HL SIPP - Keeps Cash as cash or put in Cash Fund?

RD42

I have £60K of cash in my HL SIPP. Are there any negatives compared to keeping it as cash to putting it into a cash fund like this one:

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-cash-class-i-accumulation

Could its value go down?

ColdIron

HL will pay you 0.15% interest on your cash. That fund comes with a 0.15% fee and of course you will be paying HL their 0.45% platform fee on top of that

dunstonh

Why are you holding so much in cash?

The FCA report into drawdown highlighted a number of concerns on the non-advised side and the high level of cash holding was one of them.

If you have good justification then that is fine. However, if there is not really a reason then you may wish to reconsider what you are doing as holding high levels of cash results in lower returns in most medium term + periods. Indeed, holding cash usually results in real term losses as the interest will not keep up with inflation.

ffacoffipawb

dunstonh wrote: »

Why are you holding so much in cash?

The FCA report into drawdown highlighted a number of concerns on the non-advised side and the high level of cash holding was one of them.

If you have good justification then that is fine. However, if there is not really a reason then you may wish to reconsider what you are doing as holding high levels of cash results in lower returns in most medium term + periods. Indeed, holding cash usually results in real term losses as the interest will not keep up with inflation.

Maybe he has £600k in the SIPP and the cash proportion is 10%. Not enough information to know one way or the other.

AnotherJoe

The interest rate on it is 0.7%.
Then theres a 0.15% charge = 0.55%.
Deduct the HL 0.45% charge and you are down to 0.1%
HL pay 0.15% on cash currently AFAICS.


So, you'd be losing 0.05%.

dunstonh

ffacoffipawb wrote: »

Maybe he has £600k in the SIPP and the cash proportion is 10%. Not enough information to know one way or the other.

Yes. Which is why I asked the question. Better to be sure rather than just let it go.

The FCA report looked at cash as a percentage of overall holding, So, their review is relative to the amounts.

m_c_s

recent article

https://www.moneyobserver.com/news/new-pension-rules-to-prevent-retirees-sleepwalking-cash

RD42

Thanks,

I have around £385K in total pensions, I will top up to £400K by the end of the tax year, so will have about £85K in cash. I am 45.

RD42

I forgot about the Charge! Thanks!

RD42

Thanks all, excellent points made.

I guess I will keep in cash, top up with £25K this tax year, then post Brexit buy £7K / month in L&G international trust until I am fully invested again.

dunstonh

I guess I will keep in cash, top up with £25K this tax year, then post Brexit buy £7K / month in L&G international trust until I am fully invested again.

The L&G international trust is a fund that you would have seen growth on because of Brexit and the way Sterling fell. Waiting until after could be bad. Especially if Brexit is softer than expected or the impact of Brexit is not as bad as predicted by some. Ignoring other influences, broadly speaking a 1% increase in Sterling is a 1% loss on your investments (simplified I know).

There are far bigger issues affecting the markets than Brexit. Are you going to wait until after those?