level of thinking is to pick the simplest broad based index fund like the Vanguard FTSE Global All Cap Index Fund or the Vanguard FTSE Developed World ex UK fund.
For example if you were just starting out you might set yourself up like this:
- Platform: Vanguard
- Account: SIPP
- Fund: Vanguard FTSE Global All Cap
There are SO many funds and this is where it get’s crazy to understand what you already have in your investments. You need to learn to decipher the fund fact sheets to understand what you already have and whether to keep it or not.
Understanding fund fact sheets
We are talking a lot about setting up new investments. Remember that it is also important to optimise your current investments as well. Part of the home work for the last few weeks has been to get out all of the paperwork for your existing pensions and investments.
Now you understand the levels. Platforms, Account and finally Funds, it is really time to dive in an analyse your existing investments .
Check out the Platform and see if you are happy with them. Understand the fees and more.
Then start to understand the funds inside your SIPPS, Pensions and more. To help you truly understand the funds Katie and I did a workshop called deciphering a fund fact sheet for you. If you want support understanding your existing investments this is the workshop to watch with your paperwork in hand!
Now Pensions Example
Let’s continue with the example from last nights course. This took me a little while to figure out but basically I went on a journey through Now Pensions website to click through and read all their documents.
I started by reading their Investment Strategy Page and then onto the Statement of investment Principles and finally to the Fund Fact Sheet for their main fund.
This takes some time but I KNOW with support and time you can figure out your existing investments. Here are the images of what I discovered
The first image shows what I found out about their investment strategy. They have one fund that they stick EVERYONE in. It is the 100% diversified growth fund! sounds fancy! This shows that you are in that fund till 10 years from your retirement age and then they switch you over the next 10 year from 100% in the fund down to 30% in the fund and 70% in bonds. This is SUPER conservative and something I would never do.
The second image shows the fund fact sheet. You can read it here if you want to have more fun. This shows what is in the fund and their aims. The final image is from the fund fact sheet and shows the make up of the fund. They have:
- 75% equity
- 14% bonds
- 11% other
and then they show the performance of the fund. The things I noticed were :
- 11% other? What the heck is this? Where is my money invested? I wasn’t able to find out through internet research so I would probably be calling them if this was my pension to understand this.
- 14% bonds. Why? Why have I got 14% in bonds when I am trying to grow my money. I know why, because they think you don’t understand the difference between risk and volatility but you do don’t you!? If you do then you don’t need the bonds when you are earning money. Imagine putting a 30 something in bonds, you are damaging their financial future needlessly.
- Performance. Seems low compared to global index funds. Your 11% other has lost you money, your bonds have lost you money. They aren’t doing well
The idea is you can do this yourself for your existing funds. Watch the decipher a fund fact sheet workshop and then start to read what you have already got and then if you don’t like it CHANGE! the quicker you change if you have a bad fund the quicker you will start growing again.
Learn to understand this stuff, take control of your investments and then you can set it all to autopilot, forget it and get on with living your life while your investments do what they should be doing which is earning you money!
IMPORTANT! Vanguard is both a platform/provider and it is also a fund manager. So when you’re talking about Vanguard are you talking about the platform (the website through which you buy the funds) or are you talking about the funds themselves?
You can buy Vanguard funds with lots of different providers. For example we have an ISA account with Halifax in which we have Vanguard funds. We also have a SIPP account with Halifax in which we have Vanguard funds. You can also have an ISA account with Vanguard (provider) and have Vanguard funds.
The only reason we use Halifax is that Vanguard wasn’t a platform provider when we started and we couldn’t invest directly.
Home Country Bias
What is home country bias? it is where people from a certain country invest in that country as well because they “know and trust” it. So they are biased towards the country they are born in.
So people who are born in the UK are more likely to invest in the UK, people who are born in New Zealand are more likely to invest in New Zealand etc. etc.
This is generally a bad thing as you are betting on one smaller economy and hoping that economy does well. UK investments have done very poorly over the last decade plus. So have New Zealand. If you had invested all your money in British companies, just like many retirement funds do you would have had terrible returns and been financially a LOT, and I want to emphasise a LOT worse off.
