Are two RAs better than one?

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fire2029

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Interested to hear your thoughts...
- Are two RAs better than one?
If yes, why?
If no, why?
 
backstreetboy said:
No. You'll just pay more fees and have to muck about consolidating them in the end.
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Talk to me more about the "muck of consolidating" :). Why do you want to consolidate in the end? What specifically is "mucky" about separate Living annuities?
 
Why would you put your money into an RA when you could just invest it directly?

I put the minimum amount I can into my RA for the tax break and the rest I invest directly. They get the same return (used to be better) and I dont have to jump through hoops should I need to access the money.
If I had put all my money into RA's I would have lost everything over lockdown last year.

As it was I was able to free up cash to not only keep going but to pay my staff full salaries during that time.
 
fire2029 said:
Talk to me more about the "muck of consolidating" :). Why do you want to consolidate in the end? What specifically is "mucky" about separate Living annuities?
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More fees? Presumably you'll have passive and actively managed funds and pay more fees on that active managed fund(s) with subpar performance.
 
Don't put all your eggs into one basket.
Fees are a percentage and whether it's one or more, it comes to the same.
 
Mars said:
Why would you put your money into an RA when you could just invest it directly?

I put the minimum amount I can into my RA for the tax break and the rest I invest directly. They get the same return (used to be better) and I dont have to jump through hoops should I need to access the money.
If I had put all my money into RA's I would have lost everything over lockdown last year.

As it was I was able to free up cash to not only keep going but to pay my staff full salaries during that time.
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I’m confused, you’re saying don’t use RA but right after that you seem to hint that you’re maxing one out for the tax break.
 
icarusza said:
I’m confused, you’re saying don’t use RA but right after that you seem to hint that you’re maxing one out for the tax break.
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Where did I say I dont use a RA?
 
LPCPT said:
Don't put all your eggs into one basket.
Fees are a percentage and whether it's one or more, it comes to the same.
Click to expand...
Just paying 1% more in fees is pretty significant...

10_year_returns.svg
 
Not two RAs, but I have s provident found at work, and a personal RA.

The personal RA is for when I earn taxable income by accident outside my salary. It keeps me tax neutral instead of having to pay in.
 
Assuming you are you referring to two actively managed RAs?

The more RAs you have the higher the chance that they will average out to match the index before fees due to by definition the index being the average. Therefore multiple RAs reduce the chance of you picking a single bad one that substantially underperforms the index but also removes the upside of outperforming the index.

Therefore if you are going to get the index before fees just go for the lowest fee passive tracker as it will perform best after fees. If you believe in the fund managers of a specific company and want to roll the dice go with them but splitting your RA over multiple active fund managers will just remove that potential upside.
 
I have a preservation fund with firm A
A paid up RA with firm B
A current and live RA with firm C

Different strategy’s and all different charge options (as in fee structures)

One invests in eft’s
The other with unit trusts
 
UYScuti said:
Assuming you are you referring to two actively managed RAs?

The more RAs you have the higher the chance that they will average out to match the index before fees due to by definition the index being the average. Therefore multiple RAs reduce the chance of you picking a single bad one that substantially underperforms the index but also removes the upside of outperforming the index.

Therefore if you are going to get the index before fees just go for the lowest fee passive tracker as it will perform best after fees. If you believe in the fund managers of a specific company and want to roll the dice go with them but splitting your RA over multiple active fund managers will just remove that potential upside.
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What about multiple passive RAs. Any benefits?
 
To answer the OP question :
Several sources of retirement savings vehicles has benefits in terms of taxation, as you can retire from them at different times as lump sum rates are adjusted by treasury. It can also help if you want to manage an initial drawdawn of below 2,5 initially while exhausting discretionary savings.

As for some of the "why RA" comments - tax free growth is the answer. 20% dividends is a fair chunk to give up. Then some CGT also.
But obviously you have to compartmentalize your savings, don't go put your next house deposit in a RA.
 
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BuckRogers said:
To answer the OP question :
Several sources of retirement savings vehicles has benefits in terms of taxation, as you can retire from them at different times as lump sum rates are adjusted by treasury. It can also help if you want to manage an initial drawdawn of below 2,5 initially while exhausting discretionary savings.

As for some of the "why RA" comments - tax free growth is the answer. 20% dividends is a fair chunk to give up. Then some CGT also.
But obviously you have to compartmentalize your savings, don't go put your next house deposit in a RA.
Click to expand...
Several sources of retirement savings vehicles has benefits in terms of taxation, as you can retire from them at different times as lump sum rates are adjusted by treasury.
Please elaborate on "as lump sum rates are adjusted by treasury"? Do you mean the tax free lump sum?
 
BuckRogers said:
To answer the OP question :
Several sources of retirement savings vehicles has benefits in terms of taxation, as you can retire from them at different times as lump sum rates are adjusted by treasury. It can also help if you want to manage an initial drawdawn of below 2,5 initially while exhausting discretionary savings.

As for some of the "why RA" comments - tax free growth is the answer. 20% dividends is a fair chunk to give up. Then some CGT also.
But obviously you have to compartmentalize your savings, don't go put your next house deposit in a RA.
Click to expand...
It can also help if you want to manage an initial drawdawn of below 2,5 initially while exhausting discretionary savings.
Great point!!
 
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