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Put Regular Savings Account in Pension

foncused
Posts: 21 Forumite
I am 28, I have no current pension arrangements, and I have already used up my ISA cash allowance. Being nervous about the possibility of losing if the stock market goes down, I would like to invest for retirement with a 7% regular savings account. Is there any way to get a pension wrapper around this sort of investment? I intend to invest about £450/month.
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Comments
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You can invest in cash in a SIPP pension.No way will you get 7%, but of course, it is tax free and is also eligible for tax relief, for what it's worth.Trying to keep it simple...0
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I would like to invest for retirement with a 7% regular savings account.Being nervous about the possibility of losing if the stock market goes down
The money is going to be invested for 40 years (your state retirement age is 68 if you were born after the new tax year, 67 if before).
40 years will stee the stockmarkets go up and down multiple times. It will also see your cash losing money in real terms during periods when interest rates are lower than inflation.
Paying monthly, you want the stockmarket to go down a number of times.
Also, your options are not just cash and stockmarket, you have other investment options in between. You can also mix and match so you can spread it about.
Going in cash for 40 years though is highly wasteful.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Thank you for your replies. Let me revise the question - I am concerned that the stock market may currently be at or near a peak, and I would like to use a regular savings account to hold my pension contributions for a while. Cash SIPPs seem to have much lower returns. Is there any way of putting such an account inside a pension wrapper, even if only for the short term (i.e. up to 5 years)?0
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I am concerned that the stock market may currently be at or near a peak
So, you think that the stockmarket is at a peak which it will not pass in the next 40 years?
If you had invested at the peak before the last crash, you would have significantly increased the value compared to cash. If you are paying monthly, you want a drop to occur as you buy units every month which averages out the ups and downs. So, it really doesnt matter if the market falls back or not.
Also, are you aware that the stockmarket is not all one risk level and that there are other asset classes available for you to invest in?I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I'm not discounting stocks altogether - I'm just hesitant with current values, and want to wait (up to) a few years before starting. As far as other asset classes go, I've had a look at some historical data, and no particular asset classes seem to have significantly outperformed the average over the long term.0
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Current values may be high compared to the level that they will be at next week, month, in a few years, but they are extremely unlikely to be high compared to their value in 40 years time.
If you can afford to contribute regularly every month, think of any drop in share price for the next 20 to 30 years as a sale on stocks.thoughts on personal finance @ plonkee.com0 -
One consistent is that cash performs the worst.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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foncused, for regular savings, ignore your current concerns. The market will go down at some point but by the time that happens the money you've put in may well have grown by more than the fall.
You might want to investigate "absolute return" funds. Do note that they compromise growth to achieve their objecective of minimal drop in capital value.0
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