SIPP S.O.S.

whoa_whoa_what

Always had a conservative approach to money and never invested in anything other than an ISA. I am now convinced (and was by my FA too) that at 48 and running a Ltd company a SIPP is a must.

I have postponed this for too long and now I have to make a quick decision at the worst possible market condition.

This current stock market freaks me out. So, I am looking into options where I can still open a SIPP now to take advantage of this fiscal year, but park money in a safer pot until the storm is gone.

My strategy would be 2/3 into a money market fund and 1/3 into a more stock-predominant fund. I was looking at the Royal London Short Term Money Market Y Acc fund on Interactive Investor. It pays 6.2% at this time. Is that right?? Anyone else is including these in their SIPP? Are they sufficiently safe with such return??

For the remaining third, I was looking into a Vanguard fund, but I am kind of lost. I originally intended to go for a 2040 Target Retirement, but perhaps I should throw myself more into actively managed funds? Specially considering that the majority of the SIPP is already cushioned in a MMF?

Or am I missing entirely the point that these investments go up and down and I shouldn’t be afraid to enter the market at this moment in time and completely reverse the two proportions??

Grateful for any advice!

dunstonh

This current stock market freaks me out. 

Why?  There is nothing going on that should do.

So, I am looking into options where I can still open a SIPP now to take advantage of this fiscal year, but park money in a safer pot until the storm is gone.

So, you want to wait for the stockmarket to go up again to allow you to buy the investments more expensive than they are now?

My strategy would be 2/3 into a money market fund and 1/3 into a more stock-predominant fund. I was looking at the Royal London Short Term Money Market Y Acc fund on Interactive Investor. It pays 6.2% at this time. Is that right?

No, it is wrong.  It does not pay 6.2%.   You are misreading it.  
It is in the ballpark of SONIA +0.25%.  SONIA is currently 4.46%

 Anyone else is including these in their SIPP? Are they sufficiently safe with such return??

I did over the last couple of years but currently reducing/removing it as we are past the peak.  I still use it for short term bucketing though.

For the remaining third, I was looking into a Vanguard fund, but I am kind of lost. I originally intended to go for a 2040 Target Retirement, but perhaps I should throw myself more into actively managed funds? Specially considering that the majority of the SIPP is already cushioned in a MMF?

I'm not personally a fan of the VTR funds (or any lifestyle reducing funds).    Passive strategies make sense but VTR tends to start higher than your risk profile and end up lower.    

Or am I missing entirely the point that these investments go up and down and I shouldn’t be afraid to enter the market at this moment in time and completely reverse the two proportions??

There is always something negative going on in the world.  The markets price in what they know.     Big jumps and big drops occur when something happens that wasn't known about.       Now is no different to any other time.

Green_hopeful

Just get a sipp and pay the money in. You can then look at investments without having a panic. You can keep cash in a sipp while you decide. If the markets are dropping it might be a good time to buy. You might want to check if it’s advantageous to pay into the sipp this financial year. 

cloud_dog

whoa_whoa_what said:

Always had a conservative approach to money and never invested in anything other than an ISA. I am now convinced (and was by my FA too) that at 48 and running a Ltd company a SIPP is a must.

I have postponed this for too long and now I have to make a quick decision at the worst possible market condition.

This current stock market freaks me out. So, I am looking into options where I can still open a SIPP now to take advantage of this fiscal year, but park money in a safer pot until the storm is gone.

My strategy would be 2/3 into a money market fund and 1/3 into a more stock-predominant fund. I was looking at the Royal London Short Term Money Market Y Acc fund on Interactive Investor. It pays 6.2% at this time. Is that right?? Anyone else is including these in their SIPP? Are they sufficiently safe with such return??

For the remaining third, I was looking into a Vanguard fund, but I am kind of lost. I originally intended to go for a 2040 Target Retirement, but perhaps I should throw myself more into actively managed funds? Specially considering that the majority of the SIPP is already cushioned in a MMF?

Or am I missing entirely the point that these investments go up and down and I shouldn’t be afraid to enter the market at this moment in time and completely reverse the two proportions??

Grateful for any advice!

Why?  You should be thankful the stock markets are lower than they were 3+ weeks ago.

I don't believe the RL fund is currently yielding 6.2%.  I haven't worked the numbers but I would think the current yield (today) would be less than 5% (~rates are decreasing but depending on the duration of their holdings there might be a lag in their own fund yield reducing).  Investing so much into a cash equivalent investment for such a long period of time really is not a good idea; the value will simply be eroded by inflation over the longer term.

The last bit really all comes down to your attitude to risk / volatility; which appears really quite low.  This is where it is (or at least should be) really difficult for posters to offer any opinions on what you really should do with the money, investment funds wise. I know what I would do, but that is irrelevant for you.

You say you have an 'FA', do you mean an Independent Financial Advisor or some sort of restricted advisor?  Hopefully they are an IFA.  You really should be leaning on them so they can help you understand the implications of taking different investment decisions and trying to come up with a strategy that you feel comfortable with.

whoa_whoa_what

dunstonh said:

My strategy would be 2/3 into a money market fund and 1/3 into a more stock-predominant fund. I was looking at the Royal London Short Term Money Market Y Acc fund on Interactive Investor. It pays 6.2% at this time. Is that right?

No, it is wrong.  It does not pay 6.2%.   You are misreading it.  
It is in the ballpark of SONIA +0.25%.  SONIA is currently 4.46%

Thanks for the detailed answer and explanation. I can see now the reference to SONIA on their product page and for Div. Yield 6.2% they mean what they've paid out over the last year, rather than what they will?

xylophone

This current stock market freaks me out. 

You will wait  until the next uptick and feel elated, jump in and pay more per unit, feel utterly deflated  when there is a downtick and sell for less than you paid?

That is no way to run a long term investment which a pension plan (at your age) should be.

whoa_whoa_what

Green_hopeful said:

Just get a sipp and pay the money in. You can then look at investments without having a panic. You can keep cash in a sipp while you decide. If the markets are dropping it might be a good time to buy. You might want to check if it’s advantageous to pay into the sipp this financial year. 

Thanks. I realise there are so many options available and very few days left so that's the most sensible plan. Why do I need to check? I had understood the sooner the better