Best Interest rate on a SIPP

joepubli

I am current with Sipponline and have been with some time. I have never got round to investing much of the money and a very tidy sum (circa £200k) is sitting there in cash which attracts only 4%.

Given the current market turmoil I am too scared to invest in stocks. The best alternative I can see is a switch to James hay esipp which says it pays 6.4% fixed for a year in an abbey account.

Does anyone have any better ideas? I have looked at money market funds but they don't seem to come close.

Thanks for any suggestions.
Joe

purch

very tidy sum (circa £200k) is sitting there in cash which attracts only 4%.

:eek:

4 percent :eek: :eek: :eek:

If you are frightened of investing in Equities why havn't you bought a Gilt or other Bond ??

If you'd bought Gilts you could have at least earned a GRY of 5 %, even if you'd bought in the last 12 months....if you'd bought a Supranational the GRY would have been closer to 6 %, and there are plenty of good Bond issues out there that are very low risk and yield 7 %

Compound the interest and you get an even higher yield.

What is the point of having a SIPP and not utilising the investment options ??????

joepubli

Thanks for your comment.

Can you give me an example of a Bond where the capital is safe and there is a 7% yield? On both Gilts and Bonds there is risk of capital erosion. Short dated gilts yield a lot less 5% before dealing costs.

My view on the markets for the next 12 months or so is pretty negative. hence happy to put it into cash (although even that is not without its risks).

sipp is great because of the tax break but if the outlook for the markets is negative then in my opinion a high yield cash investment is safer bet.

Comments please.

purch wrote: »

:eek:

4 percent :eek: :eek: :eek:

If you are frightened of investing in Equities why havn't you bought a Gilt or other Bond ??

If you'd bought Gilts you could have at least earned a GRY of 5 %, even if you'd bought in the last 12 months....if you'd bought a Supranational the GRY would have been closer to 6 %, and there are plenty of good Bond issues out there that are very low risk and yield 7 %

Compound the interest and you get an even higher yield.

What is the point of having a SIPP and not utilising the investment options ??????

joepubli

Thanks for your comment.

Can you give me an example of a Bond where the capital is safe and there is a 7% yield? On both Gilts and Bonds there is risk of capital erosion. Short dated gilts yield a lot less 5% before dealing costs.

My view on the markets for the next 12 months or so is pretty negative. hence happy to put it into cash (although even that is not without its risks).

sipp is great because of the tax break but if the outlook for the markets is negative then in my opinion a high yield cash investment is safer bet.

Comments please.

purch wrote: »

:eek:

4 percent :eek: :eek: :eek:

If you are frightened of investing in Equities why havn't you bought a Gilt or other Bond ??

If you'd bought Gilts you could have at least earned a GRY of 5 %, even if you'd bought in the last 12 months....if you'd bought a Supranational the GRY would have been closer to 6 %, and there are plenty of good Bond issues out there that are very low risk and yield 7 %

Compound the interest and you get an even higher yield.

What is the point of having a SIPP and not utilising the investment options ??????

purch

Can you give me an example of a Bond where the capital is safe and there is a 7% yield?

No

Your capital is never safe.

Even in a Gilt, the UK could go tits up before it matures so you can never be 100% certain that you will be repaid. ( a bit more certain than in an Abbey National account..........but non the less not 100% )

Anglo American, Marks & Sparks, Allied Domecq, John Lewis, MMO2, Compass Group.............all have Bonds with 2 to 3 years left that'll give you a GRY of over 7%

Personally I wouldn't think any of these companies will go bust over that time frame and not repay.....but of course you cannot be 100% certain.

IMHO it's far safer than leaving it as cash where you have just as much risk and less yield.

joepubli

purch wrote: »

No

Your capital is never safe.

Anglo American, Marks & Sparks, Allied Domecq, John Lewis, MMO2, Compass Group.............all have Bonds with 2 to 3 years left that'll give you a GRY of over 7%

Personally I wouldn't think any of these companies will go bust over that time frame and not repay.....but of course you cannot be 100% certain.

IMHO it's far safer than leaving it as cash where you have just as much risk and less yield.

I have looked at these. They look attractive at first sight. However to be sure of the yield you need to tie the capital up for the said 2-3 years and by the time you take the dealing spread and charges into account its still less than 6.4% at Abbey with money tied for a year. If you are able to find me a specific example with a return of over 6.4% (net of costs and spread)available over a year within a sipp I'd be delighted.

A 3 year view on equity is good - I wouldn't want to be in fixed for 3 years. But for 12 mths to me it seems a safer bet than equities.

Joe

purch

I have looked at these

I'd look a bit further and do more research into Fixed Interest securities if I were you............

averageguy11

Lol..yea do a bit of spadework...and consider a balanced portfolio..cash ..bonds...and equities when u feel happier

jamesd

joepubli, have a look at the BlackRock UK Absolute Alpha fund. Assuming you're buying it without high initial commission the 8-15% it's likely to grow the capital by this year should meet your needs, given it's excellent record so far of avoiding significant capital drops. Not guaranteed, just doing well so far. It's a fund that can be expected to benefit from market drops. It doesn't produce an income so you'll need to have some cash and/or sell some periodically if you want income.

No fund deserves 100% of your money, though. 25% maybe, but more would be pushing it in case there is a problem.

If you can't get it for a decent price then a transfer to Hargreaves Lansdown may solve that problem.