change tac

cky33

I have £170,000.00 in fixed interest with 2 pension companies.
I am 3 years from when I wish to retire.
Should I change to something other than fixed interest.
Any comments would be appreciated.
cky33

yelf

unless it is cash, no.

purch

I have £170,000.00 in fixed interest with 2 pension companies

I am assuming that you do not hold these securities directly, but through a collective investment.

The price of Fixed Income Securities are unlikely to go very much higher in the short term. Within a 3 year timeframe there will be a good chance that the prices will fall, maybe substantially.

In your particular case, and with your investment horizon fixed interest securities would not be a low risk investment IMHO

feesarefare

cky33 wrote: »

I have £170,000.00 in fixed interest with 2 pension companies.
I am 3 years from when I wish to retire.
Should I change to something other than fixed interest.
Any comments would be appreciated.
cky33

No one could answer this without more detail.

It depends how old you are now/ health/ other assets your might have /attitude to investments & risk/ dependants.

Dependending on the answers to the above you may opt for phased/ income drawdown in retirement which means a completely different investment strategy would be required.

jamesd

What are the fixed interest investments? Money market funds? Nice and safe. Govenment bonds or high quality corporate bonds? Not so safe, due for a fall in capital value at some time in the next three or so years.

What will you do when you retire? If you're spending all the money to buy an annuity then something that will preserve capital is not a bad idea at all, though you might not want to do that with all of the money. If you're not buying an annuity then now is a decent to good time to switch to investments that produce income with some reasonable prospect of capital growth.

cky33

I don`t know the fund names,only that they are fixed interest.£150,000 with Scottish Widows and £20,000 with Standard Life.
I am 62 and don`t want to see the funds lose money ! I will most likely take the 25% tax free and purchase an annuity with the remainder in 3 years or so. I am really looking for a safe home but also a chance for some growth over the next 3 years. I have no dependants and no debts.

jamesd

You need to find out what the fund names are. Not all fixed interest funds are safe - most are subject to capital value variations with a significant chance of a decrease in value over the next three years.

cky33

jamesd wrote: »

You need to find out what the fund names are. Not all fixed interest funds are safe - most are subject to capital value variations with a significant chance of a decrease in value over the next three years.

I will do so and repost next week.
Thanks
cky33

cky33

jamesd wrote: »

You need to find out what the fund names are. Not all fixed interest funds are safe - most are subject to capital value variations with a significant chance of a decrease in value over the next three years.

The fund names are,

Scot Wid fixed interest Pn S2 and

Stan Life fixed interest Pn S1

Linton

cky33 wrote: »

The fund names are,

Scot Wid fixed interest Pn S2 and

Stan Life fixed interest Pn S1

Both have increased in value by about 20% in the past 2-3 years after doing nothing very much for some time and so may be more volatile than you would like. They are mainly invested in gilts and bonds rather than money market - source Trustnet.

The problem is that since the credit crunch and the drop in savings rates, people have been moving into gilts & bonds, thus increasing the price markedly. If the current economic problems and uncertainties are resolved in the next 3 years money could flow out again and the prices fall back to previous values.

jamesd

As Linton said, there is no capital value guarantee on those. Gilts in particular are likely to be in a bubble with a significant chance of capital value reduction due to market reactions to inflation, increased interest rates and continued good performance of the stock markets and economic recovery. All of those things can be expected to reduce the capital value of gilts and high quality corporate bonds. Fiscal easing has also significantly increased the capital value of those.

Scot Wid fixed interest Pn S2 is in the gilt sector so its primary focus is UK government bonds, as you can see on the Portfolio Breakdown tab. It's an area I'd look to get out of fairly soon. Maybe within six months. Depends how long fiscal easing and doubts about recovery continue.

Stan Life fixed interest Pn S1 is a Sterling fixed interest sector fund. 57% in corporate bonds, 36.5% in gilts. The breakdown shows gilts as the ten largest individual holdings. It looks like a better place to be than the other one but the corporate bonds are probably the most vulnerable high quality types so I'd still be looking to get out of most of this exposure.

Now's a pretty good time to get out of those, or greatly reduce your holdings in them, given your objectives.

If you want near-complete capital protection look to see what money market funds are available to you. It's very rare for those to drop below 100% of the capital invested. Not quite unheard of, but so uncommon it's shocking if it happens by even 1%.