This is why we say diversify in a global fund as you are not just investing in your home country you are investing in every country around the world and if the UK doesn’t do well then you don’t care as you have your money in economies like the USA that have done much better!
The image below shows the Vanguard Life Strategy funds and how they are 25% invested in the UK when the UK only makes up 4% of the Global All Cap fund. Do you want to be overly invested in your own country?
Does this mean the Donegan’s are anti-UK? No! we are pro-diversification and intelligent investing instead of gambling on one tiny economy that seems to be poorly performing.
We are very anti the LifeStrategy and Target Date Retirement funds from Vanguard as they are both heavily invested in the UK and have a HUGE home country bias. We avoid these accounts at all costs.
The only country that can get away with it is the USA. The USA makes us 63% of the global fund currently and most of those companies are global names like Tesla, Apple, Google, Amazon. The only country that can just invest in their own country, for now, is the USA. They can use funds like VTI whish is the total stock market in the USA fund and is a fabulous investment.
Avoid home country bias and pick one simple global tracker. For the UK the funds we invest in are the Vanguard FTSE Global All Cap and the Vanguard FTSE Developed World Ex UK. We found out there are several New Zealand Funds based on Vanguard Total World (VT)
What you see when you log into your platform
You chose a platform. Say Vanguard, Interactive Investor, Halifax or what ever. Then you log in and see your accounts in there. Katie and I both have three accounts in Halifax our platform. We have a SIPP, ISA and General Account.
Why don’t we use Vanguard? They didn’t offer SIPPs and ISAs when we started! now they do we are thinking of moving everything there.
What you see in the image to the right is
- Platform: Halifax
- Account: all three! ISA, SIPP and GIA
- Fund: we own the FTSE Developed World Ex UK and FTSE Global All Cap in those accounts
We wanted to bring it to life so you could see what you might see in your Vanguard or Fidelity or whatever platform you use.
Tax on SIPPs
When you make personal contributions to a SIPP it’ll be with money that you’ve already paid income tax on.
Hang on! I thought you invested in SIPPs with before tax money?!
Yes you do! Your SIPP provider (Vanguard or whoever) goes to the government on your behalf and asks them for the tax that you’ve already paid on that money and they’ll put it into your SIPP account for you. Thank you provider and government! They will do this up to the basic tax rate.
So if you invest £800 as a personal contribution in your SIPP, the provider says “oh our customer shouldn’t have paid income tax on that money, let me go and ask the government for that tax back”. They’ll get £200 back from the government and that £200 will show up in your account a short while later and you can invest it.
The provider only does this up to the basic rate. If you’re a higher rate tax payer you need to either claim the tax on a self assessment tax return OR if this would be the only reason that you’re filling in a tax return, you can just write to them! Shout out to Rebel Ninja Kate who has helped you by making you a template for the letter to write to HMRC!
Download Pension tax relief claim letter template – Word Doc
We are so lucky to have such an incredible community of people, Rebels and Ninjas that help us do all this stuff and the best thing about finance is that we can all work together to get better at it! As always if you think of ways to improve our notes or content then you we would love your support. We want to create an amazing resources for all of us!
What if I’m planning on retiring early?!
If you’re planning on retiring early and want to work out what split you need between your SIPP and ISA, we covered this question and more in a workshop we did last year all about planning out your financial future. Check out the video here…
We had a lot of fun creating this video for you and it will help you to build your own spreadsheet to be able to see what happens to your finances over the coming decades. Let us know what you think!
Coming Soon: Bonus Week
What’s this about fees? What do I have to pay? How does it work?
There are various different fees involved as well as the cost of buying the index fund itself. Your mission at these levels is to minimise fees.
- Platform fees – The provider/platform charges you for the privilege of having the account. This is either charged as a percentage of the money that you have in your accounts (Vanguard is 0.15% a year, capped at £375) or as a fixed monetary amount.
- Dealing fee to buy the index fund – Some providers charge you to buy the fund. (Vanguard doesn’t charge)
- Entry or initial fees – Some platforms cream off up to 5% of everything you put in. FIVE PERCENT! This is before you’ve even invested anything! Vanguard doesn’t have any entry fees. NEST takes 1.8% of everything that goes in as a comission!
