Serious Cash

valiant24

I have a few hundred thousand pounds sitting in various accounts earning derisory interest.
I am going to need all of this money at the end of 2022 to pay for a building project.  (Although I could pay for it via a Lombard Loan, but it's not in my nature).

Could I be doing better that getting less than half a percent from Sainsbury's, Marcus etc?

Any thoughts on:
1. Buying some 2022 maturity gilts
2. Premium Bonds

?

Thanks
V

DireEmblem

If you have a partner, you can put 50k each into PBs.

My thoughts would be to stick with cash not gilts.

Thrugelmir

How much can you afford to lose? No investment is ever going to be risk free, at the current time uncertainty abounds. 

ZeroSum

P2p so money is at risk but

https://www.kuflink.com/peer-to-peer-lending/select-invest/

Are offering 5% + 1% cashback on a 1 year fixed rate

valiant24

Deleted_User said:

They have yields < 0.1% - see the last column in https://www.fixedincomeinvestor.co.uk/x/bondtable.html?groupid=3 ... which makes those 0.5% savings accounts look good

Yikes!

I also have hundreds of k in cash in my SIPP.   Lars would have me put these in gilts too but I don't like those yields.   Any other non-equity suggestions other than bonds or equities?

valiant24

Deleted_User said:

Well, how long will the cash in your SIPP be kept as savings / investments? I.e. how long before you spend it, or put into into another building project, or whatever? (Note that, if you intend to take it out of the SIPP at some stage but continue to keep it as savings / investments, then the answer to my question isn't when you'll take it out, because you can rebuy the same or similar assets after taking the cash out.)

My SIPP is already quit close to the Lifetime Allowance, so it seems the best strategy for it is to be pretty conservative.  There seems little point in investing something racy when the downside is 100% but the upside will be subject to 55% tax.   Appreciate that that is letting the tax dog wag the tail but even so, it makes more sense to me in these circumstances to leave the more speculative equity investments to ISAs etc where the gains even if spectacular are tax free.

I've never withdrawn from the SIPP.  I have enough cash to pay for this building project and so won't need to dip into the SIPP for it or any others.  I might start taking £20k/year or something from it to utilise my full basic rate tax band, but I don't have plans to need the bulk of it for a decade or two, if ever.

[Deleted User]

Advice from a tax-accountant may be money well spent valiant24, looking forward to the year when you hit 75.

Albermarle

My SIPP is already quit close to the Lifetime Allowance, so it seems the best strategy for it is to be pretty conservative.  There seems little point in investing something racy when the downside is 100% but the upside will be subject to 55% tax.   Appreciate that that is letting the tax dog wag the tail but even so, it makes more sense to me in these circumstances to leave the more speculative equity investments to ISAs etc where the gains even if spectacular are tax free.

For people near or at LTA , this split investment approach between SIPP and ISA's , is often mentioned as sensible. 

valiant24

Deleted_User said:

They have yields < 0.1% - see the last column in https://www.fixedincomeinvestor.co.uk/x/bondtable.html?groupid=3 ... which makes those 0.5% savings accounts look good

Please can you explain why the top one (07/06/21) seems to have such an attractive rate?

Malthusian

valiant24 said:

Deleted_User said:

They have yields < 0.1% - see the last column in https://www.fixedincomeinvestor.co.uk/x/bondtable.html?groupid=3 ... which makes those 0.5% savings accounts look good

Please can you explain why the top one (07/06/21) seems to have such an attractive rate?

8% isn't the rate, if that's what you're looking at. The rate is 0.358%, i.e. the yield.

It has a coupon of 8% because that was the going rate for lending money to the UK government when it was issued in 1996. But you won't get 8% because it's only got two months worth of coupons left before it returns £100 for every £101.23 you put into it (at current prices).

valiant24

Malthusian said:

valiant24 said:

Deleted_User said:

They have yields < 0.1% - see the last column in https://www.fixedincomeinvestor.co.uk/x/bondtable.html?groupid=3 ... which makes those 0.5% savings accounts look good

Please can you explain why the top one (07/06/21) seems to have such an attractive rate?

8% isn't the rate, if that's what you're looking at. The rate is 0.358%, i.e. the yield.

It has a coupon of 8% because that was the going rate for lending money to the UK government when it was issued in 1996. But you won't get 8% because it's only got two months worth of coupons left before it returns £100 for every £101.23 you put into it (at current prices).

No, I was looking at the yield (0.358%).   I pay £101.23, get 2 months interest on that (£100 x 8% x 2/12 = £1.33) - if that's how it works! - so total £101.33 back for a profit of (£101.33 - £101.229 = £0.101.

I don't see how that equals a 0.358% yield.