Research for DIY drawdown

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
33 replies 3.4K views


  • Notepad_PhilNotepad_Phil Forumite
    749 Posts
    500 Posts First Anniversary Name Dropper
    westv said:
    Linton said:
    westv said:
    westv said:
    tacpot12 said:
    This is a good overview article:

    This blog has some excellent articles on safe withdrawal rates:
    One thing I do find confusing about the trustnet article is the reference to fluctuating yield. Yes  the yield from a share will fluctuate as the price rises and falls but that doesn't mean the cash  value of the dividend will once you own the shares.
    Dividends will reflect the underlying financial performance of the company.  IT's smooth dividends by calling on reserves in effect giving you some of your own money back. 
    How does that relate to my point about the yield (the dividend as a percentage of the share price) and the actual cash value of the dividend for shares already owned?

    Generally the amount of the dividend is more stable than the yield.
    Which is what I said.
    I have to admit that I didn't originally get that from your comment "Yes  the yield from a share will fluctuate as the price rises and falls but that doesn't mean the cash  value of the dividend will once you own the shares.". I thought you thought that the amount of cash coming in from dividends wouldn't fluctuate once you actually owned the shares.
    But I see what you meant by it now on re-reading the article where it goes a bit overboard on how up and down the underlying yields of assets can be and how that effects the income coming in.
    So yes, once you own the shares and provided the cash paid out continues to be fairly stable (though hopefully at least increasing by about inflation) then it doesn't matter so much what the underlying yield is.
    But of course dividends aren't set in stone and I see the article is nearly 3 years old. If it was done now I'm sure they'd talk much more about the fact that dividends can be cut (even to zero) and hence anyone can be in difficulties if they don't have a plan b on where to get the income from.
  • cfw1994cfw1994 Forumite
    1.5K Posts
    Part of the Furniture 1,000 Posts Hung up my suit! Name Dropper
    scdandem said:
    Of course you could hold no cash within the SIPP , but hold it outside in savings accounts , where it will at least earn a few quid and not taxed on withdrawal.
    In this case though you would have needed to build up the cash savings over the years, which may mean you have not gained from tax relief by contributing to a pension .
    Thanks. I’m in the thick of creating a portfolio and am conscious that we have ALL our savings (exc pension) in our S&S ISA (£100k), having been advised by our IFA to cash in our £30k premium bonds and plough everything in there. Having read John Edwards and researched lots more, I’m feeling nervous that we now don’t have any ‘very safe’ emergency funds. I’ve read that we can put cash into a SIPP and get the relevant rate tax relief (rather than putting in a savings account outside the SIPP and therefore no uplift) but I’m not sure how that works, or if it’s a good idea (obviously tax benefit is good but Vanguard for eg charge 0.2% of any interest earned, and with the current rates, and inflation... but then 20% tax relief... ??? 🧐
    Colour me cynical, if you like, but does your IFA get paid on the amount invested, perhaps excluding Premium Bonds?
    personally think Premium Bonds is the perfect place for "safe emergency money".   Whether you feel that needs to be £10K or £50K, you know you can get your hands on it within a couple of days, and it *may* make perhaps 1% too.

    Plan for tomorrow, enjoy today!
  • scdandemscdandem Forumite
    79 Posts
    Part of the Furniture 10 Posts Name Dropper Combo Breaker
    No the money went into our ISAs so nothing to do with the IFA. 
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