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Pension or ISA ?

Hi all 
so I moved my largest pension pot into the SW Retirement account a couple of months ago ( i mentioned my plan on here at the time and i think some were apprehensive at my possible outcomes, but it worked out in the end ) and took a little tax free for some house renovation funds, its not doing terribly sitting there in the funds I've chosen, in this one i have circa 160k in the main Retirement Planning part and about 32k which is now crystallised in the Retirement Income part of the account,
I have another pension with SW that I'm still paying into through work and myself.
I don't need a lifetime from these just about 22 years will do nicely, probably less.

My question is that I've been considering crystalizing the remaining 160 and taking 40k tax free ,splitting it between my other half and myself and putting into cash Isa's at about 5.8% I think the best are.
That rate seems pretty good to me and seems like a relatively safe bet as far as a return is concerned versus my investments, in which who knows where they'll go!
I really cant figure out if this is a daft thing to do or a half sensible way to go?


  
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Comments

  • Linton
    Linton Posts: 17,934 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    Nick9967 said:
    Hi all 
    so I moved my largest pension pot into the SW Retirement account a couple of months ago ( i mentioned my plan on here at the time and i think some were apprehensive at my possible outcomes, but it worked out in the end ) and took a little tax free for some house renovation funds, its not doing terribly sitting there in the funds I've chosen, in this one i have circa 160k in the main Retirement Planning part and about 32k which is now crystallised in the Retirement Income part of the account,
    I have another pension with SW that I'm still paying into through work and myself.
    I don't need a lifetime from these just about 22 years will do nicely, probably less.

    My question is that I've been considering crystalizing the remaining 160 and taking 40k tax free ,splitting it between my other half and myself and putting into cash Isa's at about 5.8% I think the best are.
    That rate seems pretty good to me and seems like a relatively safe bet as far as a return is concerned versus my investments, in which who knows where they'll go!
    I really cant figure out if this is a daft thing to do or a half sensible way to go?


      

    When will you want to use the money?

    If in the next 5 years then switching to a high interest cash account would seem a prudent thing to do since it guarantees you will have the money available when you need it..  If not for another 20 years then I wouldn't bother, probably better to invest it in relatively risky equity funds and forget about it.

  • dunstonh
    dunstonh Posts: 118,574 Forumite
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    edited 22 July 2023 pm31 1:21PM
     its not doing terribly sitting there in the funds I've chosen
    An economic cycle is around 15 years.   You have been there in 3 months.   3 months is insufficient to judge good, bad or indifferent.

    My question is that I've been considering crystalizing the remaining 160 and taking 40k tax free ,splitting it between my other half and myself and putting into cash Isa's at about 5.8% I think the best are.
    What would that achieve?

    That rate seems pretty good to me and seems like a relatively safe bet as far as a return is concerned versus my investments, in which who knows where they'll go!
    Safe as in no investment risk but increases shortfall risk and inflation risk.

    I really cant figure out if this is a daft thing to do or a half sensible way to go?
    Nothing you have send indicates it is a sensible thing to do but not necessarily wrong either.  It just lacks context and information.

    if you were spending the money in the next 2 years then fair enough but if there is no intention to spend it then there is nothing being gained here by looking short term.





    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • dealyboy
    dealyboy Posts: 1,889 Forumite
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    For what it's worth I think it's a 90% sensible option.

    It's all about risk mitigation and provides an emergency cash resource as well as diversity, important for the future if you're in your mid 40s.

    In my own, non-professional opinion, 5.8% could be near the top.

    I defer to @Linton and @dunstonh as always.
  • ader42
    ader42 Posts: 323 Forumite
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    I agree with the above but you need to be mindful on inflation. 5.8% return when inflation is 8.8% is 3% negative.
    Of course that 3% negative might still be better than your current investment returns. 
    So is it long-term investment or short-term cash-flow?

