Best place for cash in SIPP

soulsaver

aroominyork said:

Short dated gilts with high coupons, eg TY25, are yielding about 5.5%. 

Tax free..?

aroominyork

soulsaver said:

aroominyork said:

Short dated gilts with high coupons, eg TY25, are yielding about 5.5%. 

Tax free..?

Not sure what your comment/question means. Income is taxable, uplift from purchase price to par redemption value is not taxed, so the tax efficient way to hold gilts outside a tax wrapper is through a low coupon gilt, eg TN25 with a 0.25% coupon. For OP in a tax wrapper, the higher coupon TY25 yields a little more (see https://www.dividenddata.co.uk/uk-gilts-prices-yields.p) so is an option to consider.

Doctor_Who

Stargunner said:

Doctor_Who said:

Stargunner said:

aroominyork said:

Short dated gilts with high coupons, eg TY25, are yielding about 5.5%. 

Can the yield change as interest rates change.or would it remain the same to maturity.

The coupon and redemption date are fixed. TY25 has a coupon of 3.5% and redemption date of 22-10-2025. The yield quoted is dependent on the purchase price and that you hold to maturity. 

https://www.dividenddata.co.uk/uk-gilts-prices-yields.py

Just run it through the bond yield calculator 

If the bond was purchased at a clean price of 95.87 on 14-Jul-2023 and held until the maturity date of 22-Oct-2025 the expected return would be 5.454% per annum.

The bond will pay two coupons per year on the 22 Apriland 22 October.

On the maturity date of 22-Oct-2025 the final coupon payment will be made and each bond will be redeemed at the face (par) value of 100.

Yield to Maturity

5.454%

Time To Maturity

2 years 100 days

Next Payment

99 days

22-Oct-23

Accrued Interest (for 22-Oct-23 coupon)

83 days

£0.794 per £100

Sorry, I don't know what your point is. You don't need to use the bond yield calculator to get the above information, just click the '+' link at the end of the TY25 row in the link to the table I posted.

Stargunner

Doctor_Who said:

Stargunner said:

Doctor_Who said:

Stargunner said:

aroominyork said:

Short dated gilts with high coupons, eg TY25, are yielding about 5.5%. 

Can the yield change as interest rates change.or would it remain the same to maturity.

The coupon and redemption date are fixed. TY25 has a coupon of 3.5% and redemption date of 22-10-2025. The yield quoted is dependent on the purchase price and that you hold to maturity. 

https://www.dividenddata.co.uk/uk-gilts-prices-yields.py

Just run it through the bond yield calculator 

If the bond was purchased at a clean price of 95.87 on 14-Jul-2023 and held until the maturity date of 22-Oct-2025 the expected return would be 5.454% per annum.

The bond will pay two coupons per year on the 22 Apriland 22 October.

On the maturity date of 22-Oct-2025 the final coupon payment will be made and each bond will be redeemed at the face (par) value of 100.

Yield to Maturity

5.454%

Time To Maturity

2 years 100 days

Next Payment

99 days

22-Oct-23

Accrued Interest (for 22-Oct-23 coupon)

83 days

£0.794 per £100

Sorry, I don't know what your point is. You don't need to use the bond yield calculator to get the above information, just click the '+' link at the end of the TY25 row in the link to the table I posted.

I didn’t realise that, my knowledge of buying and holding individual gilts is close to zero 😂

Doctor_Who

Stargunner said:

Doctor_Who said:

Stargunner said:

Doctor_Who said:

Stargunner said:

aroominyork said:

Short dated gilts with high coupons, eg TY25, are yielding about 5.5%. 

Can the yield change as interest rates change.or would it remain the same to maturity.

The coupon and redemption date are fixed. TY25 has a coupon of 3.5% and redemption date of 22-10-2025. The yield quoted is dependent on the purchase price and that you hold to maturity. 

https://www.dividenddata.co.uk/uk-gilts-prices-yields.py

Just run it through the bond yield calculator 

If the bond was purchased at a clean price of 95.87 on 14-Jul-2023 and held until the maturity date of 22-Oct-2025 the expected return would be 5.454% per annum.

The bond will pay two coupons per year on the 22 Apriland 22 October.

On the maturity date of 22-Oct-2025 the final coupon payment will be made and each bond will be redeemed at the face (par) value of 100.