- Ongoing charges figure (OCF, AMC) – each fund has a fee that you pay for them to manage it for you. For the Vanguard FTSE Global All Cap fund this is 0.23%.
- Exit fees – some providers charge you to transfer your investment or to withdraw. Vanguard doesn’t! SJP is famously being told off for doing this and there fees are TERRIBLE. Avoid SJP at all costs.
Curious how much impact the fees have on your investments over the long term? Check out this impact of fees tool Katie made
Your job is to minimise fees as much as you can. Fees are one of the biggest predictors of long term success in investing.
Vanguard site
When people get to the stage of actually investing and log onto the website it can get confusing. There are so many accounts and funds to choose from. So many people have got to this stage, stopped and turned into never bothered Ned. Don’t let this happen to you! We made a YouTube series to help you navigate the Vanguard UK website and get going!
The videos below will help you by actually showing you the buttons to press on the website and answering any question you have as you go along! Open a SIPP or an ISA alongside Alan and Katie!
How do you open an account
We had an interesting experience in Argentina where we had a couple of friends that came live and watched the course from our Airbnb! Shout out to Angela and Lilly! After week 8 they were super excited and asked to open the accounts with us. We said yes!
As we watched them we saw how difficult it was to answer some of the questions! We had to Google parts of it to understand it. So in response to this we created two videos to show us opening and ISA and SIPP on the platform. This should guide you step by step through doing it. you can pause the video, do the stuff for your account and then continue.
Read on for the retirement principles and part 2 of week 8. But before we get there here is the Home Work for the partcial side of investing.
Investing implementation homework
IF AND ONLY IF you are ready to invest (you have an emergency fund of 3-6 months living expenses and no expensive debt)…
1. Choose a platform/provider. Vanguard is great! We suggest using them. We are NOT sponsored by Vanguard or receive any benefit from recommending them. We just believe in their philosophy and mission and love how low their fees are!
2. Open a stocks and shares ISA, a Lifetime ISA or a SIPP account with the platform/provider you have decided on.
3. Buy a Vanguard global index fund. The two we own are the Vanguard FTSE Global Index fund and the Vanguard FTSE Developed World ex UK.
We covered this in detail in a set of blog articles we wrote for you about how to invest in index funds. Also check out the videos above.
4. Set up a regular monthly investment to buy the fund you’ve chosen
And if you can automate it so much the better! Have it come out automatically so you don’t have to think about it and it is all done for you! GENIUS!
Then there is a bit more homework to get your existing investments in order!
Week 8: Existing Investments Homework
We need to get a handle on your existing investments. You probably have different work place pensions all over the place so it is your job to find them, understand them and work out whether to consolidate or improve them.
This is going to take detective work but could be worth thousands to you in retirement. A recent government report said there is as much as £27Bn in forgotten or lost pensions in the UK. I am hoping there is some waiting for you!
- Create levels of thinking table of existing investments. Just a simple table with the following information in it. This gives you a simple way to see what you have got an asses if it is any good.
- Platform, Account, Fund
- Fees at all levels
- Work out what you have got in each of these accounts. What funds they are invested in
- Watch the decipher a fund fact sheet workshop if you want to be able to read and understand the fund fact sheets you have got. Remember the #1 indicator of success is low fees.
- Are you happy with what ya got? This is the big question. Are you happy with where your investments are now. If so awesome, Katie has an old Deloitte pension that has low fees and is in a Vanguard Index Fund which is amazing so we just leave it there!
- If you aren’t happy with the funds you are in then the question becomes are there better funds where you are? Can you find better investments where your pensions are?
- If not, then consider transferring to a SIPP you open and taking control. You might be able to get lower fees and better access to low fee global index funds.
How does this work in my country?
Some of you will be thinking, how the #### does this work in my country? We for the first time ever we have had sessions for two more of the main countries on the course New Zealand and American.
New Zealand
We had the incredible Ruth from the Happy Saver on Rebel Finance School to go through how the system works in New Zealand and Katie got inspired to find Vanguard Total Stock Market Global Funds in New Zealand and she found them!
Watch the workshop to the go through the levels of thinking for New Zealand and how the system works for you there. We would LOVE to know what you think of the workshop and Katie and I will be dropping in to New Zealand in November / December so hope to meet you for a coffee!
