Looking for a Sipp to put cash into, cheapest deal, best rates?

zagfles

dunstonh wrote: »

Or very risky depending on how you are measuring risk. Cash for long term suffers shortfall risk and inflation risk for example. Risks where are far more likely to happen than with investment risk.

Indeed. Same applies to level annuities. Yet we keep being told that remaining invested and using drawdown is more risky.

System

The sipp cash rates are around 2% for 2 years. Inflation CPI is around 1.5% at the moment. Where is the risk?

dunstonh

zagfles wrote: »

Indeed. Same applies to level annuities. Yet we keep being told that remaining invested and using drawdown is more risky.

The same does not apply as you cost them over a period. It is a different type of risk. There is no risk free option. However, annuities are a lower risk option for providing a guaranteed income for life compared to drawdown.

The sipp cash rates are around 2% for 2 years. Inflation CPI is around 1.5% at the moment. Where is the risk?

What are the SIPP charges?
What period are you looking to be staying in case?
CPI is a selected measure but may not match your personal inflation rate. Taken as a whole, prices for services increased by 2.3% to the year to Dec 2014. Goods decreased by 1.00% (fuel likely impact there).

System

I think I need an advisor!

So what is the best plan? I want to put in the maximum this year (40k I think). I want to withdraw it all when I am 50, at the same value it was today (so equalling inflation). Is this guaranteed?

mania112

Nothing guaranteed. Even the few funds that claim to be guaranteed

Beating inflation isn't too tricky though to be fair, you don't have to be in a large proportion of high-risk funds to do this.

Earliest you can withdraw is currently 55, but that's going up to '10 years before state pension age' in 2020 - at which time it will start at 57.

zagfles

dunstonh wrote: »

The same does not apply as you cost them over a period. It is a different type of risk. There is no risk free option. However, annuities are a lower risk option for providing a guaranteed income for life compared to drawdown.

Of course the same applies. Put £40k into a cash SIPP and that £40k may be worth a lot less in 10 years time due to inflation. Buy a level annuity which pays £4k pa, and that £4k pa may be worth a lot less in 10, 20 or 30 years times due to inflation.

At least with the cash SIPP there may be some interest to offset inflation. With a level annuity your £4k pa will never increase, so virtually guaranteed to decrease in real terms.

What are the SIPP charges?
What period are you looking to be staying in case?
CPI is a selected measure but may not match your personal inflation rate. Taken as a whole, prices for services increased by 2.3% to the year to Dec 2014. Goods decreased by 1.00% (fuel likely impact there).

Yes and personal inflation rates should be considered when thinking about the inflation risk of a level annuity.