Cash within vanguard 😫

L9XSS

Seems a “no brainier” I have about £125k of my Vanguard SIPP in cash at present (was earning around 3.2% or thereabouts monthly interest) but will drop to 2.2% mid to late March. I too after reading @NedS detail will almost certainly move this into the Vanguard short term money market fund until I decide where to invest this capital. At circa 3.9% income it seems a safe have for a few more months. I’m looking to start drawdown at 62 years of age (in 6 years time) as a 5 year bridge to my SP. DB pension is strong and payable at 60 years of age.

plumb1_2

One thing iam not to clear on, this is a income fund and pays out monthly dividend.
Is this dividend paid out as cash and put into my sipp account? And I then have to reinvest back into the fund if I want? As I am not into drawdown yet.

L9XSS

plumb1_2 said:

Have looked on vanguard site, and not been able to find out the process of withdrawing the dividend or the pot when  needed. Anyone any information on this or a link please.

I think you just move the “fund” that your invested in to “sell” on the Vanguard platform. You then receive this back into cash in your SIPP.

plumb1_2

L9XSS said:

plumb1_2 said:

Have looked on vanguard site, and not been able to find out the process of withdrawing the dividend or the pot when  needed. Anyone any information on this or a link please.

I think you just move the “fund” that your invested in to “sell” on the Vanguard platform. You then receive this back into cash in your SIPP.

Thanks, but I don’t want to sell, want to reinvest 

Linton

plumb1_2 said:

One thing iam not to clear on, this is a income fund and pays out monthly dividend.
Is this dividend paid out as cash and put into my sipp account? And I then have to reinvest back into the fund if I want? As I am not into drawdown yet.

Yes income from income funds held in a SIPP is kept within the SIPP. You can use it to buy more investments, pay charges, drawdown, or just keep in cash.  Some platforms may support automatic reinvesting, I dont know.  But that would be something you ask for and not the default.

plumb1_2

Linton said:

plumb1_2 said:

One thing iam not to clear on, this is a income fund and pays out monthly dividend.
Is this dividend paid out as cash and put into my sipp account? And I then have to reinvest back into the fund if I want? As I am not into drawdown yet.

Yes income from income funds held in a SIPP is kept within the SIPP. You can use it to buy more investments, pay charges, drawdown, or just keep in cash.  Some platforms may support automatic reinvesting, I dont know.  But that would be something you ask for and not the default.

Thanks Linton, guess I’ll have to wait until vanguard pays the divi next month.
Maybe a silly question, but if I reinvest the divi/ interest  would this be classed as compound interest?