America
We are super excited as we have Brad Barrett from ChooseFI coming on as well to help us all understand the American system with Roths, 401ks and many many numbers accounts!
The idea of this session is to help you understand the levels of thinking laid out in Week 8 and how it applies to your country. We would love to know what you think. In 2025 we will be running some events with Brad in America so join our mailing list if you want to hear about those.
What about my country!
- How do you go about finding out the details in your country? There are many ways.
- Join a ChooseFI or Financial Independence Facebook group and start to ask questions
- Join the local investing groups. Beware they might be active investment groups but you could still ask them about passive index funds
- There is a specific New Zealand RFS Facebook Group
- If there isn’t a group why don’t you start one and build a community yourself? Be the change you want to see in the world!
Retirement principles
On to part 2 of Week 8 which is introducing the retirement principles ready for week 9
The second part of week 8 was the start of the retirement planning section of the course. This is the final section of the course which we’ll continue in weeks 9 and 10 . This week we talked about how to know how much you need to be able to retire.
Remember back to week 1?! We showed you how to calculate your wealth-building rate. Check out the notes for week 1 if you need to refresh your memory. You can find the how big is your gap tracker template in this blog article. Why is this relevant for planning for retirement?!
The key here is that WEALTH-BUILDING RATE is the determining factor of how long it will take you to get to retirement NOT how much you earn although clearly earning more will mean you can save more! We wrote a article covering 10 ways to increase your income here.
It all comes back to the size of your gap baby!
If you are feeling overwhelmed by the course at this point and thinking, I don’t even have a gap, or I can’t invest yet then this is where we need to start!
Start where you are
If you don’t have a gap, if you don’t have spare money then that is where we need to start. Optimise your work place pensions and then forget the rest and let’s go back to earning more, spending less and creating a gap. We can only start where you are. This is critical! Please just start with the simple daily actions of learning, saving, and working to increase income.
If you start where you are and focus on small improvements you can make you will be AMAZED at how far you can get in a year!
How much do you need to retire?
To work out how much you need to retire, multiply how much you want to live on a year in retirement by 25. The inverse of this is 4% (1/25 = 4%). Alan has written a blog article all about the 4% rule and a follow up article answering questions about the 4% rule
You might feel overwhelmed by this target. You work out you need £40,000 a year to live on, you multiply that by 25 and you get the HUGE number of £1,000,000! Looking at that number you might think you will never get there, but you haven’t allowed for the power of compounding! Alan wrote a blog article to reassure you! The insurmountable mountain. Let Compounding do the heavy lifting for you.
It’s not F&*£ing binary! Don’t use “I’ll never get there” as an excuse for not starting. Check out this article Alan wrote about an Italian bin man we met in Ecuador who spends 6 months of the year surfing in Ecuador. It is amazing what you can achieve if you put your mind to it and think a little bit differently from the norm.
The secret mission behind Rebel Finance School is to help you get your finances in order so you can live the life you actually want to live! It all starts with working through this stuff, getting your finances in order and buying the freedom to live life as you want to!
The last article to read is one of the best from the entire FIRE (Financial Independence Retire Early) community about the subject. It is from Mr Money Mustache and it is called the Shockingly Simple Maths behind Early Retirement.
As a little reminder here are some of the key slides for the 2nd part of the course Retirement Principles.
Retirement principles homework
1. What was your wealth building rate for last month? We want you to know what percentage of your money is going towards investments and your long term prosperity! Then you can see if you are getting that number higher each month!
2. How much do you want to live off in retirement? You might need to go back to what we discussed in week 1 to have an idea of what you’re currently spending. Of course your plans for retirement might cost more or less than your current lifestyle. Your current spending gives you a good idea what you might need later on, plus or minus mortgages and childcare etc.
3. How much do you need invested in order to reach your target? (25x your annual expenses). The idea is to set a target for the amount you want to get invested and then in the next few weeks we will lay out a road map to get there.
4. Visualise having the money for 2 minutes a day. Sit in a comfy seat, see your self happy, your investments growing and you with the freedom to do whatever you want to. Spending time with your family, grandkids, travelling, whatever makes you happy. The key is to feel good about the goal and the future and then take action in the now to produce this result for yourself.
