Help with a sipp decision

jaimai_2

We have a sipp for 54000 in cash that is earning 0.5%:mad:. We dont want the money locked up for the next two years courtesy of mr Brown. Hubby is 53 im 46 we would like to take 25% to put towards a house and dont know what to do with the rest. In a ideal world we would like to control the remainder by putting it in a account thats out there paying approx 5% and building up the money before taking an annuity or drawdown. Totally confused and could do with some unbiased help, is there anybody out there that can help us see the woods from trees please.

TMFTP

First important question - do you need the cash NOW?

If you take your TFC it looks like you'll be buying an annuity. Most providers look for a pot of £100k+ for drawdown.

Investing in cash is typical for pension pots close to annuitising - it's safe, so won't suffer large drops due to stock market crashes, etc. If you don't need the cash NOW, then you can change the investments in your SIPP (drawdown would offer you the same / similar investment types) to give the types of return you mention- though it will mean greater risk of your fund dropping (as it would in drawdown).

A local IFA can help you with a review of your needs / wants if it's too confusing to sort yourself. These things often are, particularly close to retirement, and more so now where, as you say, you are being asked to anticipate your needs up to two years into the future. A good IFA should be able to help pick the "big stuff" out of the distractions.

DiggerUK

jaimai,
I'm in the no green shoots camp. Financial outlook is grim when all is taken into consideration. Others will have a different take on situation.
Never been a fan of personal pensions either, but at least with a SIPP you have the option with most options, so to speak.

It is a wise time to take the 25%, the balance should be put into anything to do with gold, gold miners and associated stock. It may seem that is too exotic, but they are the only stable areas financially, and have not been slammed down by the current situation. Nor do I think they will be.

Best of fortune.

TMFTP

DiggerUK wrote: »

It is a wise time to take the 25%, the balance should be put into anything to do with gold, gold miners and associated stock. It may seem that is too exotic, but they are the only stable areas financially, and have not been slammed down by the current situation. Nor do I think they will be.

Best of fortune.

Wow....

If ever a post needed a disclaimer, that's the one.

The other way of looking at gold would be for the 5 years prior to 2001, it was drifting from $4 to $2 per ounce. It's now c. $12 per ounce. It did this at a time when shares were plummeting.

Now? Do you think you may be buying gold at too high a price? How high do you think gold will go? In what timescale? Check out a gold price history chart and see how confident you are in it holding or increasing it's price.

I'm not saying it's a wrong strategy. Just that's it's bad advice.

jaimai_2

Hey amendment here we are actually getting 0.1% or 0.08% nett bring on the champagne

DiggerUK

TMFTP wrote: »

The other way of looking at gold would be for the 5 years prior to 2001, it was drifting from $4 to $2 per ounce. It's now c. $12 per ounce.

Gold today is at about 1110USD / 720GBP. Historical price charts going back to 1972/3 in GBP are here.
http://goldprice.org/gold-price-uk.html

jaimai, On the left hand side of this link is some advise for pension funds. Don't forget this is a site that represents gold concerns, so they are not going to rubbish it as an investment. But it might help you improve on Tesco Basics Champagne.

http://www.invest.gold.org/sites/en/where_to_invest/directory/?country=UNITED+KINGDOM&cb%5B%5D=coins&submit=Search&agree=1&task=search

adrian56

TMFTP wrote: »

Wow....

If ever a post needed a disclaimer, that's the one.

The other way of looking at gold would be for the 5 years prior to 2001, it was drifting from $4 to $2 per ounce. It's now c. $12 per ounce. It did this at a time when shares were plummeting.

Now? Do you think you may be buying gold at too high a price? How high do you think gold will go? In what timescale? Check out a gold price history chart and see how confident you are in it holding or increasing it's price.

I'm not saying it's a wrong strategy. Just that's it's bad advice.

Gold between 1997 and 2001 which includes the period when Gordon Brown sold much of the UK's Gold was circa $290-$270. The price of gold today is circa $1115. As for comparing the price against the previous historical data would be flawed as the one variable that has changed and now can not be altered is the fact that the amount gold being found is in decline. IMHO it should also be noted that in the event fiat paper money collapsing too zero value, gold would always have a value as it always has throughout history. Yes Gold is at historical highs, but like all natural non renewable resources including oil, it can only continue to increase in value compared to fiat monopoly cash. Just look at the Icelandic cash investments that went to zero, would physical gold have done the same.

jaimai_2

Hey digger tesco basics champagne is pushing the boat out.I might be bin diving at tescos at this rate.

jamesd

jaimai, taking the cash and using income drawdown for a few years for the remaining 75% is readily doable via providers like Hargreaves Lansdown. Within the SIPP in income drawdown for utmost caution you might consider a UK money market ETF since that's about as close as you can get to cash on deposit when using investments. Minimal capital risk but also rather low interest rate.

If you're interested in higher returns than cash, for higher volatility, you might consider adding a fund or two from the strategic bond and commercial property sectors. Not UK government bonds (gilts) or high quality corporate bonds because those are too linked to quantitative easing and are widely regarded as currently selling at too high a price, with drops likely over the next few years. Strategic bond funds have bonds that are less tied to gilts and commercial property is bouncing around the bottom and recovering slightly while paying 5-7% or so yield with a reasonable prospect of capital growth.

To be more adventurous you might consider general equity markets, to be much more so perhaps emerging markets and at the outside edge of highly speculative raw materials and commodity funds like those holding gold or gold itself. However, nothing in this paragraph seems really to fit well your two year time horizon.

jaimai_2

Jamesd Thanks for the reply we have considered gold, we tried to invest in gold a few years ago but at the time we were not allowed to. The most important thing is to claim the 25% and if the rest is in a fund gaining good interest then it would be okay leaving it in longer until retirement or close to it. You have some good points 5-7% would be cool have to have a look at those strategic bond funds.