alternative to holding cash

andygodwin

hi all

i have a sipp, and hold about 10% of the fund in cash as a "prudent safety measure"..

this cash earns me 0.

whats the next best way to hold it safely?? so that i can earn just 2% say, to beat inflation.

A

mania112

2% above inflation? That's 4.7% if using RPI as your inflation benchmark.

You would likely need to be in a moderate portfolio of funds - and to do this you would need to agree that moderate (5/10) is a level of risk you are willing to take.

There's a wide range of insured pension funds that are 'safe' in terms of security of your funds. It isn't possible to guarantee you'll receive the level of return you require, but your best bet is to invest in a diverse range of funds.

andygodwin

sorry no not 4.7, just anything better than 0% for the cash holding,

1% would be ok.

mania112

More or less the same can be said, however a lower risk profile would be ok to achieve your target.

bigadaj

andygodwin wrote: »

hi all

i have a sipp, and hold about 10% of the fund in cash as a "prudent safety measure"..

this cash earns me 0.

whats the next best way to hold it safely?? so that i can earn just 2% say, to beat inflation.

A

One approach is to take all your assets into account as a portfolio. So rather than making asset allocation separately on your pension, isas and investments then you could look at treating them as one. So a cash holding could be held in cash isas or savings accounts outside your pension to compensate for the fact that your pension purely consists of funds or shares.

grey_gym_sock

iShares £ Corporate Bond 1-5yr UCITS ETF (IS15) would pay c. 2.5% - though it's not completely without risk ... it's an ETF investing in short-term (1-5 years) investment-grade corporate bonds. the capital value can fall - e.g. if interest rates rise), but probably not a lot, given the short duration.

but that may not be the right answer. it rather depends what kinds of risks you want to avoid, and which risks you're happy with.

PaulCooper

There are specific accounts around that accept SIPP money, they are not that easy to find, mine is with the Iswitch BS, these are paying 4.15% & 2.75% on cash. Unfortunately they obviously have enough money as their accounts for SIPP money are closed to new money coming in. You may have to lock the money into an account for a period of time to get 2% now, but they are around, they just don't get a lot of publicity.

Paul

kidmugsy

You could always use instead shares in one of the defensive investment companies that aim to protect your money before they aim to grow it.

http://www.ruffer.co.uk/#ruffer/who-we-are/review-archive

http://www.patplc.co.uk/investmentplans.php