Move fund to safety?

Sue_S

I've currently got approx £360K in Vanguard 60/40 Sipp with II and am looking to buy an annuity in the next tax year.  Getting jittery about the market as I don't want to hit a downturn with no time to ride it out.  Any advice about what to do?  

PhoneBook

Buy your annuity now. Good rates on offer. Why wait?

Keep_pedalling

For such a short period I think I would play safe and move to cash. 

cmundo

I'm in similar boat and literally just in process of moving it all to money Royal London money market fund 

DRS1

Well what I did was move the money part to cash (for the lump sum) and part to a fund invested in gilts.  Of course I ended up buying an index linked annuity so I should have put the money in a fund invested in index linked gilts (not the conventional gilts) - doh!  Lesson: make sure you know what sort of annuity you will be buying if you want to match your investment to the annuity.

Or just stick it all in cash - at least you won't watch it go down in value.

phlebas192

DRS1 said:

Well what I did was move the money part to cash (for the lump sum) and part to a fund invested in gilts.  Of course I ended up buying an index linked annuity so I should have put the money in a fund invested in index linked gilts (not the conventional gilts) - doh!  Lesson: make sure you know what sort of annuity you will be buying if you want to match your investment to the annuity.

Or just stick it all in cash - at least you won't watch it go down in value.

Cash has the risk that if there is a sudden large drop in gilt yields then your cash will be buying a much smaller annuity income. Your suggestion of switching to gilts that roughly match your intended annuity purchase makes more sense. If you match both the type of annuity you want (index linked in your case) and maturity compared to expected lifespan then the annuity should end up very close to today's values. But if it is a case of buying in the next 12 months, you're not going to go far wrong by buying now if it will produce the level of income you require.

dunstonh

General rule of thumb is to move to cash well before you need to draw it.     Using gilts would counter movements in annuity rates.

Buying the annuity now whilst annuities are just off their 17 year peak could also make sense as it locks in the current rates.

Albermarle

Even if you have a relatively high risk tolerance, and have a fear of missing out on more potential stock market rises, then you could still go 40/60 instead of 60/40.

tigerspill

cmundo said:

I'm in similar boat and literally just in process of moving it all to money Royal London money market fund 

Just wondering the reason for this rather than a savings account?  Thanks.

QrizB

tigerspill said:

cmundo said:

I'm in similar boat and literally just in process of moving it all to money Royal London money market fund 

Just wondering the reason for this rather than a savings account?  Thanks.

To move a SIPP to a savings account, you'd have to take it as cash and pay income tax on 75% of it.

That's rarely a good idea.

Sue_S

Thanks to everyone for their help.  Just for further clarity, the reason I wanted to wait until next year is because I'm selling a property and will have CGT to pay and I want to keep this year's taxable income as low as possible.