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After Armageddon- cash in SIPPS and ISAs?
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After Armageddon- cash in SIPPS and ISAs?
I really think far too many people are thinking this will all be over soon and life will return to normal, and the markets will rocket.
But listening especially to some US mainstream programmes it seems to me nobody is fully appreciating how bad this could get. Think food ABSENCE not just shortages of beans and bog roll. Think armed militia in the streets in the US. Think State v State not USA (we are already there in Europe).
So, my question to all, is how safe are funds in S&S ISAs and SIPPs? I know in theory that shares and ETFs and ITs should all be fine, but what about cash? I thought, though may be wrong, that the FSCS scheme does not apply to cash in these things, but there is a £25k or something protection.
I have been careful with my cash savings to keep below the £85k limit for FSCS compensation if a bank goes bust, but have shares worth well over that (actually, maybe not, now!) in our ISAs and especially in our SIPPs of which we have only 2, with AJ Bell, which hold our entire pensions, but also, crucially 2 ISAs also, even now worth way more than £85k between them, for each of us.
I want to go to cash, but is this less safe than sticking with shares even though I can see another 50% down from here? I was thinking of just buying a shitload more gold ETF and VGOV and VUTY (UK and US treasuries), but is even that safe in an ETF?
Hope this is in the right forum - I am perpetually confused where to post these types of thread!
SB
But listening especially to some US mainstream programmes it seems to me nobody is fully appreciating how bad this could get. Think food ABSENCE not just shortages of beans and bog roll. Think armed militia in the streets in the US. Think State v State not USA (we are already there in Europe).
So, my question to all, is how safe are funds in S&S ISAs and SIPPs? I know in theory that shares and ETFs and ITs should all be fine, but what about cash? I thought, though may be wrong, that the FSCS scheme does not apply to cash in these things, but there is a £25k or something protection.
I have been careful with my cash savings to keep below the £85k limit for FSCS compensation if a bank goes bust, but have shares worth well over that (actually, maybe not, now!) in our ISAs and especially in our SIPPs of which we have only 2, with AJ Bell, which hold our entire pensions, but also, crucially 2 ISAs also, even now worth way more than £85k between them, for each of us.
I want to go to cash, but is this less safe than sticking with shares even though I can see another 50% down from here? I was thinking of just buying a shitload more gold ETF and VGOV and VUTY (UK and US treasuries), but is even that safe in an ETF?
Hope this is in the right forum - I am perpetually confused where to post these types of thread!
SB
Re: After Armageddon- cash in SIPPS and ISAs?
If the situation is really that bad - and there is almost certainly a degree of media hype - then one might wonder if the FSCS protection would really be honoured when needed.
I have always kept 75% of my net worth in cash. Of the remaining 25% on the market, around 9% is in bonds and physical gold, thereby effectively limiting worst case loss (hopefully temporary) to around 10% of net wealth. Psychologically this is easier to handle in stress conditions like now.
I have always kept 75% of my net worth in cash. Of the remaining 25% on the market, around 9% is in bonds and physical gold, thereby effectively limiting worst case loss (hopefully temporary) to around 10% of net wealth. Psychologically this is easier to handle in stress conditions like now.
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Re: After Armageddon- cash in SIPPS and ISAs?
Answering my own question, in case anyone is interested.
I was right that the cash compensation limit was £25k, but not anymore, as it was raised to the full £85k (maybe more at next review, with recent falls in the £!) last April.
So, assuming the FSCS is fully solvent there should be little issue, other than the usual one of where the money is held and whether you end up with multiple sums in affiliated banks which share a license. This is especially an issue with the whole Lloyd’s group, which includes Halifax and about 20 other entities.
Shares are owned by us, so the only real risk there is the share failing, as was ever so.
I was right that the cash compensation limit was £25k, but not anymore, as it was raised to the full £85k (maybe more at next review, with recent falls in the £!) last April.
So, assuming the FSCS is fully solvent there should be little issue, other than the usual one of where the money is held and whether you end up with multiple sums in affiliated banks which share a license. This is especially an issue with the whole Lloyd’s group, which includes Halifax and about 20 other entities.
Shares are owned by us, so the only real risk there is the share failing, as was ever so.
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Re: After Armageddon- cash in SIPPS and ISAs?