🎉 Practical Prosperity – Week 8 Quiz
1. What are the three levels of investing the Donegans teach?
2. What’s the main advantage of using an ISA or SIPP over a general investment account?
3. What kind of fund do Alan and Katie recommend for beginners?
4. What is "home country bias" in investing?
5. What’s your mission at each level of investing? (Select all that apply)
6. What should you do if you don’t understand your current investments?
🏆 Certificate of Achievement
You’ve mastered Week 8: Practical Prosperity!
Index Fund Pilot
You’re practically unstoppable. 💸🚀
Coming up in week 9
Week 9 is Planning for your future! You’ve nearly made it to the end of the course! Two more weeks to go. We’re going to cover how to plan for the future and how to figure out how long it will take to get to the target that you’ve set. Katie’s going to crack out the spreadsheets. She is SUPER excited!
Ask for help
Remember to reach out in the Facebook group with any questions you have or if you get stuck. We also have the question form here where you can give u questions directly. Don’t let confusion be an excuse for not progressing with this stuff. We, the Ninjas and the community are here to support you!
Alan and Katie
Frequently Asked Questions
A good place to start is via Gov.uk’s pension finder. Compare the fees and see what funds they are invested in. If you don’t like the funds see if they can be shifted to one that better meets your Rebel needs. The easiest path is usually to take the free employer money in their default scheme. Transfer out occasionally if they will allow. Consider consolidating them into your low-fee SIPP if they are expensive.
Tip: Always TRANSFER. Prioritize the worst offenders first.
👉 Week 8 looks at the best providers to look after your money.
Balance fees, fund availability, and trust. Less than £30k? Trading 212 is free or Vanguard charges £4/month. More than £$30k and Vanguard has capped fees. Interactive Investor is also popular.
Tip: Watch out for platforms pushing active funds. Go passive every time.
👉 The Investment weeks 6-8 will guide you to the right place.
If the current funds don’t align with your preferences, you might want to explore whether they can be switched to an option that suits your Rebel goals better. Some pension funds, like NEST’s Sharia fund, could have hidden gems worth checking out. If allowed, consider transferring or even consolidating older, high-fee pensions into more tax-efficient, low-cost accounts. Just remember: We are not financial advisors, so we can’t make specific recommendations, so be sure about what you want to do.
Quick tip: Always ask about exit fees first as it’s better to be sure!
👉 For more insights, take a peek at the Week 8 discussion—it might have some helpful hints!
The best way is to follow the tax-free hierarchy:
1) Employer pension (free matching!),
2) LISA (if under 40),
3) SIPP (tax relief),
4) ISA (flexible)
Anything after that can utilise other tax allowances like dividends and capital gains allowances in your taxed GIA.
Tip: Use our flowchart to decide.
👉 Look at Week 8 for more on the decision heirarchy.
Global funds auto-rebalance — you own thousands of companies without betting on winners.
Tip: Avoid home-country bias. For instance, the UK is only about 4% of the world global economy so you don’t want 25% of you funds in the UK!
👉 Week 8 talks about the beauty of global funds over the rest.
Don’t be scared. Take a look at our article on “How to break up with your financial advisor”
👉 When you think you are ready to pull the trigger on your expensive IFA we even have a letter template ready for you! Your future self will thank you!
You can switch. Here’s how we’d approach it:
1. Research a simple, low-fee global index fund.
2. Compare performance and fees.
3. Switch all at once or gradually — whatever feels comfortable.
We’d just get on with it.
👉 We walk you through switching in the course — step by step.
Your money is still safe.
Brokers hold your investments separately from their company accounts. Check your country’s investor protection scheme for extra peace of mind.
👉 Weeks 6-8 covers platform safety and protections in detail.
Fees compound against you! A 0.5% fee vs. 0.1% could cost you £100,000+ over 30 years. Always check the Ongoing Charges Figure (OCF) and aim for <0.25%.
👉 We talk about this more in Week 8 and the investment weeks.
Just start where you are. It’s all about mindset. Believe it’s possible and then figure out how to make it happen.Once you have created your gap, open an account like a tax-advantaged ISA or SIPP, set up a direct debit into a global index fund, and walk away.