Yield to Maturity

5.454%

Time To Maturity

2 years 100 days

Next Payment

99 days

22-Oct-23

Accrued Interest (for 22-Oct-23 coupon)

83 days

£0.794 per £100

Sorry, I don't know what your point is. You don't need to use the bond yield calculator to get the above information, just click the '+' link at the end of the TY25 row in the link to the table I posted.

I didn’t realise that, my knowledge of buying and holding individual gilts is close to zero 😂

No problem, I was just somewhat confused by your post. The calculator is useful if you want to see how the yield changes with variations in the purchase price, which is really the only variable with a nominal gilt (if you hold to maturity).

Aged

Doctor_Who said:

Aged said:

Doctor_Who said:

Are you in the accumulation phase or de-accumulation phase with your pension? I hold some cash in a STMMF in my SIPP, but the reason is that I will be withdrawing this money in the next 2-3 years.

My official retirement date is in 2 years time, but I have cash in ISAs etc which I intend to be my first port of call when I start to draw down, assuming that interest rates return to negligible levels by then!

You really need a plan of when you will require the pension money and then invest accordingly and to your appetite for risk, which seems very low. Only you know your circumstances, what income you require and what other savings/investments you have.

You said in your second post that the money was 'there for the longterm', this would typically mean being invested in equities and bonds, not cash. There has been quite a few posts on the Pensions board from people wanting to 'de-risk' their pension to cash, you might want to read some of them and the responses.

My appetite for risk IS very low. I see no point in taking risk with my uninvested cash when interest rates are what they are right now. I have equities etc in my portfolio and I want to inflation-proof the cash element of my portfolio as much as possible, at this moment in time. 

Doctor_Who

Aged said:

Doctor_Who said:

Aged said:

Doctor_Who said:

Are you in the accumulation phase or de-accumulation phase with your pension? I hold some cash in a STMMF in my SIPP, but the reason is that I will be withdrawing this money in the next 2-3 years.

My official retirement date is in 2 years time, but I have cash in ISAs etc which I intend to be my first port of call when I start to draw down, assuming that interest rates return to negligible levels by then!

You really need a plan of when you will require the pension money and then invest accordingly and to your appetite for risk, which seems very low. Only you know your circumstances, what income you require and what other savings/investments you have.

You said in your second post that the money was 'there for the longterm', this would typically mean being invested in equities and bonds, not cash. There has been quite a few posts on the Pensions board from people wanting to 'de-risk' their pension to cash, you might want to read some of them and the responses.

My appetite for risk IS very low. I see no point in taking risk with my uninvested cash when interest rates are what they are right now. I have equities etc in my portfolio and I want to inflation-proof the cash element of my portfolio as much as possible, at this moment in time. 

The problem is how to access these interest rates with cash in a SIPP. Few SIPPs allow fixed-rate cash accounts to be held and most don't pay great interest rates on any cash you do hold. So, for very low risk, you are left with STMMFs tracking SONIA or gilts (which you say you can't hold). None of these cash-like investments are going to match inflation at present (or probably in the future). So, apart from moving your SIPP to another provider, I've run out of ideas. Maybe someone else will be able to provide suggestions that meet your requirements.

Aged

Doctor_Who said:
 

The problem is how to access these interest rates with cash in a SIPP. Few SIPPs allow fixed-rate cash accounts to be held and most don't pay great interest rates on any cash you do hold. So, for very low risk, you are left with STMMFs tracking SONIA or gilts (which you say you can't hold). None of these cash-like investments are going to match inflation at present (or probably in the future). So, apart from moving your SIPP to another provider, I've run out of ideas. Maybe someone else will be able to provide suggestions that meet your requirements.

Yes, therein lies the dilemma. Thanks for all your input 

coyrls

Are you sure your platform doesn't support the purchase of individual bonds?  You might need to do it over the 'phone if you can't do it online but generally you will only pay the online charge for a 'phone transaction that can't be done online.

Aged

coyrls said:

Are you sure your platform doesn't support the purchase of individual bonds?  You might need to do it over the 'phone if you can't do it online but generally you will only pay the online charge for a 'phone transaction that can't be done online.

Yes I did check with them, they definitely don't allow it.