SIPP & savings

db75

Took me too long to start a SIPP but had helpful advice here in the past which was both informative and helpful in getting over my initial issues with investing.

I have 23k in HSBC's Global strategy balanced fund and am putting in 1000 pm. 

Im 49 and have a limited company - I have around 150k in the business at the moment that i could get into the sipp over the next couple of years with some lump sums added

Would you spread across the year or just put in all at once and in given the balanced nature of the  fund im invested in i have been thinking about ways to add some better opportunities for growth . I thought about another hsbc or similar fund with a higher equity percentage but seem to remember someone saying it was pointless because there would be too many similar investments across the funds? 

Could you recommend any other strategies? 

I also have too much cash sitting in accounts around 270k in cash isas and around 500k in accounts paying 5% 
Currently thinking of keeping the isas as they are to have some cash thats not invested while i build up the sipp and then doing something else with the cash outside of isas  - probably 100k of that allocated to help my brother  and some emergency fund for myself but what would you do with the 350 or so thats in cash

thanks

ColdIron

db75 said:

i have been thinking about ways to add some better opportunities for growth . I thought about another hsbc or similar fund with a higher equity percentage but seem to remember someone saying it was pointless because there would be too many similar investments across the funds?

If you used HSBC GS Dynamic the underlying investments would be pretty much identical but the allocations would be different so not pointless it you wanted a greater potential for growth

db75

ColdIron said:

db75 said:

i have been thinking about ways to add some better opportunities for growth . I thought about another hsbc or similar fund with a higher equity percentage but seem to remember someone saying it was pointless because there would be too many similar investments across the funds?

If you used HSBC GS Dynamic the underlying investments would be pretty much identical but the allocations would be different so not pointless it you wanted a greater potential for growth

thanks ok that makes sense hedging bets, i will dip my toe

Alexland

That's a huge amount of cash to be holding with a very small exposure to S&S investments.

I rather like HSBC GS Balanced at the moment as bonds are back to being reasonably attractive so should aid rather than detract from performance as they have in recent years. It could well pay to hold a diversified mix of decent return assets going forward.

So rather than increasing the risk on the S&S you already have I would look to increase the proportion of your assets that are invested in S&S but keep reasonably diverse to control volatility. Maybe look at moving some/all of the Cash ISA into S&S ISA using a fixed fee platform like iWeb?

For where you are holding unwrapped cash if you are paying tax on that then maybe £50k in premium bonds?

Do you have a partner who may have available allowance to contribute into pensions, ISAs, etc?

Do you have children who could contribute into SIPPs and JISAs?

db75

@Alexland I guess i was thinking if i put all excess business cash in pension over the next few years any exposure to risk is best off through the business to get the tax relief, especially when interest rates are good for the cash isas but i guess it wouldnt hurt to convert some cash isas to s+s - can i transfer these to interactive investor where i manage my sipp?

'It could well pay to hold a diversified mix of decent return assets going forward.' diversified in what way?

i know a few people with premium bonds  myself included - small amounts admitedly but have never made anything from them

do children and no allowance available to my wife...

Alexland

db75 said:

@Alexland I guess i was thinking if i put all excess business cash in pension over the next few years any exposure to risk is best off through the business to get the tax relief, especially when interest rates are good for the cash isas but i guess it wouldnt hurt to convert some cash isas to s+s - can i transfer these to interactive investor where i manage my sipp?

Yes of course it makes sense to make healthy business contributions into the SIPP each tax year.

Sure you could move the ISAs to to II but I expect they would increase their monthly charge so it would probably be cheaper to hold it at iWeb as their account opening fee is waived until the end of this month and it would only cost a single £5 trade with no ongoing fee. I like to hold large accounts with different providers to balance the risks.

db75 said:

'It could well pay to hold a diversified mix of decent return assets going forward.' diversified in what way?

Well the HSBC GS Balanced fund contains a mix of equities and bonds and while that hasn't worked out very well in recent years as bonds have gone through a painful price correction they are now attractive again so future performance of the fund looks brighter.

While everyone knows that over very long periods equities tend to do better than bonds they forget that sometimes there are decades where bonds outperform equities. Going further up the risk scale betting on equities which have done so well in recent years doesn't guarantee higher returns in the medium term.

db75 said:

i know a few people with premium bonds  myself included - small amounts admitedly but have never made anything from them

The more you hold the closer to the average result you can expect to get although you are unlikely to win the top prizes ever there is a trickle of lower prizes which might be more attractive than paying tax on interest earned a savings account.

wake1

@Alexland thanks for the detailed reply. Ill definitely look into moving some of the cash isas to iweb. ill do some more research on premium bonds too

 some of the unwrapped  cash im looking to help bolster pre or semi retirement in case the business goes downhill which is why i thought about another property