Where to put SIPP funds... nothing but bad options around?
Discussion
Hi All.
Looking for a bit of inspiration. I have a modest amount in an HL SIPP which I will be looking to draw down in about 5 years time.
I am risk averse and would quite happily stick it somewhere and get a safe 2 or 3% a year but such a place does not exist it seems, as equities are sky high and heading for a correction (according to various commentators) and indeed bonds are not the place to be either (as I have read in various places).
So what to do? Vanguard Lifestrategy type tracker - low cost but what mix of bonds and equities? Managed mixed fund - higher fees but leave it to somebody who (in theory!) knows better? Income equity fund - take the dividends and just ride out the storm when it comes? Cash!?
Appreciate there is no easy answer but would be interested in where anybody else has their loot at the moment?
Cheers for any (helpful!) replies
Looking for a bit of inspiration. I have a modest amount in an HL SIPP which I will be looking to draw down in about 5 years time.
I am risk averse and would quite happily stick it somewhere and get a safe 2 or 3% a year but such a place does not exist it seems, as equities are sky high and heading for a correction (according to various commentators) and indeed bonds are not the place to be either (as I have read in various places).
So what to do? Vanguard Lifestrategy type tracker - low cost but what mix of bonds and equities? Managed mixed fund - higher fees but leave it to somebody who (in theory!) knows better? Income equity fund - take the dividends and just ride out the storm when it comes? Cash!?
Appreciate there is no easy answer but would be interested in where anybody else has their loot at the moment?
Cheers for any (helpful!) replies
How long are you anticipating you'll draw it down over? That's probably at least as significant than the 5 years until you start from an investment duration perspective.
Vanguard (who hopefully know what they're doing) on page 2 of https://www.vanguard.co.uk/documents/adv/literatur... suggest 40% equities for a 5 year duration, 80% for 10 years +.
Personally I'd think hard about something like City of London IT which has a historically robust dividend yield, but that may be too low yield for your taste.
Vanguard (who hopefully know what they're doing) on page 2 of https://www.vanguard.co.uk/documents/adv/literatur... suggest 40% equities for a 5 year duration, 80% for 10 years +.
Personally I'd think hard about something like City of London IT which has a historically robust dividend yield, but that may be too low yield for your taste.
Quattromaster said:
Sorry, unable to help with your question, but can I ask what "funds" you have the money in, Ive just chucked some pennies into a SIPP with HL and always welcome any feedback.
Understand if you tell me to do one if you dont wanna tell me.
Not at all - I have had various funds over the years (changed far too often - just unable to resist tinkering), most recently switched out of the HL Multi-Manger Special Situations into various Vanguard trackers (having read a lot about how trackers are the way forward and managed funds typically underperform). I'm in Vanguard FTSE tracker, Developed Europe ex-UK, Global All cap, Global small cap and Lifestrategy 100% equity.Understand if you tell me to do one if you dont wanna tell me.
What I (stupidly) failed to realise was quite how volatile these funds were (not quite so much with the lifestrategy but definitely the others) - I read somewhere that I should not be at all surprised if they went down 20% in a year and indeed could go down as much as double that! That would probably give me heart failure so I am looking for something a bit steadier now...
xeny said:
How long are you anticipating you'll draw it down over? That's probably at least as significant than the 5 years until you start from an investment duration perspective.
Vanguard (who hopefully know what they're doing) on page 2 of https://www.vanguard.co.uk/documents/adv/literatur... suggest 40% equities for a 5 year duration, 80% for 10 years +.
Personally I'd think hard about something like City of London IT which has a historically robust dividend yield, but that may be too low yield for your taste.
Thanks - I will be drawing down most of it over a 5 year period starting in about 5 years time (I have another pension which I can take after that)Vanguard (who hopefully know what they're doing) on page 2 of https://www.vanguard.co.uk/documents/adv/literatur... suggest 40% equities for a 5 year duration, 80% for 10 years +.
Personally I'd think hard about something like City of London IT which has a historically robust dividend yield, but that may be too low yield for your taste.
Yes I read that about the lifestrategy funds but the worries over the bond market have spooked me a bit... also I read that bond trackers don't tend to outperform managed bond funds in the same way as for equities. Paralysis by analysis basically
PS - can't find that City of London fund on the HL site...
Edited by DibblyDobbler on Saturday 27th January 20:45
DibblyDobbler said:
PS - can't find that City of London fund on the HL site...
http://www.hl.co.uk/shares/shares-search-results/c/city-of-london-investment-trust-ord-25pEdited by DibblyDobbler on Saturday 27th January 20:45
but I was thinking of that in the context of drawdown at least being long enough you cared about income yield.
http://www.telegraph.co.uk/finance/personalfinance...
is an interesting read for two reasons. Firstly the investments they suggest. Secondly the fact that a year ago the sky was about to be falling....
xeny said:
http://www.hl.co.uk/shares/shares-search-results/c...
but I was thinking of that in the context of drawdown at least being long enough you cared about income yield.
http://www.telegraph.co.uk/finance/personalfinance...
is an interesting read for two reasons. Firstly the investments they suggest. Secondly the fact that a year ago the sky was about to be falling....