Tip: Progress is better than perfection, so just start!
👉 Weeks 6-8 are the Investment weeks where we look at the nuts and bolts of this!
Pick one passive global index fund (e.g. Vanguard FTSE Global All Cap), open a tax-efficient account (ISA/SIPP/LISA), and use a low-fee platform (like Vanguard or Trading 212).
Tip: You can automate monthly contributions—set it and forget it!
👉 We get on top of all this in the Investment Weeks 6-8.
Confused about the tax relief letter for SIPP – If I contribute £100 a month from my net earnings, that was £125 gross because 20% of 125 is 25 – so my pension provider adds £25. Then for higher rate the gross would be $166.67 because 40% of 166.67 is 66.67. So don’t I need to claim back 66.67 -25 = 31.67? Not double the 25?
Hey Dave, it is super confusing at the higher rate. What they tend to do is expand your lower rate so you don’t go into the higher rate as much there for avoiding the tax as opposed to giving it back to you. Do you fill out a tax return as a higher rate payer. We wish they would make it simpler!
Thanks! It’s my wife who has the SIPP currently, she doesn’t do a tax return but maybe she should. We’ll take the template and put our best guess in for what she’s owed and see what they say…
Hey Dave, yes write to them and make a phone call after a while and work through it. Let us know how you get on.
The YouTube personal finance club link is broken. Takes to a page saying it is a private video.
Hi Guys, I can’t access the YT links as they are marked as private :-)
Abip they are all updated now! Sorry we got behind with the course notes focusing on writing the course. Thank you. Alan
Firstly, thank you to Ruth for introducing me to the RFS team. I’m a long time follower. I feel I’ve been in the, ‘little knowledge is dangerous ‘ for a number of years, but I think you’re dragging me out the other side now. Thank you both so much.
Claire, thank you for sticking with us and for Ruth’s intro! We LOVE the Happy Saver. She is awesome! You’re absolutely right—little knowledge can be dangerous, but you’re now armed with a few more ideas, information. Keep going, you’re doing brilliantly!
Peace and Pineapples 🍍✌️
Think there’s a problem with the week 8 quiz – I got all 6 correct, but the page said “you scored 5 out of 6”
Peter, thanks for highlighting. I will have a look today and see if I can get them right! lol. Will check. THANK YOU
Hey Alan, Thanks for all the great information in here, it’s wonderful. Just wondering when you’ll update week 8’s course notes with the table of the funds to invest showing the RFS purity? In min 53:04 of week 8’s video you mentioned you were going to do it… :)
Hey Ivan, maybe the next couple of weeks. We have got a lot of work to do on the notes section of the course. Thanks for checking in. This is something we want to create as a blog post too sometime collecting all the different funds and helping people choose….
Hi Donegans! I just finished watching week 10 and I’ve learned so much! I just called fidelity and unenrolled from account management! I have around $6k in employer stocks and after everything I’ve learned I’m thinking it would be better to switch that and future contributions over to an index fund and kick off my taxable account. What say you?
Unenrolling from account management = taking control = YESSSS! Switching to index funds is a smart move – low fees, broad diversification, and no one trying to outsmart the market.
Employer stock can be risky if it’s a big chunk – so spreading it out is wise. Is this all in a general account now? Is it in a 401k? Are you maxing out your tax advantaged accounts? Sending huge happiness. You’re on fire! 🔥
Yes, the $6k in stocks is all in an individual taxable account. I have maxed out my 401k and Roth IRA and now looking to put all my extra into that taxable account!
That makes sense. Do you have a CGT allowance. Normally profit on stocks and shares is counted as capital gains and taxed differently to income. DO you know your CGT taxes?
Yes, since I’ve had these for over a year it would be long-term capital gains tax, which is 15%
the 0% bracket in the USA is $48,350 if single and $96,700 if filing jointly. Are you under this amount? Alan
No, my income is >48k and I am single, so it would already push me into the 15% bracket, if I understand correctly. My gains are around $1k, so taxes would be around $150? Is that correct?
