how long is a piece of string? and (not) timing the market

Mistermeaner

Market timing (ish) questions;

1. We have £20K in cash in Santander 1-2-3; we always tend to keep around this amount if we can as our emergency cash fund. We have a one off lump sum of around £15K being paid to us before the end of May (part of a settlement agreement with ex employer). I'm tempted to dip into these cash savings in order to put £10K into the mrs pension and a further £4K into her LISA ASAP while the market is 'low'... given we are guaranteed to be able to quickly replenish our cash savings is this something people think would be wise at the moment... or would you instead wait to receive the money then drip feed it over the remainder of 2020?

2. I am moving to a new job and the pension they offer isn't brilliant in terms of fund choice. I will still be using it in order to get company contributions but need to decide what to do with ~£300K pot I have with Scottish widows; I can leave it where it is but without the company contributions going in its a bit naff in terms of fund choice so I am contemplating switching it out to the new vanguard SIPP. They don't allow partial transfers out so its all or nothing.... My question is do I just instruct a transfer in one go (so Scottish widows sell everything all at once and cash transfer to vanguard for onward investment... or should I gradually sell my Scottish widows holdings into cash (say over 6 months) and then do the transfer once all funds are liquidated (thus getting some averaging effect)?

Comments appreciated

PS age 40 so a good 20years to go!

Thanks

Voyager2002

It is completely impossible to answer your questions, except to say that tying up your emergency fund for the next six weeks might be unwise. (Could you use credit cards or whatever if there were an emergency before the settlement money arrives?)

Personally I believe that current share prices are low when compared with prices to be expected over the next few years, and quite possibly over the next few months. So in your position I would probably act on that belief and buy shares now rather than drip-feeding over the year. However, it is equally plausible that share prices will suffer further falls over the remainder of this year, even if there is an eventual economic recovery. So drip-feeding might protect you from short-term loss and so could be the more intelligent strategy (although not what I would do). Either way, you would probably not notice the difference in 20 years!

TCA

If your sell your Scottish Widows pension to cash, you'll be crystallising any recent falls in its value. Then depending on how long the transfer takes you might be out of the market for a while, which may or may not work in your favour.

Thrugelmir

Cash Lisa each would be way of covering your bases while the ball of string unwinds. Recent events remind us starkly of our own human fragility. Do you have a mortgage? 

george4064

Why have you opted for LISA over ISA?

Albermarle

Normally a SW pension would have a lot more fund choice than a Vanguard SIPP, which is limited to Vanguard funds only.
Another factor is the charges . Some workplace and ex workplace pensions have decent discounts to standard charges but it is often not obvious from the paperwork and you need to call them .
Also with £300K there are other SIPPs with similar /lower charges to Vanguard but with a lot more investment choices ( if you want them )
One answer to the dilemma of lump sum vs drip feed is to do a mixture . e.g. one third lump sum every three or four months .

Alexland

With £300k in a Vanguard SIPP the 0.15% would be capped at £375 pa but you could still do a better with a fixed or lower capped platform.

If you want to hold fund(s) consider iWeb at £180 pa or for ETFs/IT(s) consider Fidelity who cap for these at £45 pa. If you are not making new contributions then there won't be many additional transaction fees.

However by moving to a SIPP you are limiting your FSCS protection and would be out the market in cash while the money transfers.

Thrugelmir

Alexland said:

With £300k in a Vanguard SIPP the 0.15% would be capped at £375 pa but you could still do a better with a fixed or lower capped platform.

No flexi-access drawdown options available yet.  A major drawback. 

eskbanker

Thrugelmir said:

Alexland said:

With £300k in a Vanguard SIPP the 0.15% would be capped at £375 pa but you could still do a better with a fixed or lower capped platform.

No flexi-access drawdown options available yet.  A major drawback. 

Not that major unless they really take their time introducing this....

Mistermeaner said:

PS age 40 so a good 20years to go!

Thrugelmir

Makes you wonder what the delay is caused by? A SIPP was promised for a long time. Was this announcement more of a marketing measure to placate the questions and draw in funds to manage. 

Alexland

Thrugelmir said:

No flexi-access drawdown options available yet.  A major drawback. 

Vanguard might get that done by the time the 40 year old OP retires!

Our inactive SIPPs are with Fidelity and the capping means our average platform fee for holding an equity ETF is a bargain at around 0.02%. We hold all the bonds and rebalance within our workplace pensions where there are no trade fees.