You got your backside handed to you for doom mongering in your other post about banks failing I notice, some of those comments apply here. Let's not make a bad situation worse. This isn't the end of civilisation, it is a short sharp interruption. There are glimmers of hope already appearing in China, we are 2-3 months behind them on the curve so it isn't unreasonable to expect that we can ride it out without Armageddon.
Pull yourself together!
Pull yourself together!
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Re: After Armageddon- cash in SIPPS and ISAs?
I know in theory that shares and ETFs and ITs should all be fine
Up to a point, Lord Copper. ITs, of course, are potentially subject to much wider swings than open ended funds, but you knew that. And with ETFs, a wide divergence can arise between physical and synthetic funds. As I found out in 2008.
The fund in question was based on one of the innumerable MSCI indices, and the counterparties included the second largest reinsurance group in the world. Which was AIG.
......Which found itself temporarily insolvent amid the general panic. For two anxious weeks, until the Fed launched a rescue package, the fund was untradeable. Fortunately there was never much doubt that the rescue would come through, but it wasn't a good two weeks.
Would the FSCS pay up if the financial world went completely down the plughole? Would even a physical fund do the right thing by you? Would your Perth mint certificates be reliable if Australia descended into Mad Max territory? We can't know. But I have this feeling that keeping your cash safe would be the least of your worries if the hunger apocalypse really became a reality. Until then, there's really no point in worrying about it.
BJ
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Re: After Armageddon- cash in SIPPS and ISAs?
monabri wrote:The limit is for losses upto £85k. This thread might be of interest
viewtopic.php?p=291596#p291596
For cash the limit is £85K of deposits per banking institution your SIPP/ISA broker is keeping your cash in, less your other deposits with each banking institution.
See viewtopic.php?f=26&t=13044, an email exchange I had with IWeb on exactly this matter (you have to read all of the thread to get to the bottom of it...).
Note the thread is from 2018 and also refers to £50K FSCS cover for investments, which was increased to £85K in April 2019. The limit for cash was increased from £75K to £85K in January 2017.
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Re: After Armageddon- cash in SIPPS and ISAs?
Well said bluedonkey
I think the big problem is the aftermath. Even when life returns to some normality, there is bound to be a very big hangover certainly in the financial markets whilst everything that is being done now is slowly unwound. Furthermore, if and when dividends are cut I wonder how long it will take for them to return to their previous levels?
The Times today for the first time since this crisis got underway has a few much more optimistic articles about how long the real crisis will last. No one is suggesting that it will not be a severe and unpleasant few months but it will not last for ever. The modellers apparently who predicted up to 250,000 people dying are the same from Imperial College who got things so very far wrong with the Foot and Mouth outbreak some years back.
So nil desperandum.
Dod
I think the big problem is the aftermath. Even when life returns to some normality, there is bound to be a very big hangover certainly in the financial markets whilst everything that is being done now is slowly unwound. Furthermore, if and when dividends are cut I wonder how long it will take for them to return to their previous levels?
The Times today for the first time since this crisis got underway has a few much more optimistic articles about how long the real crisis will last. No one is suggesting that it will not be a severe and unpleasant few months but it will not last for ever. The modellers apparently who predicted up to 250,000 people dying are the same from Imperial College who got things so very far wrong with the Foot and Mouth outbreak some years back.
So nil desperandum.
Dod
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Re: After Armageddon- cash in SIPPS and ISAs?
Should I be stockpiling packets of vegetable seeds?! (GYO). Grow your own.
I presume cash held one's ISA alongside shares would be included on the £85K limit, if one's broker collapsed.
I presume cash held one's ISA alongside shares would be included on the £85K limit, if one's broker collapsed.
Re: After Armageddon- cash in SIPPS and ISAs?
So with "food absence" you are expecting a functioning cash economy. If people don't eat for a week, you are reduced to bartering with whatever you can stop people taking from you. Your shares will be worthless to you, your cash will be worthless to you.
Let's be realistic, absolute worst case scenario here is a percentage of old and infirm people will die from this each year. The world will adapt to this, cash will trickle down the generations, housing will become cheaper, some sectors such as care homes will shrink others will take their place.
Let's be realistic, absolute worst case scenario here is a percentage of old and infirm people will die from this each year. The world will adapt to this, cash will trickle down the generations, housing will become cheaper, some sectors such as care homes will shrink others will take their place.
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