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Cash in SIPP

Including Financial Independence and Retiring Early (FIRE)
EthicsGradient
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Re: Cash in SIPP

#671678

Postby EthicsGradient » June 29th, 2024, 8:21 pm

BenValue wrote:Thank you for all the very useful advice.

I have opened a bit of a can of worms mentioning no risk. I was a bit clumsy in my wording. I simply meant that I wanted to get the same amount of capital out that I put in.

I don't think you were clumsy at all. I think everyone actually knew what you meant, and one or two people just fancied a weekend debate among themselves about application of everyday words to finance.

Urbandreamer
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Re: Cash in SIPP

#671683

Postby Urbandreamer » June 29th, 2024, 9:05 pm

BenValue wrote:Thank you for all the very useful advice.

I have opened a bit of a can of worms mentioning no risk. I was a bit clumsy in my wording. I simply meant that I wanted to get the same amount of capital out that I put in.


Thanks for getting back to us. However how do you measure "capital"? The ability to buy loaves of bread, or pounds?

To be blunt from one point of view mc2fool is right, from another he is wrong. Your point of view is right for you.

We still don't know what you mean. Are you happy to ignore debasement of the currency, as you don't think that it's appropriate to consider over the term of your SIPP, or not?

Your OP seems to suggest that you are, with your desire to write off equities. Possibly I am wrong and property investments are your thing. Yet how different are these things?

FWIW, I'd recommend a "portfolio" of investments. Given your OP, some interest baring (others know more), some equities, some commodities i.e gold.

I also hold a small amount of bitcoin.

However mix and match and judge your "pick-n-mix" to suit yourself.
Many others would consider my mix unwise. I feel the same about their mix. However we are all right in our choices. Given that the informed choices suit our objectives.

Ps mc2fool and I have been speculating if you follow Tweedle Dum or Tweedle Dee. Did you say what you mean, or mean what you said. The two are clearly not quite the same. Clearly you meant something close to what he assumed, rather than meaning what you said.

y0rkiebar
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Re: Cash in SIPP

#671685

Postby y0rkiebar » June 29th, 2024, 9:28 pm

I use the Lyxor CSH2 ETF, a SONIA tracker.

https://www.justetf.com/uk/etf-profile. ... 1230136894
Last edited by y0rkiebar on June 29th, 2024, 9:31 pm, edited 1 time in total.

moorfield
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Re: Cash in SIPP

#671686

Postby moorfield » June 29th, 2024, 9:28 pm

BenValue wrote:At the moment most of my SIPP is in cash earning just over 1 per cent. I don’t want to invest in equities at the moment but would like to get a better interest return but with no risk.

Is there anything risk free to capital that I could invest in the SIPP which would give me interest in excess of 4 per cent?



Well the most risk free to capital and liquid thing you can hold is just cash, obviously. What all the above suggestions haven't factored is the transaction costs of swapping in and out of those alternatives. Tot up the costs, stamp duty, commission and that 4% will be whittled away quickly.

But if you insist, I'd add below par preference shares into the mix. My own love/hate booty call here would be RE.B for a year, at 11.3% yield. :twisted:

Urbandreamer
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Re: Cash in SIPP

#671688

Postby Urbandreamer » June 29th, 2024, 10:04 pm

moorfield wrote:Well the most risk free to capital and liquid thing you can hold is just cash, obviously. What all the above suggestions haven't factored is the transaction costs of swapping in and out of those alternatives. Tot up the costs, stamp duty, commission and that 4% will be whittled away quickly.

But if you insist, I'd add below par preference shares into the mix. My own love/hate booty call here would be RE.B for a year, at 11.3% yield. :twisted:


Err, don't preference shares suffer costs i.e stamp duty, commission and platform fees? To be fair, you may already pay the platform fees, however I call foul ignoring them yet claiming others ignored the same for their choices.

Preference shares may be a better choice than a bond ETF, or not. But they both have costs. As has been pointed out, so do holding bonds in a SIPP.

PS, I'm obviously a minority in my view upon capital. Can I recommend the book "When money dies" to make it clear that money is NOT capital. It's a truly depressing book, as so much is taken from personal journals.
https://www.amazon.co.uk/When-Money-Die ... 105&sr=8-1

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Re: Cash in SIPP

#671692

Postby MuddyBoots » June 29th, 2024, 10:36 pm

BenValue wrote: At the moment most of my SIPP is in cash earning just over 1 per cent. I don’t want to invest in equities at the moment but would like to get a better interest return but with no risk.