1. Why do we need a cash isa to use as an emergency fund when we can just have a stock isa and cash in if we need to?
2. At 59 do I need a Stock ISA if a SIPP is available to withdraw funds if I need.
3. Vanguard is mentioned a lot for its low fees eg .24% You do not seem to mention the one off £500 sign on fee. If I want to start a fund with a small investment to begin with, all the money is lost in the sign on.
1) Because emergency fund should be in cash rather than invested, to save you needing to take money out for an emergency at the same time as a market crash.
2) Probably depends a bit on whether you might need a large lump sum which might push you into a higher rate tax bracket and/or you might hit the individual lump sum allowance (the point at which you no longer get any more 25% tax free) for your SIPP. Probably less important if you can get to your SIPP
3) There’s no £500 sign on fee, there is a minimum of £500 needed to start an account (after that the minimum investment amounts are much lower) but it’s not lost, you will get to invest all that £500. There is a £4/month minimum platform fee though, which might might make it unattactive at low values – https://rebeldonegans.com/how-to-choose-an-investment-platform/ and https://rebeldonegans.com/uk-investment-platform-review-2025/ would probably help if you need to find a platform.
When I invest in a SIPP as a higher rate tax payer, can I claim back the extra 20% from HMRC via the letter template straight away, or would I need to wait until the end of the tax year and then claim back for the previous year?
Hey Matt, you can do either. You can do it on your tax form or send them the letter, either works. It is what is best for you and the speed with which it affects your taxes…… Does that help? Alan
Amazing – Thank you.
So just to clarify, if I open a SIPP today (which is my plan!) they (Vanguard) automatically claim back the 20% for basic rate, and then I could send a letter tomorrow to HMRC using your template to claim back the extra 20% as I’m a higher rate tax payer?
Hey Matt, yes you can. I think the letter says please give it back to me rather than give me a higher band. You can do it where they reduce your tax bill the next year but I think it is better to get it back sooner. Let us know how you get on? Alan
Thank you so much – I will update once I have a response. Thank you for all of the videos and courses – they (and you) are amazing!
YAY! It is our pleasure!
Hi both, thank you so much for the amazing work you do! A few months ago I started sorting out my finances at the age of 42 (…), I read a book, listen to maaany podcast and did some research – and one thing is for sure I wish I discover you earlier!!
I opened an account with Vanguard, got an ISA stocks & shares, transfer the cash ISA I had in another provider, but was not sure what to do with my £40K. I invested about half of it into TDF 2050 (which after watching this lesson, doesn’t seem the best option – but I liked the idea of becoming “safer” as approaching to retirement), I put about £3K to S&P500 VUAG (to be a bit more “risky”) and have the rest waiting to be invested. From the video I gather that VAFTGAG is a good option, but I was wondering what’s the difference between that and S&P500?
I listened to what you said about VAFTGAG being global, re-balances itself, no heavy country biased, etc. and that S&P500 is large-cap 500 US companies. But in terms of performance, etc. is there a big difference and therefore would be better for me to move it across to VAFTGAG?
Also is the TDF such a “bad option” (you said it was biased towards UK), but I’m thinking if combined with the S&P500 would compensate that bias? Or would it simply be better to move everything across the VAFTGAG?
I ‘d appreciate your feedback and of course, looking forward to continue learning with you both! I already shared the course with a couple fo friends!! :)
Thanks again :)
Hey Esther, thanks for the message.
I can’t give financial advice because I don’t know enough about your situation and I am not regulated.
How close to retirement are you? if you are more than 5 years away one absolutely doesn’t need any bonds in your portfolio that will slow down the growth. This article will give you an idea of dealing with risks at different phases of your investing journey: https://rebeldonegans.com/how-to-prepare-for-an-ai-bubble-burst/
The S&P500 has performed better that the FTSE Global all cap over recent years but that is no guarantee of what will happen going forwards.
If I was more than 5 years out from retirement I would have one simple global fund and not bettering on a single country or adding in bonds. I would 100% not have a heavy home country bias either.
Did you read our article about risk? You have said a few times about safer investments. i think what you are talking about is less volatile… https://rebeldonegans.com/is-the-stock-market-risky/Is%20the%20Stock%20Market%20Risky?
Let me know if this helped at all.
Alan