  • Albermarle
    Albermarle Posts: 25,968 Forumite
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    As said it is not crazy, and you are not the first poster in recent times that is thinking about similar courses of action.
    At least you are not thinking of cashing in all your investments to put into savings ( as some have) as that would be not a good idea.
    There is no absolute right and wrong. The experienced investors who have commented tend to think long term and that is usually best. However if it makes you feel more comfortable then.....
  • xylophone
    xylophone Posts: 45,426 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    It doesn't seem to me a crazy scheme on the basis the money would only be a part of your  assets (and in addition to this, you are still working and contributing to a pension).

    It would make cash instantly available should you need or simply want it (emergency use/new car/holiday/help children etc).

    Have you and your spouse obtained state pension forecasts?

    https://www.gov.uk/check-state-pension
  • Nick9967
    Nick9967 Posts: 199 Forumite
    Seventh Anniversary 100 Posts Name Dropper
    Nick9967 said:
    Hi all 
    so I moved my largest pension pot into the SW Retirement account a couple of months ago ( i mentioned my plan on here at the time and i think some were apprehensive at my possible outcomes, but it worked out in the end ) and took a little tax free for some house renovation funds, its not doing terribly sitting there in the funds I've chosen, in this one i have circa 160k in the main Retirement Planning part and about 32k which is now crystallised in the Retirement Income part of the account,
    I have another pension with SW that I'm still paying into through work and myself.
    I don't need a lifetime from these just about 22 years will do nicely, probably less.

    My question is that I've been considering crystalizing the remaining 160 and taking 40k tax free ,splitting it between my other half and myself and putting into cash Isa's at about 5.8% I think the best are.
    That rate seems pretty good to me and seems like a relatively safe bet as far as a return is concerned versus my investments, in which who knows where they'll go!
    I really cant figure out if this is a daft thing to do or a half sensible way to go?


      
    Apologies to those who replied , I abandoned after posting , life took over I'm afraid.
    I suppose more context was in order , I would have done that immediately after your questions/points normally but as I say things changed.
    I suppose my main reason for asking is it seems it would give me clarity of my returns (I'm not overly confident about the world as it stands at moment, who have guessed we'd have a had a world epidemic that turned everything on its head) I'm 56 will go part time at 58 , all in for 61, i only need this pension pot to last me a max of 22 years from 58, I have other income after that, a spouse currently 47, with a full state pension (as do I) and a modest LGPS, just seems that 5.8% is not that bad with things the way they are? 

    anyway thanks for all of your replies sorry i abandoned the post!

  • dunstonh
    dunstonh Posts: 118,574 Forumite
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    I suppose my main reason for asking is it seems it would give me clarity of my returns (I'm not overly confident about the world as it stands at moment, who have guessed we'd have a had a world epidemic that turned everything on its head) I'm 56
    At 56, you lived through the 70s energy crisis and cost of living crisis that followed (both of which make recent issues look like a holiday by comparison).  The three day week and the deindustrialisation of the UK.   Cold war with constant nuclear threat etc.     Yet you think now is not very good....     Hopefully, you will get my point which is that there are always negative things happening.   

     just seems that 5.8% is not that bad with things the way they are? 
    Every year, any asset class can be top, middle or bottom.  In 2022 cash was king.   It is not in 2023.   And it wont be in around 4 out of 5 years.        Making a decision because of a single year is not sensible.  You average out the ups and downs and look longer term.   Hopefully, you are going to be around another 30 or so years.   So, you need to think about that timescale.

    You will need cash savings.  Its necessary.  you also need investments.  Going too heavy in investments is not good and going too heavy in cash is not good.    


    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Qyburn
    Qyburn Posts: 3,145 Forumite
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    dunstonh said:

    At 56, you lived through the 70s energy crisis and cost of living crisis that followed (both of which make recent issues look like a holiday by comparison).  The three day week and the deindustrialisation of the UK. 

    He was only five years old back then.
  • dunstonh
    dunstonh Posts: 118,574 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Qyburn said:
    dunstonh said:

    At 56, you lived through the 70s energy crisis and cost of living crisis that followed (both of which make recent issues look like a holiday by comparison).  The three day week and the deindustrialisation of the UK. 

    He was only five years old back then.
    But as a child, he would probably remember the consequences of the energy crisis and strikes etc.    Even though he would have no clue about the financial side.  I remember the nights with candles and queues for petrol stations and I am younger.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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