SIPP protection

Veloflyer

Secret2ndAccount said:

I think the platforms are wising up to the demand for bonds, and are moving from telephone dealing to online dealing. I bought my bonds on iWeb, and it was the same as buying shares or funds.
Whether buying 25 different amounts of 25 different gilts (and paying 25 fees) is considered easy would be a matter of opinion, but you only have to do it once, then you sit and wait for the money to come in.

Naturally gilts depends on HMG not going bankrupt/defaulting. Given the debt etc., I wonder if the risk of that happening is now still acceptable?    

DRS1

It may depend what sort of gilt you are buying.  Conventional gilts seem to trade online but ILGs seem to require phone calls - though there may be some exceptions.

Linton

Veloflyer said:

Secret2ndAccount said:

In my view, if you have a lot of your pot in bonds, generating regular, guaranteed payouts, then you don't need much of a cash buffer. More of an emergency fund for a new boiler. Your income is protected from downturns anyway. The cash buffer is what you draw on in an equity crash. If you aren't drawing from equities, you don't need a cash buffer. So you keep a cash buffer that is proportionate to the part of your income coming from equities.
If you went with my plan A - 1 bond every 5 years - you could allow yourself to drift - have a large cash pile when a bond matures, gradually diminishing over 5 years until the next big bond payment comes in.

Yes understood. A Bond/gilt ladder could indeed be a wise choice for some of the pot. I guess another advantage is knowing what you will receive. Are these things fairly simple to set up via the SIPP platform? I took a swift look at Bell and it seems fairly straightforward.  

Plus given your future income is guaranteed for 5 or more years is there such a need to derisk the rest of your pension pot?  You will presumably need long term growth to cope with inflation, future expensive one-offs, and ensure your pot lasts your lifetime, however long that may be.

leosayer

Veloflyer said:

Secret2ndAccount said:

I think the platforms are wising up to the demand for bonds, and are moving from telephone dealing to online dealing. I bought my bonds on iWeb, and it was the same as buying shares or funds.
Whether buying 25 different amounts of 25 different gilts (and paying 25 fees) is considered easy would be a matter of opinion, but you only have to do it once, then you sit and wait for the money to come in.

Naturally gilts depends on HMG not going bankrupt/defaulting. Given the debt etc., I wonder if the risk of that happening is now still acceptable?    

The UK won't go bankrupt or default because it creates the money required to meet debt repayments.

SVaz

If HM Govt default then it’s pretty much TEOTWAWKI and a regular investment income would be the least of anyone’s worries 😅

We’d be too busy scavenging for food and avoiding armed gangs or we’d be on a universal income/social credit system like the conspiracy theorists would have us believe. 

So unless you think you should be stocking up on the 3 Bs ( Beans, bandages and bullets) then Gilts are fine.

Index linked usually win over the long term,  only prolonged periods of low inflation would make ordinary Gilts the better choice and as nobody has a crystal ball then….

Aretnap

Veloflyer said:

Secret2ndAccount said:

I think the platforms are wising up to the demand for bonds, and are moving from telephone dealing to online dealing. I bought my bonds on iWeb, and it was the same as buying shares or funds.
Whether buying 25 different amounts of 25 different gilts (and paying 25 fees) is considered easy would be a matter of opinion, but you only have to do it once, then you sit and wait for the money to come in.

Naturally gilts depends on HMG not going bankrupt/defaulting. Given the debt etc., I wonder if the risk of that happening is now still acceptable?    

HMG can borrow in its own currency and print it's own money. It would take a nuclear war, a communist revolution or a plague significantly worse than COVID-19 to bankrupt a government in that fortunate position. (And if any of those things did happen then it wouldn't really matter whether the government repaid it's debts or not, because money would be worthless anyway).

To the extent that gilts come with risk, it's the risk that the returns will fail to keep up with inflation, rather than the risk that the government will default outright.

GenX0212

DRS1 said:

It may depend what sort of gilt you are buying.  Conventional gilts seem to trade online but ILGs seem to require phone calls - though there may be some exceptions.

AJ Bell trade IL Gilts online - or at least they did when I set up my Gilt ladder last month

Veloflyer

Gents  - many thanks. My thinking as follows

Sell half the pot of (uncrystallised) equites and buy into a 5 year index linked gilt. Leave it until maturity

Use the other half pot of (uncrystallised) equities to drawdown on annually, using lump sum and 12K from the crystallized portion to live on for 5 years tax free. I'd exhaust the uncrystallized half pot after 5 years.
Leave rest of crystallized portion alone

After 5 years, use the cash from the matured gilt to drawdown on for @ another 5 years in a similar manner - again tax free...

The idea being I'd be preserving half the pot for 5 years, after which, I would still have a considerable portion in cash i.e. preserved, until that too is depleted after another 5 years.

What to do with the crystallised portions of each half pot is another one to think about.......     
 

Albermarle

Aretnap said:

Veloflyer said:

Secret2ndAccount said:

I think the platforms are wising up to the demand for bonds, and are moving from telephone dealing to online dealing. I bought my bonds on iWeb, and it was the same as buying shares or funds.
Whether buying 25 different amounts of 25 different gilts (and paying 25 fees) is considered easy would be a matter of opinion, but you only have to do it once, then you sit and wait for the money to come in.

Naturally gilts depends on HMG not going bankrupt/defaulting. Given the debt etc., I wonder if the risk of that happening is now still acceptable?    

HMG can borrow in its own currency and print it's own money. It would take a nuclear war, a communist revolution or a plague significantly worse than COVID-19 to bankrupt a government in that fortunate position. (And if any of those things did happen then it wouldn't really matter whether the government repaid it's debts or not, because money would be worthless anyway).

To the extent that gilts come with risk, it's the risk that the returns will fail to keep up with inflation, rather than the risk that the government will default outright.

HMG can borrow in its own currency and print it's own money. 

Plus it can put up taxes to repay debts ( topical comment  ) 

Cus

The market currently charges someone buying insurance against a UK default over the next 5 years a 0.2% a year premium.  It's not risk free.

Look up Argentina and their repeated defaults. They also could have just borrowed and printed..but they couldn't really