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Managing SIPP in retirement
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When I set up my SIPP in 2015 I went down the global tracker route. I thought I could be clever and split the world into distinct regions and buy a vanguard etf to cover each region. This saved me a few quid in fees and would allow some geographical biases if I fancied that.
Europe exUK
Asia Pacific exJapan
USA
Japan
Emerging Markets.
I was about 50% USA when I started. I am now nearer 60%, I have not rebalanced for a few years and USA has been growing faster than all the other regions. Being 50% USA captured the fastest growing market in that time and is reflected in the weightings of my SIPP now.
I have modified that plan to make it simpler and reckon on 90:10 developed/emerging. In my ISA I use Vanguard Funds Plc FTSE Developed World UCITS (VEVE)
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AlanP_2 said:Bostonerimus1 said:BobR64 said:Bostonerimus1 said:You don't really need much of a strategy if all you need is 2% plus inflation every year. Just put it in something like VLS80 or VLS60 and sit back.
My retirement income needs basically come from pensions and some rental income so I just leave my DC pension money in 85% equities and the rest in a mix of cash and bonds and leave it alone.
I'm not entirely convinced about the VLS funds though as ETFs tend to be cheaper to hold than funds and I am pretty comfortable with sticking to simple global index trackers for the equity component. Also, I understand that VLS tend to weight a bit too heavily towards UK stocks.
When you say you have a mix of cash and bonds, what form do you hold the bonds in inside your pension? I think one of the main things I am interested in is to find out what people are doing practically for the bond component.
60% in a US tracker might be OK for some UK based investors but certainly not all and a UK based investor wouldn't get the same returns (even if invested in "same" funds) as currency movements would have an impact.And so we beat on, boats against the current, borne back ceaselessly into the past.1 -
Like many I got burned by bond funds in 2022 and since learned a vital lesson - that holding bond funds (I held VGOV mainly) is completely different to holding a bond to maturity. So my inclination now is to hold mainly equities in a global tracker - SWLD or VHVG - and for the 'bonds' component either to buy short term gilts (I never knew till recently you could do this) and hold to maturity or just buy a MMF, on the basis that cash is just as good at reducing volatility as bonds, and much safer. In fact my SIPP pays 3.25 to 3.75% interest on straight cash holdings. Does this make sense? If not I'd be happy to know!I have found Pensioncraft videos useful and also James Shack seems to really know his stuff (if you can keep up with his machine gun delivery). I skip through the promoted sections, I dont think it invalidates the content.
The PensionCraft chap mentioned that he would hold gilts directly in a pension - perhaps as a ladder - but would not be inclined to hold a fund. I am reasonably comfortable with how gilts work and the practicalities of buying them but less so how to make them work inside a pension.
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@BobR64, are you able to qualify what percentage of your income requirements will be met by the DB(s) and SPs, and any other guaranteed sources?
For us it works out as c. 80%.
We are retiring early (about 8 years) and I have a completely different asset/investment allocation for our early retirement pots (as these will completely fund the 8ish years) when compared to the allocation for post DBs / SPs.
I have time to reassess the post DB/SP strategy but at present I am actually leaning towards simply holding global 100% equity investment(s), with a reasonable contingency (cash / cash like) for those turbulent times.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
cloud_dog said:@BobR64, are you able to qualify what percentage of your income requirements will be met by the DB(s) and SPs, and any other guaranteed sources?
For us it works out as c. 80%.1 -
BobR64 said:In particular there was one that explained how bond funds can still be volatile and unpredictable even if they are based on very predictable assets like gilts.
The PensionCraft chap mentioned that he would hold gilts directly in a pension - perhaps as a ladder - but would not be inclined to hold a fund. I am reasonably comfortable with how gilts work and the practicalities of buying them but less so how to make them work inside a pension.I don't remember anyone in the mainstream warning about the volatility of bond funds before 2022. They were always supposed to be the safe haven that would smooth out equities.On gilts, I assume you buy them to provide a fixed income on part of your portfolio for however long you need, and use nominal or IL depending on timescale, and how you feel about inflation risk? Personally I wouldn't want to fix too far into the future
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incus432 said:BobR64 said:In particular there was one that explained how bond funds can still be volatile and unpredictable even if they are based on very predictable assets like gilts.
The PensionCraft chap mentioned that he would hold gilts directly in a pension - perhaps as a ladder - but would not be inclined to hold a fund. I am reasonably comfortable with how gilts work and the practicalities of buying them but less so how to make them work inside a pension.I don't remember anyone in the mainstream warning about the volatility of bond funds before 2022. They were always supposed to be the safe haven that would smooth out equities.On gilts, I assume you buy them to provide a fixed income on part of your portfolio for however long you need, and use nominal or IL depending on timescale, and how you feel about inflation risk? Personally I wouldn't want to fix too far into the future
There was really only one direction they were going to go, and in the meantime you got virtually no return. I avoided bonds & gilts during the times of near zero interest rates, partly due to what I read here and in other places.1 -
zagfles said:Is MSE "mainstream"? There were plenty of people here warning that bonds and gilts were "return free risk" a few years ago. Gilts with a coupon of 0.125% were selling above par! IL gilts with a 0.125% coupon were selling at 300+ clean, over 3x par!
There was really only one direction they were going to go, and in the meantime you got virtually no return. I avoided bonds & gilts during the times of near zero interest rates, partly due to what I read here and in other places.Not
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zagfles said:incus432 said:BobR64 said:In particular there was one that explained how bond funds can still be volatile and unpredictable even if they are based on very predictable assets like gilts.
The PensionCraft chap mentioned that he would hold gilts directly in a pension - perhaps as a ladder - but would not be inclined to hold a fund. I am reasonably comfortable with how gilts work and the practicalities of buying them but less so how to make them work inside a pension.I don't remember anyone in the mainstream warning about the volatility of bond funds before 2022. They were always supposed to be the safe haven that would smooth out equities.On gilts, I assume you buy them to provide a fixed income on part of your portfolio for however long you need, and use nominal or IL depending on timescale, and how you feel about inflation risk? Personally I wouldn't want to fix too far into the future
There was really only one direction they were going to go, and in the meantime you got virtually no return. I avoided bonds & gilts during the times of near zero interest rates, partly due to what I read here and in other places.And so we beat on, boats against the current, borne back ceaselessly into the past.0
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