pension / sipp / business cash

dannybbb

couple of questions - i have built up a reserve of cash in my business, i am almost 50 and have only recently (last year) started a sipp . 
Im looking at the next tax year and normally withdraw 20k to add to a cash isa but this year was going to start a stocks isa  - got me wondering instead of taking from the business and investing  should i just put more into the sip.... i may be answeing my own question as im writing it but i guess maxing out sipp contrubution whilst taking usual dividends and then starting the stocks isa is probably the idea....

I do have a seperate sipp question though, i have money in global hdbc funds  (with ii) - 50k in balanced and  25k dynamic  - thinking was to have some exposure to  different risk levels but i understand after setting it up that there is a lot of crossover for one but also that  it might substantially increase my costs. Any thoughts on that and if its better to just have one fund, i suppose its simple enough to sell and reinvest in the other  after deciding which one is more appropriate,

thank you

DRS1

My one thought on putting money into the SIPP is make sure you aren't going to want to invest it back in the business at any point in the future.

It looks from the names as if you wanted to split the money 2/3rd/1/3rd between steady eddy and riskier investments.  When I drill down into the holdings there is a chunk of "Alternative" and "Other" in there which is a bit of a mystery.  Standard advice (sorry, guidance) on here seems to be "a cheap world equity tracker" so all in one thing.  Given your age and portfolio value I am not sure I would do that.  I would err more on the steady eddy side if I was going for just one thing.  But I think your original split was a perfectly reasonable way to go and let's face it the charges on those two funds are not high.

dannybbb

@DRS1 thanks for the reply, at the moment i have around 130000 in the business and  have put 20k in the sipp in 2023 and 55k in 2024 by a mix of 1000 monthly and some lump sums as ive had a good year was keen to minimise tax. i dont anticpiate the need for any large investments in the business in fact i anticipate things going downhill fairly sharply for various reasons beyond my control.
i have around 750k in personal cash, around 250 of that in cash ISAs which i realise isn't a great idea but too late for that but interest rates are good at the moment so im just looking to make sure i take care of what I have. Do you think its worth putting more of the cash into stocks or just fun the sipp and  start a stocks isa?

thanks again

dunstonh

You say business, so that suggests Limited company or LLP.  is that correct?
It makes a big difference compared to sole trader.

DRS1

When things go downhill is usually when a business starts to eat your cash but you will be the best judge of that.

With that amount of personal cash you should be looking at getting it into a tax shelter if you can - ISAs are the obvious ones because you can always pull it back out if you need it.  But at 20K a year you may be doing that forever.  The SIPP has more tax advantages than an ISA and is probably a good place to have your stocks and share investments (even if it is simply the low cost world tracker) because that is a long term parking place for the money - say 15 years if you aim to retire at 65 but longer if you are going to use drawdown.
Nothing wrong with a stocks and shares ISA - that can hold the low cost world tracker just as easily as the SIPP.  You can merge some of your existing cash ISAs into the S&S ISA if you feel like it (just make sure you are doing a transfer and not a withdrawal and new investment).

I would have no problem keeping the 750k in high interest savings accounts but then I like having income even if I am paying tax on it.  Others will no doubt be along to tell you to put £50k into premium bonds on the basis that any prizes you win will be tax free and who knows you might win £1million.  Personally I am lucky to win £25 but that is just me.  Whether you should put any of the £750k into stocks and shares is very much a personal decision.  Would you feel comfortable with that.  I think there are other threads on here (under Savings and Investments) discussing what to do with large amounts of money and it may be worth trawling for them to see if anything strikes a chord.

DRS1

Oh and just a word of caution about investing now - the USA market and the big tech stocks have been on a good run and there is some concern that they may be over valued.  Is there a bubble and when will it go pop?  I have no idea but now could be a good time to keep your powder dry and stick with cash or something safe - there is a thread about investing in gilts here which you may want to look at though that is a world away from an equities tracker.
Anyone buying gilts right now? - Page 4 — MoneySavingExpert Forum

dannybbb

@dunstonh sorry, its a ltd company yes

dunstonh

dannybbb said:

@dunstonh sorry, its a ltd company yes

Limited company significantly favours pension over ISA for company money as it gets money out of the company tax efficiently (no dividend tax, no income tax, no NI and reduces your corporation tax bill).    Drawing money from the business to put in an ISA is very inefficient.    However, the ISA for your personal money already outside of the business is good.

dannybbb

@DRS1 in my case the worst that will happen is  income will dry up. a fairly likely event unfortunately.
ive been concerned about this sort of volatility too and would be typical that i get over my fear of investing just in time for everything to crash badly. I have been concerned that ive put 55k in within one year, especially when i only had 4 days off in 2024  in creating that cash as I have also read about things being overvalued, would be painful!
i also at my age  have tie but not a huge amount of time for things to recover. ill have a look at guilts, i suppose thats a way to keep the tax benefits with less risk. 
ill look into guilts  - do you think its a case of adding to what i have or trading in what i have  for guilts?

dannybbb

@dunstonh i did that for years unfortunately....
but in terms of now, thing is theres enough in the business to max out a sipp ocntribution as well as draw out for isa. 

dannybbb

on another question if transferring cash to stocks would you do that with the isa or cash out side the isa?
vanguard seems to be a good place for  a stocks isa under 250k especially given my lack of knowledge, would you agree?