Thanks again! Sorry - was looking on the funds pages for City of London rather than shares, got it now.but I was thinking of that in the context of drawdown at least being long enough you cared about income yield.
http://www.telegraph.co.uk/finance/personalfinance...
is an interesting read for two reasons. Firstly the investments they suggest. Secondly the fact that a year ago the sky was about to be falling....
That telegraph article is interesting... away to do some digging...
What article says equities are overvalued? In UK they’re running at or about long term p/e average, the same with the US, all be it a bit higher. Europe still looks to have some better value and EM more so.
Many ‘commentators’ are calling the top of the market as its numerically hit all time highs. So what? The market typically rebates it’s contents every quarter and is based on market weighted values! If you go back to the start of the Dow, for example, it was all railways! To sure that’s the case now.....
Bonds are over valued by any metric, EM local currency aside, but if you’ve got the timescale and risk appetite the equity markets still have some room to run. Even if there a pull back if you’ve got the time you will still be better off long term in sitting in it and riding through it.
Many ‘commentators’ are calling the top of the market as its numerically hit all time highs. So what? The market typically rebates it’s contents every quarter and is based on market weighted values! If you go back to the start of the Dow, for example, it was all railways! To sure that’s the case now.....
Bonds are over valued by any metric, EM local currency aside, but if you’ve got the timescale and risk appetite the equity markets still have some room to run. Even if there a pull back if you’ve got the time you will still be better off long term in sitting in it and riding through it.
ellroy said:
What article says equities are overvalued? In UK they’re running at or about long term p/e average, the same with the US, all be it a bit higher. Europe still looks to have some better value and EM more so.
Many ‘commentators’ are calling the top of the market as its numerically hit all time highs. So what? The market typically rebates it’s contents every quarter and is based on market weighted values! If you go back to the start of the Dow, for example, it was all railways! To sure that’s the case now.....
Bonds are over valued by any metric, EM local currency aside, but if you’ve got the timescale and risk appetite the equity markets still have some room to run. Even if there a pull back if you’ve got the time you will still be better off long term in sitting in it and riding through it.
Thanks for your thoughts. That article posted by Xeny up above is a good example of what I have been reading lately - I should really just stop reading I think! I do take your point about the UK and Europe not looking quite so overvalued as the US hence my choice of Vanguard funds.Many ‘commentators’ are calling the top of the market as its numerically hit all time highs. So what? The market typically rebates it’s contents every quarter and is based on market weighted values! If you go back to the start of the Dow, for example, it was all railways! To sure that’s the case now.....
Bonds are over valued by any metric, EM local currency aside, but if you’ve got the timescale and risk appetite the equity markets still have some room to run. Even if there a pull back if you’ve got the time you will still be better off long term in sitting in it and riding through it.
Where do you have your stash as a matter of interest?
ellroy said:
if you’ve got the timescale and risk appetite the equity markets still have some room to run. Even if there a pull back if you’ve got the time you will still be better off long term in sitting in it and riding through it.
If you've got the time with a horizon of 5 years is a bit marginal, but I'm certainly buying equities, albeit with a time horizon longer than 5 years.I linked the telegraph article partly to point out that columnists have been wailing the market is about to crash ever since they needed to write some words to get paid.
Investec offer 1.95% annual interest on a 5 year fixed rate SIPPable deposit account.
NS&I also have a three year Guaranteed Growth Bond (issue 56) that pays 2.2% a year. This can also be held within a SIPP.
So if this is what you want to achieve you can do this with some or all of these funds. I would personally go with the NS&I option, any day.
NS&I also have a three year Guaranteed Growth Bond (issue 56) that pays 2.2% a year. This can also be held within a SIPP.
So if this is what you want to achieve you can do this with some or all of these funds. I would personally go with the NS&I option, any day.
JulianPH said:
Investec offer 1.95% annual interest on a 5 year fixed rate SIPPable deposit account.
NS&I also have a three year Guaranteed Growth Bond (issue 56) that pays 2.2% a year. This can also be held within a SIPP.
So if this is what you want to achieve you can do this with some or all of these funds. I would personally go with the NS&I option, any day.
Hmm - now that is interesting, thanks Julian! NS&I also have a three year Guaranteed Growth Bond (issue 56) that pays 2.2% a year. This can also be held within a SIPP.
So if this is what you want to achieve you can do this with some or all of these funds. I would personally go with the NS&I option, any day.
Will have a look at that now...
That is a bugger.
The HL SIPP is not actually a proper SIPP as it limits investment to the Vantage platform only, but I didn't realise this didn't offer access to NS&I products.
I suppose you have to decide which is more important, staying with HL, or being able to access the investments you want. I know moving would be a bit of a faff, but once done it is done.
I would call HL first to let them know that you want to remain a customer but that access to this investment is important to you. There is no reason (regulatory or legal) why they can't give you access to this, it depends upon how much they value you as a client and how reasonable and understanding the person you speak to is about this issue.
