Best allocation across Cash, Bonds & Equities?

Albermarle

Deleted_User said:

Albermarle said:

Deleted_User said:

By the way, when the posters here are saying “cash”, do you mean the actual cash sitting within a tax free pension wrapper and earning no interest? 

It can mean that , or it can mean cash outside a wrapper, sitting in a normal saving account(s) earning 1% maybe .
It varies depending on the poster.

Cash in a savings account earning interest which you can access in an instant? Absolutely. Cash in a SIPP losing value and subsidizing the brokerage? Why would one ever do that? 

Apparently many people take the tax free cash from the pension and then leave what is left in cash , as they are worried about investing it . Clearly it is not what an experienced investor would do, and I think in fact the UK authorities have had some kind of info campaigns to dissuade people from this route.

Otherwise it could be that someone has taken advantage of the tax relief to maximise pension contributions , with little held outside the pension. So holding some cash in the pension , especially close to , or after retirement , could be a reasonable strategy for a cautious investor .

[Deleted User]

sheslookinhot said:

Deleted_User said:

Albermarle said:

Deleted_User said:

By the way, when the posters here are saying “cash”, do you mean the actual cash sitting within a tax free pension wrapper and earning no interest? 

It can mean that , or it can mean cash outside a wrapper, sitting in a normal saving account(s) earning 1% maybe .
It varies depending on the poster.

Cash in a savings account earning interest which you can access in an instant? Absolutely. Cash in a SIPP losing value and subsidizing the brokerage? Why would one ever do that? 

Does cash in a SIPP receive  the 25% contribution from HMRC ?

That has nothing to do with how you use liquidity within a SIPP. 

[Deleted User]

Linton said:

Deleted_User said:

Albermarle said:

Deleted_User said:

By the way, when the posters here are saying “cash”, do you mean the actual cash sitting within a tax free pension wrapper and earning no interest? 

It can mean that , or it can mean cash outside a wrapper, sitting in a normal saving account(s) earning 1% maybe .
It varies depending on the poster.

Cash in a savings account earning interest which you can access in an instant? Absolutely. Cash in a SIPP losing value and subsidizing the brokerage? Why would one ever do that? 

How does cash  sitting in a SIPP subsidise the brokerage?

Its a free loan to your broker. I’ve heard the stats recently, a stunningly large amount is sitting in cash.  Thats one of the reasons brokerages in N America can offer free service; free cash generates  income for them.  

Thrugelmir

Deleted_User said:

Linton said:

Deleted_User said:

Albermarle said:

Deleted_User said:

By the way, when the posters here are saying “cash”, do you mean the actual cash sitting within a tax free pension wrapper and earning no interest? 

It can mean that , or it can mean cash outside a wrapper, sitting in a normal saving account(s) earning 1% maybe .
It varies depending on the poster.

Cash in a savings account earning interest which you can access in an instant? Absolutely. Cash in a SIPP losing value and subsidizing the brokerage? Why would one ever do that? 

How does cash  sitting in a SIPP subsidise the brokerage?

Its a free loan to your broker. I’ve heard the stats recently, a stunningly large amount is sitting in cash.  Thats one of the reasons brokerages in N America can offer free service; free cash generates  income for them.  

Payment for order flow is an even greater incentive to offer free services. 

Canuck01

In line with the OP's post, it would be great to hear from some others who are retired or close to it, and what their portfolio split between and stocks and fixed income is, and the reasons for it.  As stated mine is 50/50 ish.

LHW99

Canuck01 said:

In line with the OP's post, it would be great to hear from some others who are retired or close to it, and what their portfolio split between and stocks and fixed income is, and the reasons for it.  As stated mine is 50/50 ish.

We are semi-retired now, and the portfolio overall is just over 10% bonds (UK / International, not gilts), around 6% cash part os which is likely to be used to add to holdings in the next few months, the rest is equity.

We have small DB pensions and part-time income, however, so won't be relying on the DC funds in order to eat!

squirrelpie

We're retired. I don't knowingly own any bonds. I don't know when it will happen but interest rates will go up, and bond prices will consequently go down. I'm not into timing markets.

fineclaret

allanm02 said:

Deleted_User said:

dunstonh said:

Which gilt fund lost 8% over the last 2 months? I have not followed gilts but treasures did not do anything like this.

A number of them are running in that ballpark.  Vanguard UK Govt bond is 7% down over 12 months.  Although a gilts crash did occur in that period.

Some global govt bond funds and long dated gilts have just crept into double digit losses.

However, it is worth noting that 2020 saw significant gains way above the typical norm and 2021 saw some of that unwind to bring it back in line with the long term average.

The claim was “2 months”.  I’ve seen a rise. Thats quite different from 12 months. 

Sorry, I misspoke. 12 months it is!

Nonetheless, the bulk of the fall was over a 6 week period early in the year. Although advice might be 'we didn't mean those kind of bonds!', it is possible to trip oneself up in the act of being cautious.

Linton

Thrugelmir said:

Linton said:

Deleted_User said:

Albermarle said:

Deleted_User said:

By the way, when the posters here are saying “cash”, do you mean the actual cash sitting within a tax free pension wrapper and earning no interest? 

It can mean that , or it can mean cash outside a wrapper, sitting in a normal saving account(s) earning 1% maybe .
It varies depending on the poster.

Cash in a savings account earning interest which you can access in an instant? Absolutely. Cash in a SIPP losing value and subsidizing the brokerage? Why would one ever do that? 

How does cash  sitting in a SIPP subsidise the brokerage?

Platforms place client funds on overnight deposit and receive the benefit. HL / AJ Bell didn't get rich from fees alone. 

The overnight cash deposit rate is about 0.04%/year.  So hardly a massive return compared with the platform charges.

Linton

allanm02 said:

allanm02 said:

Deleted_User said:

dunstonh said:

Which gilt fund lost 8% over the last 2 months? I have not followed gilts but treasures did not do anything like this.

A number of them are running in that ballpark.  Vanguard UK Govt bond is 7% down over 12 months.  Although a gilts crash did occur in that period.

Some global govt bond funds and long dated gilts have just crept into double digit losses.

However, it is worth noting that 2020 saw significant gains way above the typical norm and 2021 saw some of that unwind to bring it back in line with the long term average.

The claim was “2 months”.  I’ve seen a rise. Thats quite different from 12 months. 

Sorry, I misspoke. 12 months it is!

Nonetheless, the bulk of the fall was over a 6 week period early in the year. Although advice might be 'we didn't mean those kind of bonds!', it is possible to trip oneself up in the act of being cautious.

Those are the type of bonds people are talking about.

Currently there are long term (40 year) gilts available at a price of £193.   When they mature they will be worth £100.  So sometime between now and then they will about halve in value.   They are returning a moderate rate of interest so if you hold then for 40 years you will make a small profit.  However if you dont you would lose out big time if interest rates return to pre 2008 levels.