Is there anything risk free to capital that I could invest in the SIPP which would give me interest in excess of 4 per cent?


Have you considered shopping around different SIPP providers to find one with a better interest rate? Fidelity (who I use for my ISA) currently pay 3.76% AER on cash balances in their SIPP which is a little below your target, but there might be another one out there which is acceptable to you.

https://www.fidelity.co.uk/statutory-an ... your-cash/

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Re: Cash in SIPP

#671697

Postby Dicky99 » June 29th, 2024, 11:38 pm

BenValue wrote:Thank you for all the very useful advice.

I have opened a bit of a can of worms mentioning no risk. I was a bit clumsy in my wording. I simply meant that I wanted to get the same amount of capital out that I put in.


More intellectual willy waving perhaps than a can of worms ;)

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Re: Cash in SIPP

#671887

Postby vand » July 1st, 2024, 9:06 am

Money market fund is the very obvious option here - yielding 3% above inflation and no duration to worry about

Obviously the yield will come down if and when interest rates are lowered in the months ahead, but nobody is expecting a return to negative real rates

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Re: Cash in SIPP

#671895

Postby bots33 » July 1st, 2024, 9:28 am

Hi Ben, appears BestInvest provide the best rates at 4.45% on all balances in a SIPP.

https://www.forbes.com/uk/advisor/inves ... t-on-cash/

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Re: Cash in SIPP

#672229

Postby TallInvestor » July 2nd, 2024, 5:38 pm

Another vote for Short Term Money Market funds. I hold two in my II SIPP.
ROYAL LONDON SHORT TERM MONEY MARKET CLASS Y - ACCUMULATION has grown by 5.49% over the past 12 months.
iShares £ Ultrashort Bond ETF (ERNS.L) pays interest every 6 months and yielded 5.35% over the past year.

These are investments, not savings, so there is always a small risk. The yield is a little higher than short-dated gilts in return for a tiny increase in risk. I use them for any cash that I want to leave in my SIPP or ISAs but cannot think of anything better to invest in.

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Re: Cash in SIPP

#672352

Postby BenValue » July 3rd, 2024, 10:33 am

Hi TallInvestor that looks perfect.

Bots33 that also looks a good suggestion but I don’t live in the UK and changing SIPP provider might be difficult for me

Thank you

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Re: Cash in SIPP

#672375

Postby shaunm » July 3rd, 2024, 12:17 pm

BenValue wrote:Thank you for all the very useful advice.

I have opened a bit of a can of worms mentioning no risk. I was a bit clumsy in my wording. I simply meant that I wanted to get the same amount of capital out that I put in.


Suggest a portfolio of short tem gilts, perhaps maximum maturity of 3 years
Could be some useful "entry points" once the election results are known on Friday

https://www.dividenddata.co.uk/uk-gilts ... -yields.py

ps, most of my own SIPP is within gilts at the present moment (short dated Sept 24 / March 25)
Review your SIPP platform, eg AJ Bell paying reasonable rates on Cash Balances

https://www.ajbell.co.uk/charges-and-ra ... rest-rates

Cash held in a SIPP in drawdown
Cash balance Gross interest rate for this tier only Interest rate (AER) for this tier only
£0–£10,000 3.45% 3.49%
Above £10,000-£100,000 3.95% 4.01%
Above £100,000 4.45% 4.52%

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Re: Cash in SIPP

#673780

Postby CautiousPaul » July 10th, 2024, 11:32 am

Ben: you might want to move your SIPP. For example, AJ Bell would pay you at least 3.2% in a SIPP.

https://www.ajbell.co.uk/charges-and-rates/interest-rates

BenValue
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Re: Cash in SIPP

#673858

Postby BenValue » July 10th, 2024, 7:28 pm

Hi Cautious Paul

I have a Barclays SIPP which I think is paying 1.15 per cent on balances over £10,000.

Moving SIPP provider would be a good idea. However I moved to Spain just before Brexit. Us expats/immigrants are having difficulties opening UK accounts post Brexit. This is made worse because I live in the countryside and so have no proper postal address. Russian mafia types moved next door to me a few months ago and are making life hell. So I may have to move back to civilisation in which case I would get a proper address which would make moving a SIPP account a bit easier.

However in the meantime I have followed some of the great suggestions on this thread.

I have put half the cash in gilts (short dated Sept 24 / March 25)
I have put a quarter in iShares £ Ultrashort Bond ETF (ERNS.L)
The other quarter is mainly cash with a few small share holdings to play with. If the market heads south and looks good value I may invest this in an investment trust like City of London (CTY).

Thanks again for all your help


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