I know of many people who HL have agreed to do things for (including reducing its fees) in order to retain clients, so don't give in easily and accept what they say on their website is the beginning and end of matters.
The HL SIPP is not actually a proper SIPP as it limits investment to the Vantage platform only, but I didn't realise this didn't offer access to NS&I products.
I suppose you have to decide which is more important, staying with HL, or being able to access the investments you want. I know moving would be a bit of a faff, but once done it is done.
I would call HL first to let them know that you want to remain a customer but that access to this investment is important to you. There is no reason (regulatory or legal) why they can't give you access to this, it depends upon how much they value you as a client and how reasonable and understanding the person you speak to is about this issue.
I know of many people who HL have agreed to do things for (including reducing its fees) in order to retain clients, so don't give in easily and accept what they say on their website is the beginning and end of matters.
Thanks again Julian - I will call them and see what they are saying to it before jumping ship.
I have been fretting about this for some time (which is daft I know) and I do need some kind of resolution to allow me to think about something more interesting!
Will report back in due course.
I have been fretting about this for some time (which is daft I know) and I do need some kind of resolution to allow me to think about something more interesting!
Will report back in due course.
Please free to PM me if you wish. I hope you are able to sort things our over the phone with HL.
Other posters here are quite right to point out you are looking at a 10 year time span and an equity/bond portfolio would give you the highest returns. This is completely correct and in line with all perceived wisdom.
However, if you want to remove all risk of loss of capital (and by default, this includes removing the ability to protect your capital from the full effects of inflation over this period) then this is the route you must take.
The NS&I rate seems very attractive, make sure you are aware of the effect of SIPP fess is in reducing this rate of interest (reduction in yield) and do what you feel most comfortable with.
Cheers!
Other posters here are quite right to point out you are looking at a 10 year time span and an equity/bond portfolio would give you the highest returns. This is completely correct and in line with all perceived wisdom.
However, if you want to remove all risk of loss of capital (and by default, this includes removing the ability to protect your capital from the full effects of inflation over this period) then this is the route you must take.
The NS&I rate seems very attractive, make sure you are aware of the effect of SIPP fess is in reducing this rate of interest (reduction in yield) and do what you feel most comfortable with.
Cheers!
Thankyou again Julian you've been very helpful
I will report back once I have spoken to HL.
Ref the 5-10 year time horizon this pot is probably/hopefully going to tide me over from 55-60 when I can get my other pension (which is defined benefit). If nothing else this has maybe taught me that taking a transfer on the DB pension is all very well but I have no interest or ability for investing it myself!
I will report back once I have spoken to HL.
Ref the 5-10 year time horizon this pot is probably/hopefully going to tide me over from 55-60 when I can get my other pension (which is defined benefit). If nothing else this has maybe taught me that taking a transfer on the DB pension is all very well but I have no interest or ability for investing it myself!
DibblyDobbler said:
Thankyou again Julian you've been very helpful
I will report back once I have spoken to HL.
Ref the 5-10 year time horizon this pot is probably/hopefully going to tide me over from 55-60 when I can get my other pension (which is defined benefit). If nothing else this has maybe taught me that taking a transfer on the DB pension is all very well but I have no interest or ability for investing it myself!
The 5-10 year time horizon is what makes it a tough problem, so don't be hard on yourself. It's too long to be comfortable accepting no return, but too short to be comfortable that equity returns will make up for volatility.I will report back once I have spoken to HL.
Ref the 5-10 year time horizon this pot is probably/hopefully going to tide me over from 55-60 when I can get my other pension (which is defined benefit). If nothing else this has maybe taught me that taking a transfer on the DB pension is all very well but I have no interest or ability for investing it myself!
I'm a little bit younger than you, and toying with the whole financial independence/retire early thing, but for that I'll almost certainly run a moderately large cash buffer (say ~3 years, with scope for a little belt tightening to stretch it to ~4.5) and keep most of my assets in equities. I'm probably looking at bigger numbers, but because I'm looking at a much longer period than 5 years(I hope) I can actually afford more risk/volatility than you.
xeny said:
The 5-10 year time horizon is what makes it a tough problem, so don't be hard on yourself. It's too long to be comfortable accepting no return, but too short to be comfortable that equity returns will make up for volatility.
I'm a little bit younger than you, and toying with the whole financial independence/retire early thing, but for that I'll almost certainly run a moderately large cash buffer (say ~3 years, with scope for a little belt tightening to stretch it to ~4.5) and keep most of my assets in equities. I'm probably looking at bigger numbers, but because I'm looking at a much longer period than 5 years(I hope) I can actually afford more risk/volatility than you.
Interesting - thanks for the comments I'm a little bit younger than you, and toying with the whole financial independence/retire early thing, but for that I'll almost certainly run a moderately large cash buffer (say ~3 years, with scope for a little belt tightening to stretch it to ~4.5) and keep most of my assets in equities. I'm probably looking at bigger numbers, but because I'm looking at a much longer period than 5 years(I hope) I can actually afford more risk/volatility than you.
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