Funds for a short term sipp

barnstar2077

https://forums.moneysavingexpert.com/discussion/comment/82043004#Comment_82043004

It depends on what you plan on doing with the pot once you retire. If you plan on buying an annuity, then de-risking the whole thing is probably a wise move, where as if you plan on going into drawdown, then the chances are a large proportion of the pot will be left untouched for a decade or more.

stulaunch

https://forums.moneysavingexpert.com/discussion/comment/82043016#Comment_82043016

No, won't be taking annuity. I was just wondering if I can work what I may take in the couple of years before SP starts, whether that amount would be better in a MMF?

Kryten_the_Titan

Looking at HSBC Global Strategy Balanced fund, https://www.trustnet.com/factsheets/O/g1hd/hsbc-global-strategy-balanced-portfolio/

HSBC GS is a reasonably diversified fund of a mix: 60% equity, 30% bonds and 10% property/cash. It isn't particularly volatile (8.21 over 3 years which isn't bad) but that doesn't mean it is safe from a stock market crash/correction owing to the 60% equity allocation.

You are 3 years from starting drawdown, which will last for a 4 year period. You need to consider, if there was a stock market crash between now and before the start of the final year of drawdown in 6 years time, will that scupper your plans if you remained invested 100% in the HSBC GS fund? If this fund fell in value by 20% between now and before drawdown started could you delay drawdown for a year or two? If the answer is "No", you may wish to consider reaping the rewards of this fund's gains over the past 10 years and converting a large proportion, if not all of the HSBC GS to a short term money market fund. Holding 70% STMMF/30% HSBC GS, or 80/20 or 90/10 ratios might be worth considering but you would need to ask yourself the same question in the next 1 to 4 years, "Is now the time to sell HSBC GS?

GunJack

Interesting, the OP is looking at similar situation to mine - 3 years to go to 61 and jacking in work and the DC pot to be used to bridge between finishing, DB2 starting at 65 and SP at 67 (DB1 starts at 60).

Only last week I decided to de-risk the majority of the DC to cash/STMMF and the same for the last 3 years of contributions. It will be emptied in that 6 year timeline leaving 2x DB and SP going forward, so de-risking now felt the right time to do as I don't need to worry about growth for the last 3 years

mrklaw

thinking of the same lol - dozens of us (at least three)

-retire at 58; DB at 60; SP at 67. if I can get my wifes SIPP to enough to do 16k a year tax free, then my DC only needs those first two years around 25k per year which will be in MMF, and then about 8k a year for the rest of the bridge. Low enough draw and discretionary part of the budget which should mean I can stay invested, but I will have all funds by the end of this year so I’m tempted to just seal them away and then its secure (but knowing I’m trading some upside).

then two more years of contributions are solely discretionary

safe_hands2

I'm in a similar situation too. 4 years until I retire, possibly 3 if I can save enough. Sipp will fill the gap between small dB at 60 and state pension.

At the moment my plan is to start shifting into MMFs from next year. The reason I'm leaving it late is because I have enough cash savings to draw on if the stock market takes a dip for a while.

I'm constantly considering other options though.

leosayer

Will the money be spent after it is taken as income?

Some people could use such an approach for tax efficiency and then continue investing it via an ISA.

In such cases, the time horizon is longer.