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    • Johnny Doe
    • By Johnny Doe 13th Mar 17, 11:51 AM
    • 234Posts
    • 107Thanks
    Johnny Doe
    Lump Sum payment into SIPP
    • #1
    • 13th Mar 17, 11:51 AM
    Lump Sum payment into SIPP 13th Mar 17 at 11:51 AM
    Hi all,

    I'm looking to pay £10k into a Best Invest SIPP to gain the tax relief but would like to invest it into a relatively safe fund. I'm concerned if I buy equities this could potentially drop 30-40% in the coming months, although I know it will recover..

    I realise this is a very broad question but could someone please advise on a defensive fund with low charges that would be suitable? I've had a look and the best cash funds appear to only pay 0.3% and charge 0.3%..

    Cheers
Page 1
    • bigadaj
    • By bigadaj 13th Mar 17, 6:46 PM
    • 9,362 Posts
    • 5,983 Thanks
    bigadaj
    • #2
    • 13th Mar 17, 6:46 PM
    • #2
    • 13th Mar 17, 6:46 PM
    This no reason why you can't hold as cash apart from the lack of interest or earnings.

    Any fund investment will hold some risk, and the risk/ reward relationship has become very skewed to no return at the lower end, or negative if you cosmiderincomsidering inflation is real terms.

    What sort of timescale are you looking at for the pension?
    • kidmugsy
    • By kidmugsy 13th Mar 17, 7:44 PM
    • 9,375 Posts
    • 6,145 Thanks
    kidmugsy
    • #3
    • 13th Mar 17, 7:44 PM
    • #3
    • 13th Mar 17, 7:44 PM
    I'd sit in cash if I were you, but you could consider Ruffer Investment Company for half and Personal Assets Trust for the other half.
    • Johnny Doe
    • By Johnny Doe 14th Mar 17, 3:50 PM
    • 234 Posts
    • 107 Thanks
    Johnny Doe
    • #4
    • 14th Mar 17, 3:50 PM
    • #4
    • 14th Mar 17, 3:50 PM
    Thanks for the advice, looking to retire in 10 yrs, 75% will still be invested but will take an income from drawdown at 55.

    I think you're right keep it as cash, the £2500 is a handy addition to the pension even though it's not earning any interest.

    Funnily enough if I did invest the £10k in something that returned 4% (ie p2p) it would take 5-6 yrs to grow to £12500.. food for thought
    • coyrls
    • By coyrls 14th Mar 17, 5:55 PM
    • 804 Posts
    • 799 Thanks
    coyrls
    • #5
    • 14th Mar 17, 5:55 PM
    • #5
    • 14th Mar 17, 5:55 PM
    Thanks for the advice, looking to retire in 10 yrs, 75% will still be invested but will take an income from drawdown at 55.

    I think you're right keep it as cash, the £2500 is a handy addition to the pension even though it's not earning any interest.

    Funnily enough if I did invest the £10k in something that returned 4% (ie p2p) it would take 5-6 yrs to grow to £12500.. food for thought
    Originally posted by Johnny Doe
    Yes but after 10 years @ 4% you would have £14,800 vs £12,500, which might indicate that over a 10 year time frame, you should consider some sort of conservative investment because £12,500 @ 4% over ten years would give you £18,500.
    • Johnny Doe
    • By Johnny Doe 14th Mar 17, 8:50 PM
    • 234 Posts
    • 107 Thanks
    Johnny Doe
    • #6
    • 14th Mar 17, 8:50 PM
    • #6
    • 14th Mar 17, 8:50 PM
    Exactly, I didn't say anywhere I wasn't going to invest for the entire 10yrs, but I would expect markets to have settled down in 5-6 yrs (hopefully earlier!)
    • AnotherJoe
    • By AnotherJoe 14th Mar 17, 9:34 PM
    • 6,904 Posts
    • 7,341 Thanks
    AnotherJoe
    • #7
    • 14th Mar 17, 9:34 PM
    • #7
    • 14th Mar 17, 9:34 PM
    You think you can forecast the markets 5 years out!?
    • davieg11
    • By davieg11 14th Mar 17, 10:00 PM
    • 225 Posts
    • 104 Thanks
    davieg11
    • #8
    • 14th Mar 17, 10:00 PM
    • #8
    • 14th Mar 17, 10:00 PM
    Some people have been sitting on cash since 2013 waiting for a crash....
    • Johnny Doe
    • By Johnny Doe 14th Mar 17, 10:04 PM
    • 234 Posts
    • 107 Thanks
    Johnny Doe
    • #9
    • 14th Mar 17, 10:04 PM
    • #9
    • 14th Mar 17, 10:04 PM
    Anotherjoe, what do you suggest then?
    • bigadaj
    • By bigadaj 15th Mar 17, 6:57 AM
    • 9,362 Posts
    • 5,983 Thanks
    bigadaj
    Anotherjoe, what do you suggest then?
    Originally posted by Johnny Doe
    Cash, with a guaranteed loss to inflation, ruffer or pat as kidMugsy suggests with a lower risk to take your chances with the markets, those are the main options.
    • AnotherJoe
    • By AnotherJoe 15th Mar 17, 7:51 AM
    • 6,904 Posts
    • 7,341 Thanks
    AnotherJoe
    Anotherjoe, what do you suggest then?
    Originally posted by Johnny Doe
    If you are looking to drawdown at age 55 then you potentially have another 30+ years of being invested so I wouldn't even be particularly cautious and certainly wouldn't be getting out if the market.

    However, assuming very cautious is your nature then whilst I am not aware of those two investments mentioned presume they fit your risk profile so go for those or some other low risk investment, not cash. It's not the "old" model when you went very cautious and finally into cash at retirement because you bought an annuity.

    You have ten years to recover from a crash, the flexibility to retire a year or two later if it all goes horribly wrong , and the possibility that being in the market instead if in cash will enable you to either retire at 55 with more confidence (since you'll have more money than with cash) or best case, retire earlier than planned.

    I am practicing what I preach (doesn't mean I am right of course ) and am retiring this year and my only adjustment has been to move towards more passive funds than active,and more investments aimed at income than growth, rather than getting out of the market, I'm just as invested as I was five years ago. I'll be invested another 30 years or so and the growth over that period will aid my spending, being all in cash would significantly lower my long term spending.
  • jamesd
    Is that pension tax relief at 40% or 20%? If at 40% will you have plenty of time at 40% in the future or is it a use it or lose it situation?

    For non-equity at the moment I like peer to peer lending but it's generally unavailable in a pension. You could use P2P with returns of perhaps 10% after bad debt allowance, before inflation, while doing regular investing in equities into a pension with the intent to switch heavily into equities after the next big drop.
    • kidmugsy
    • By kidmugsy 15th Mar 17, 1:50 PM
    • 9,375 Posts
    • 6,145 Thanks
    kidmugsy
    Some people have been sitting on cash since 2013 waiting for a crash....
    Originally posted by davieg11
    And the month of May may prove them right. Nobody knows.
    • LXdaddy
    • By LXdaddy 15th Mar 17, 6:03 PM
    • 659 Posts
    • 400 Thanks
    LXdaddy
    If you are going to have these funds sitting around for at least 10 years then being in cash doesn't seem right. We KNOW that inflation will eat into them. Whereas with any investment there is a risk that they will fall but a reasonable expectation that they will outdo inflation over the longer term.
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