How to invest money that has been transffered to SIPP

username12345678

I think as long as you’ve sat down with your brother and discussed the potential for loss with the all equity allocation you’re proposing then over a 20 year+ timescale I don’t think it’s that outlandish.

What you don’t want is a 45%+ drawdown (00-03, 08/09) and your brother saying you hadn’t given him an explicit warning this could happen.

economic

username12345678 wrote: »

I think as long as you’ve sat down with your brother and discussed the potential for loss with the all equity allocation you’re proposing then over a 20 year+ timescale I don’t think it’s that outlandish.

What you don’t want is a 45%+ drawdown (00-03, 08/09) and your brother saying you hadn’t given him an explicit warning this could happen.

Yeh I’ve already done this. Thanks

Voyager2002

No-one has commented on the tax position...

Soon after both the parents enter their 70s, the protection offered by the SIPP wrapper will disappear and a large tax bill will arrive. The law is designed to enable people to provide for their retirement: a SIPP is not meant as a means to invest for ever, and so the expectation is that the owners of a SIPP will either use it to buy an annuity or live on regular drawdowns from it.

So there has to be a plan for moving the contents of the SIPP to some other shelter, and the investments made now need to be consistent with that plan.

economic

Voyager2002 wrote: »

No-one has commented on the tax position...

Soon after both the parents enter their 70s, the protection offered by the SIPP wrapper will disappear and a large tax bill will arrive. The law is designed to enable people to provide for their retirement: a SIPP is not meant as a means to invest for ever, and so the expectation is that the owners of a SIPP will either use it to buy an annuity or live on regular drawdowns from it.

So there has to be a plan for moving the contents of the SIPP to some other shelter, and the investments made now need to be consistent with that plan.

Well the plan is for long term growth of the fund and we are willing to take the risk for this. Plus as I said me and my brother do not plan to depend on this money so we most likely won’t draw on this money right away.

AnotherJoe

P.s You asked "should you wait for a dip"

No. There's no point, there could equally be a rise, (statistically that's more likely) and over the 20 year timespan odds that you just happened to wait long enough to make a difference are minute, plus you could trickle feed in over 3 months or 6 months as it rises and then it crashes on month 4+ or 7+ and be worse off.

Just do it.

TARDIS

Voyager2002 wrote: »

No-one has commented on the tax position...

Soon after both the parents enter their 70s, the protection offered by the SIPP wrapper will disappear and a large tax bill will arrive. The law is designed to enable people to provide for their retirement: a SIPP is not meant as a means to invest for ever, and so the expectation is that the owners of a SIPP will either use it to buy an annuity or live on regular drawdowns from it.

So there has to be a plan for moving the contents of the SIPP to some other shelter, and the investments made now need to be consistent with that plan.

Other than the second LTA test at age 75 what other tax implications do you mean?

The SIPP wrapper doesn't suddenly disappear in your 70s as far as I'm aware.

I had thought investments could technically remain in a SIPP and be passed on free of IHT down several generations under current rules. This seems an important consideration for the OP. Admittedly this may then be liable to income tax if his parents live beyond 75, but am I missing another hidden tax here??

economic

TARDIS wrote: »

Other than the second LTA test at age 75 what other tax implications do you mean?

The SIPP wrapper doesn't suddenly disappear in your 70s as far as I'm aware.

I had thought investments could technically remain in a SIPP and be passed on free of IHT down several generations under current rules. This seems an important consideration for the OP. Admittedly this may then be liable to income tax if his parents live beyond 75, but am I missing another hidden tax here??

Do you or anyone else know if the SIPP HAS to be drawn if it is inherited (whether parents die before or after 75)?

Is it possible to keep it undrawn by the beneficiaries until he/she chooses to (perhaps when other income is reduced, so that less income tax is pad on the SIPP drawdown)?

Thrugelmir

bowlhead99 wrote: »

At the moment, people say (for example), US markets are 'a bit toppy'.

- But in the US, equity analysts are more bullish on equities than at any time on almost 40 years.

- The American Association of Individual Investors reports that private investors in the US have increased their holdings of equities from 66% to 72% of their assets over the last year, the highest level since the dot-com boom of 2000.

- A Bank of America Merrill Lynch survey shows that most institutional investors DD don't expect equity markets to peak until 2019 or later.

The US is insular. Different mentality.

Recent research shows that U.S. stocks account for less than half of the global stock market but make up nearly three-quarters of U.S. investors’ stock holdings.

Low international exposure.

Alice_Holt

Voyager2002 wrote: »

No-one has commented on the tax position...

Soon after both the parents enter their 70s, the protection offered by the SIPP wrapper will disappear and a large tax bill will arrive. The law is designed to enable people to provide for their retirement: a SIPP is not meant as a means to invest for ever, and so the expectation is that the owners of a SIPP will either use it to buy an annuity or live on regular drawdowns from it.

So there has to be a plan for moving the contents of the SIPP to some other shelter, and the investments made now need to be consistent with that plan.

The important age is 75, after which, and on the death of the principle, they will be taxed as income (at their marginal rate) in the beneficiaries hands:
https://www.youinvest.co.uk/pensions-and-retirement/accessing-your-pension/sipps-and-death

An alternative would be for your parents to gift your and your brother money now and use the PETs exemption or the gifts made from surplus income IHT exemption.

economic

Alice_Holt wrote: »

The important age is 75, after which, and on the death of the principle, they will be taxed as income (at their marginal rate) in the beneficiaries hands:
https://www.youinvest.co.uk/pensions-and-retirement/accessing-your-pension/sipps-and-death

An alternative would be for your parents to gift your and your brother money now and use the PETs exemption or the gifts made from surplus income IHT exemption.

But do i have to drawdown the SIPP once i receive it? Can i not leave it in undrawn until i find it beneficial to draw it (say i have no other income so dont have to pay as much tax)?