Leave it or move it?

Singlespeeder

Hi,
I have a modest though not insignificant chunk of money sat in a Fidelity SIPP though it's currently not invested in anything, and accruing no interest.
With Inflation at 6.7% or whatever it currently is, effectively the chunk is devaluing.
I could invest it in shares though this is patently risky and my track record makes me very nervous (anyone remember Marconi !) ...
Or I could, as a base rate tax payer, withdraw it and foot the 20% bill then put it into a high (I use that term loosely) interest account at say 5% .... over time it would rebuild it's value.

If I do nothing it'll dwindle...

Any thoughts? 

cloud_dog

We do not know why you have cash sat in your pension, and I'm not commenting on the wisdom of doing so, but have you considered using one of the many short term money market funds that track SONIA (SOIA)?  See this thread (as a more recent post)...

https://forums.moneysavingexpert.com/discussion/6480290/sonia-gbp-funds-etfs#latest

Albermarle

Firstly the cash will be attracting some interest. Fidelity recently e mailed all customers with updated rates.
How we manage your cash (fidelity.co.uk)
As above you can put your money in a Short term Money Market Fund.
This one is often mentioned and is available on the Fidelity platform.
Royal London Short Term Money Market Fund Y Acc Key Statistics | GB00B8XYYQ86 | Fidelity

I could invest it in shares though this is patently risky and my track record makes me very nervous (anyone remember Marconi !) ...
The vast majority of retail investors ( means you and me) do not invest in individual shares as it is too risky.
Most are invested in funds that contain many shares and other investments to spread the risk. So one negative event like Marconi, has no impact.

I suggest you need to improve your knowledge of investing. Reading this forum regularly can be useful and you can have a look at this.
Investing in stocks for beginners: How to get started – MSE (moneysavingexpert.com)

Aberdeenangarse

Short term money funds are certainly the way to go, and is what I’ve been doing. My SIPP was fully invested in Equities, but I moved the whole fund into cash a few weeks back when the FTSE was around 7,700. Looks like it may have a wise move, certainly with the current turmoil.

MEM62

Singlespeeder said:

I have a modest though not insignificant chunk of money sat in a Fidelity SIPP though it's currently not invested in anything, and accruing no interest.

That's not good.  

Singlespeeder said:

With Inflation at 6.7% or whatever it currently is, effectively the chunk is devaluing.

Indeed, that is inflation risk.  

Singlespeeder said:

I could invest it in shares though this is patently risky and my track record makes me very nervous 

Interesting, you consider shares as risky yet are happy for your money to be exposed to inflation risk - in which the value of your money is guaranteed to be eroded.  If you money has been in cash for any period of time it will have lost significant spending power. 

Singlespeeder said:

Or I could, as a base rate tax payer, withdraw it and foot the 20% bill then put it into a high (I use that term loosely) interest account at say 5% .... over time it would rebuild it's value.

Why would you do that when you can hold cash within a pension and still earn interest on it?  Not sure why you believe that the money has to be withdrawn to earn interest.  You need look at the time period over which this money will be used.  If it is 10 years plus then you really need to move it to equities.  If is is a much shorter term then you can still get a reasonable rate of interest on it as cash.  (or you may want to do part and part) 

Whatever you do don't just let it sit there.     
     

Singlespeeder

Further investigation prompted by Albermarle would indicate it is attracting some interest... so my belief that it wasn't proved incorrect. It looks like it's getting 3.55% which isn't so bad.
I'm also looking into
"This one is often mentioned and is available on the Fidelity platform.
Royal London Short Term Money Market Fund Y Acc Key Statistics | GB00B8XYYQ86 | Fidelity"

Albermarle

Aberdeenangarse said:

Short term money funds are certainly the way to go, and is what I’ve been doing. My SIPP was fully invested in Equities, but I moved the whole fund into cash a few weeks back when the FTSE was around 7,700. Looks like it may have a wise move, certainly with the current turmoil.

The UK accounts for  only 4% of the global financial markets and the FTSE 100 will be even less, so its movements are not that important to most investors.

Regarding the current ' turmoil.'

US and Europe have flopped back a bit from August peaks . However. 

The FTSE 100 is almost exactly where it was at the start of the year.
Europe is about 6% up
US is 10% up
Japan is 20% up

Singlespeeder

It's not clear quite the return is on the 
Royal London Short Term Money Market Fund Y Acc Key Statistics | GB00B8XYYQ86 | Fidelity
Is it significantly more than 3.55%?
I apologise for not having a great understanding of the whole investments arena, it's an incredibly complex subject.

wjr4

What are your reasons for keeping it in cash? 

Singlespeeder

Misplaced caution I guess. Ease of access. 
I have drawn down from it a couple of times & used it to paydown my mortgage previously. 
We didn't want to risk losing it so left it in cash.
If I'll get more that 3.55% in the RL fund ... I'm happy to move it to there.
The document Fidelity send say it's classed as a low risk investment but I assume the rewards are subsequently lower returns.

Doctor_Who

Singlespeeder said:

It's not clear quite the return is on the 
Royal London Short Term Money Market Fund Y Acc Key Statistics | GB00B8XYYQ86 | Fidelity
Is it significantly more than 3.55%?
I apologise for not having a great understanding of the whole investments arena, it's an incredibly complex subject.

It will be ~5.25% since it effectively tracks the BoE base rate. Fees are 0.1% for the fund plus whatever the platform charge is. It should net quite a bit more than 3.55%.