Safe Sipp

AnotherJoe

dunstonh wrote: »

HL is a full SIPP and is actually one of the most expensive. It doesn't have the adviser costs being a DIY SIPP but it's around double the costs of a SIPP that an IFA could use. Albeit with adviser costs added on.

Most SIPPs nowadays have moved to full SIPP basis or are moving that way (i.e. anything quoted on the LSE and other major markets and virtually all UT/OEICs). The only exception tends to be whether they support property purchase or not. Fund supermarket style SIPPs are in decline. As are personal pensions and stakeholder pensions. Long term, it looks like workplace schemes and SIPPs will be the two most common types.

Dunston, you really should know better to make such a blanket statement.

It depends what is held in it.

Were the OP for example to move wholly into cash, the ongoing cost from HL would be zero.

If it was held as ITs, ETFs, shares, it would be very low, a maximum of £200/year irrespective the size of the holding.

Bravepants

dunstonh wrote: »

HL is a full SIPP and is actually one of the most expensive. It doesn't have the adviser costs being a DIY SIPP but it's around double the costs of a SIPP that an IFA could use. Albeit with adviser costs added on.

Most SIPPs nowadays have moved to full SIPP basis or are moving that way (i.e. anything quoted on the LSE and other major markets and virtually all UT/OEICs). The only exception tends to be whether they support property purchase or not. Fund supermarket style SIPPs are in decline. As are personal pensions and stakeholder pensions. Long term, it looks like workplace schemes and SIPPs will be the two most common types.

Thanks for this clarification Dunstonh. I think my SIPP with HL is the simple type, it only allows access to funds, shares etc. I would like to put my SIPP cash into something that bears a higher rate of interest than the 0.05% or so it is sitting at at the moment.



HL sometimes offer fixed rate cash offers, but they haven't done so for a good long while. HL have also started Active Savings, but that's also not available in the SIPP that I have with them.

Bravepants

AnotherJoe wrote: »

Dunston, you really should know better to make such a blanket statement.

It depends what is held in it.

Were the OP for example to move wholly into cash, the ongoing cost from HL would be zero.

If it was held as ITs, ETFs, shares, it would be very low, a maximum of £200/year irrespective the size of the holding.

Can we clarify first whether HL offer both a "simple" and a "full" SIPP? Or is HL's SIPP simply a "full" SIPP with certain limitations, such as no access to interest bearing cash accounts?



If so is cash held in a "full" SIPP more expensive to hold than, as you quite rightly say, the "simple" SIPP?

cfw1994

DeletedUser wrote: »

HH, I have no idea what my future holds, i may, or may not need it.

Therefore knowledge that a specific amount of money will be available should i need it, is my objective.

If i could put it into a (tax free) bank account, i would.

To me, the stock market is just another gamble, one i'm not particularly keen to participate in.

All i was looking for, were the names of some decent cash-type funds, as again from reading, bonds appear to be over-valued.

Thanks

Of course, putting large sums into a 'tax free bank account' is also a gamble, albeit one where you know the outcome, so more fact than gamble....the value of that lump will reduce by inflation every year..

Therein lies the problem: from what I can see (certainly in my Aviva funds available), cash held makes zero interest: technically even loses a bit (sector average is -0.1 to -0.2%).
Okay for a portion of your overall pot (as someone already suggested), but I would not recommend it for all of it - as another said, timing the market is a fools game - my company (NASDAQ quoted) has gone up over 100% in the past 15 months - that would be a lot of loss to ignore, & if the market fell 30% today I would still be up were that part of a portfolio!

So: I too know little about what will happen in the future, & it makes sense having 'easy access' less volatile funds available to tide you through any market slump/crash - as I approach retirement age, I am thinking of having up to 3 years funds available in 'risk free' pots (eg, Premium Bonds - you never know! - or perhaps cash ISA - generally frowned upon for long term...or as you suggest, a portion of your pension pot)

kidmugsy

Bravepants wrote: »

I would like to put my SIPP cash into something that bears a higher rate of interest than the 0.05% or so it is sitting at at the moment.

Is there any reason not to buy a two-year gilt?
https://markets.ft.com/data/bonds

Mnd

Will you be 55 when you want it in a couple of years, if so this means you can't get it anyway.

Bravepants

kidmugsy wrote: »

Is there any reason not to buy a two-year gilt?
https://markets.ft.com/data/bonds

Hi, I think we've had this conversation before!


I think I better understand them these days, but can I just please confirm how it would work...



On HL's website there is a gilt on the secondary market...


Treasury 0.75% GILT 22/07/23 GBP0.01 (WI)


It's coupon is 0.75% and it's current price is £97.565. (Edited to get the denomination right!)


If I buy £100,000 worth of this gilt I would own 1024.957 of them, which at par value is of course £102,495.70, which is the capital I would get back at the end of the 4 years.

I would also receive interest at a rate of 0.75% for 4 years on the par value, and deducting 0.45% (HL's fee), capped at £200 per year would equate to £800 in fees. I would turn £100,000 into £104,770 after 4 years right?


As I understand it, the main reson for choosing this 0.75% secondary market gilt is not because of the spectacular interest rate, but because of the duration.

Note: I know the duration is over 4 years, but I rounded down for simplicity.

kidmugsy

Bravepants wrote: »

On HL's website there is a gilt on the secondary market...


Treasury 0.75% GILT 22/07/23 GBP0.01 (WI)


It's coupon is 0.75% and it's current price is 97.565 pence.


If I buy £100,000 worth of this gilt I would own 102495.7 of them, which at par value is of course £102,495.70, which is the capital I would get back at the end of the 4 years.



I would also receive interest at a rate of 0.75% for 4 years on the par value, and deducting 0.45% (HL's fee), capped at £200 per year would equate to £800 in fees. I would turn £100,000 into £104,770 after 4 years right?

I have a vague memory that the detail depends on whether the price you quote is "clean" or "dirty" i.e. how it allows for the part of the coupon that's due because the gilt is between its two annual paying-out dates. Does the HL website go into this sort of detail? If not some other website will. Or you could phone and ask them: in my experience they are good with enquiries.

Warning: what you and I would call "duration" is not the way the word is used among the specialists in these things.

Sorry I can't be more helpful; it's a while since we bought gilts and I can't lay hands on my file of info at the moment.

Is this any use?
https://www.dmo.gov.uk/responsibilities/gilt-market/

londoninvestor

Bravepants wrote: »

I would also receive interest at a rate of 0.75% for 4 years on the par value

For 5 years - there's also an interest payment on the maturity date.

So if you buy now, you get interest in Jan 19, Jul 19, Jan 20, Jul 20, Jan 21, Jul 21, Jan 22, Jul 22, Jan 23 and Jul 23: 10 payments, each of which is 0.375% of par.

Bravepants

kidmugsy wrote: »

I have a vague memory that the detail depends on whether the price you quote is "clean" or "dirty" i.e. how it allows for the part of the coupon that's due because the gilt is between its two annual paying-out dates. Does the HL website go into this sort of detail? If not some other website will. Or you could phone and ask them: in my experience they are good with enquiries.

Warning: what you and I would call "duration" is not the way the word is used among the specialists in these things.

Sorry I can't be more helpful; it's a while since we bought gilts and I can't lay hands on my file of info at the moment.

Is this any use?
https://www.dmo.gov.uk/responsibilities/gilt-market/

Thanks for the information. I found this:


https://www.londonstockexchange.com/prices-and-markets/retail-bonds/acc-int-calc/accinterest.htm


It looks like it will be the "dirty" price, I will ask HL next week for confirmation.