Sipp lost £3,777. Yikes - advice please?

travelodger

I'm extremely ignorant on money matters, as anyone who has seen my previous posts will attest. So, Janet-and-John style responses will get through my thick head.

I transferred my HL SIPP worth £43,000 to Vanguard last November and have been paying in £400 a month since then. Logged in today to see how it's doing and got a nasty shock: it shows a loss of £3,777.

It scared me so much I went and cancelled my Direct Debit. Was that the right or wrong thing to do?

I have read on other threads people giving advice NOT to pull out of stocks and shares but to "ride it out" but does the same go for this SIPP?

Thanks in advance from "dunderhead".

travelodger

I should have said perhaps that I am invested in the Lifestrategy 80 EF

NedS

That sounds about right, global markets are down about 15% since the start of the year.

Now is not the time to stop your monthly payments. If anything, you should consider adding more as you are now purchasing units 15% cheaper than you were 6 months ago so can view it that equity is currently on sale. If you were buying anything else for £400 every month, you'd probably be delighted if the price had dropped by 15%

travelodger

Thanks NedS. I had a feeling as soon as I cancelled that DD that it was a panic move, that is why I came here and asked.

I don't think I am allowed to add any more, am I? I thought £400 pm was the maximum. 

Sadly the clever friend who got me into all this and used to advise me is no longer on the scene.

NedS

travelodger said:

Thanks NedS. I had a feeling as soon as I cancelled that DD that it was a panic move, that is why I came here and asked.

I don't think I am allowed to add any more, am I? I thought £400 pm was the maximum. 

Sadly the clever friend who got me into all this and used to advise me is no longer on the scene.

You have effectively just given up the gains you have made in the last 12 months.

How much you can contribute is limited by your earnings - you cannot contribute (gross) more than your gross earnings. How much do you earn per year?

travelodger

You have effectively just given up the gains you have made in the last 12 months.

Do you mean by cancelling the DD, or by being invested in this fund? If the former I can reinstate the DD tomorrow.

How much you can contribute is limited by your earnings - you cannot contribute (gross) more than your gross earnings. How much do you earn per year?

My income is £32k gross. 

Alistair31

travelodger said:

Thanks NedS. I had a feeling as soon as I cancelled that DD that it was a panic move, that is why I came here and asked.

I don't think I am allowed to add any more, am I? I thought £400 pm was the maximum. 

Sadly the clever friend who got me into all this and used to advise me is no longer on the scene.

Don’t take this the wrong way, but perhaps your friend was not as clever as you thought. 

travelodger

"Don’t take this the wrong way, but perhaps your friend was not as clever as you thought"

Because you think anyone who invests in stocks and shares isn't clever? What would you have advised me to do then?

Alistair31

travelodger said:

"Don’t take this the wrong way, but perhaps your friend was not as clever as you thought"

Because you think anyone who invests in stocks and shares isn't clever? What would you have advised me to do then?

Huh? I was more thinking of your mistaken belief that £400pm was the maximum you could invest. That and the fact you seem to be in a bit of a spin after a 15% decline, didn’t your friend tell you this is normal, to be expected, gauge your tolerance?

travelodger

When my friend advised me, my earnings were such that I could only invest £400. So that is what I paid in for six years. I had since forgotten that it was linked to income.

In six years I have never seen it drop before.

I came here for advice on what to do NOW, not to have the man I loved dearly and miss terribly criticised. I am an elderly disabled woman bereaved, asking for help.

bugbyte_2

to quote:

You can contribute 100% of your annual income (up to the maximum annual allowance of £40,000) to your SIPP each tax year. Your annual allowance includes personal contributions, employer contributions and tax relief. Your personal contributions receive a top up from tax relief.

i.e. you can pay in up to £32,000 per year with the gov. adding an additional 20% - £8,000 = £40,000 but as a general rule you cant put in more than what you earned. 

This equates to £2,666 pm.

If you are a higher rate tax payer, you can claim back another 20%

https://www.willisowen.co.uk/help/sipp-tax-benefits