Reply to: How much do you save in your pension each month?

[Fred Bloggs]

Could you please share which investment trusts pay 4% income ?

I invest in Unit Trusts as opposed to Investment Trusts. Take a look at Hargreaves Lansdown website, most of what you need is there. For Income Units Trusts data also Google for "Principal Investment Management White List" something like that........... HTH.

[Andy2]

Now then, I'll try to explain...........

I have been buying income unit trusts for quite sometime in my SIPP, a £1k per month investment. A while ago the trusts were paying about 4% income into my SIPP, rolling up. The capital value today is about 25% less than it was. But......... I'm still getting the same income payments rolling up into my SIPP on those investments each year. The capital value is irrelevant for now. It's only an actual loss if you realise it.
.

Could you please share which investment trusts pay 4% income ?

[expat]

(1) It's not mandatory to lose money in a SIPP, you won't have lost anything in the last year if you moved into cash, gold, absolute return bond funds etc. You just have to do your own research and (2) take your own decisions as you would with any investment.
At least (3) you have more flexibility in a SIPP than an older style personal pension to dabble in all sorts of funds and asset classes.

(4) Take 25% out at 55, (5) draw a pension at 55, and make sure the missus still gets money if you peg it early (I suggest drawdown not annuity). (6) Then you should claw most of it back one way or another. If you die before retirement or just after then there won't have been much point in saving anything anyway - apart from for your kids.
(7) The IR35 thing with company contributions is another big plus.

(8) But I wouldn't put all my eggs in one basket, deffo max out ISAs and pick up some property as well in the next decade or two.
(9) In all of the above it is obviously best to accumulate in a bear market.

All good points.

[GreenerGrass]

It's not mandatory to lose money in a SIPP, you won't have lost anything in the last year if you moved into cash, gold, absolute return bond funds etc. You just have to do your own research and take your own decisions as you would with any investment.
At least you have more flexibility in a SIPP than an older style personal pension to dabble in all sorts of funds and asset classes.

Take 25% out at 55, draw a pension at 55, and make sure the missus still gets money if you peg it early. Then you should claw most of it back one way or another. If you die before retirement or just after then there won't have been much point in saving anything anyway - apart from for your kids.
The IR35 thing with company contributions is another big plus.

But I wouldn't put all my eggs in one basket, deffo max out ISAs and pick up some property as well in the next decade or two.
In all of the above it is obviously best to accumulate in a bear market.

[expat]

Yes having to wait for your pot at 55 is not such an issue when you are 54.

However, imagine paying into a pot for 20 years and being 40 now.

You might want/need that pot, maybe you've fallen on hard times and your house is going to be repossessed or your children have cancer and need to be treated in the USA on a wonder drug that's going to cost £100K, or you want to emigrate and property prices are rock bottom and you could buy a beachside property if you had that cash or a business opportunity with a family member or friend etc etc.

Sorry, locking up money like that for 40 years is madness.

"You might want/need that pot". That is indeed a very good point. You shouldn't lock up money that you might need.

Save (short- or long-term) what you might need. Put the rest into a pension. Not some "pension fund", but a SIPP that you yourself control intelligently.

That doesn't mean that you should look at all your income and say "I might need that". For all you know, you might "need" twice your income.

[TimberWolf]

Talking of endowments. I've got one running and the solicitors haven't mentioned it with regard to my on-going flat sale. Presumably now is not a good time to cash it in (another 10 years left), and presumably you can continue to pay into one even if you don't have a mortgage?

[Fred Bloggs]

Apart from the fact that he is putting all his eggs into a couple of small baskets.
Remember, everyone thought endowments were a sure thing - until they weren't. Everyone thought pensions were a sure thing - until they weren't. People even thought the dollar and the pound were a sure thing once!

When it comes to your money, trust NOBODY, and diversify diversify diversify.

Thanks for the comments. I have other savings and a (25 years) deferred final salary pension too. Along with zero debt. I had endowments and surrendered them about 2/3 of the way in. It was a good decision to do so.

[Fred Bloggs]

As fred said good luck to you... but if you are so good at timing and can guarantee 100% then why don't you leverage up and make millions and millions.

Back in the real world nobody can predict the future and Fred is talking a lot of sense.

But your 100% in the future sounds great. Good luck with that.

Thanks for the comments. My thoughts exactly.

I have got other savings and I have got a safety net of 25 years worth of final salary pension waiting for me too.

Regarding the loss in value of my SIPP over the last year, it really doesn't matter for the reasons I gave above, but also, the loss actually only equates approx to the tax I've saved compared to distributing the cash and putting into ISA's. As I've tried to outline above, a lot of the cash will eventually end up in ISA's anyhow. My SIPP is invested with the UK's finest investment brains i.e. Neil Woodford, Robin Geffen etc... (unit trusts) and whilst they have all lost money the last year, I guess Dim P has also if he/she was honest with us. At the end of the day, a basket of income producing shares is the only reasonable hedge against inflation that there is open to us mere mortals and if blue chip companies ever stop paying dividends then anything else we do really is irrelevant.

[frank size]

I'm quite surprised at the response to this thread. Putting into a pension is a great way to save tax. Those that say "mine has reduced in value etc etc" seem to miss the point that it is a long term investment. when my investments go down my monthly contributions can now just buy more!! And those that think they can't control their investment - speak to an adviser

doh!

[PM-Junkie]

As fred said good luck to you... but if you are so good at timing and can guarantee 100% then why don't you leverage up and make millions and millions.

Back in the real world nobody can predict the future and Fred is talking a lot of sense.....

Apart from the fact that he is putting all his eggs into a couple of small baskets.
Remember, everyone thought endowments were a sure thing - until they weren't. Everyone thought pensions were a sure thing - until they weren't. People even thought the dollar and the pound were a sure thing once!

When it comes to your money, trust NOBODY, and diversify diversify diversify.

[DieScum]

I'll stick to making 100% on property, and then switching to Gold and later commodities and make another 100% in a few years.

As fred said good luck to you... but if you are so good at timing and can guarantee 100% then why don't you leverage up and make millions and millions.

Back in the real world nobody can predict the future and Fred is talking a lot of sense.

But your 100% in the future sounds great. Good luck with that.

[Fred Bloggs]

Good luck, if you can make money like that. I can't, I've tried.

[DimPrawn]

Now then, I'll try to explain...........

I have been buying income unit trusts for quite sometime in my SIPP, a £1k per month investment. A while ago the trusts were paying about 4% income into my SIPP, rolling up. The capital value today is about 25% less than it was. But......... I'm still getting the same income payments rolling up into my SIPP on those investments each year. The capital value is irrelevant for now. It's only an actual loss if you realise it.

Today, because the price of the trust(s) I'm buying is now 25% lower, every unit I buy now pays 5% income, still rolling up in the SIPP. It is possible that the trusts will reduce their dividend yields, however, the best trusts haven't done this in 15 or 20 years or more.

It is my intention to eventually take the 25% tax free capital and put it into ISA's to continue to generate that same 4 to 5% income whilst then drawing that 4 to 5% out of the SIPP as a retirement income on the remaining SIPP capital.

Ofcourse, the real yield is really more than 4 to 5% as I paid absolutely no tax on the money put into the SIPP. The capital value is almost irrelevant as long as the income is being paid.

If the income stream ever stops then we really are doomed and any money has by then become pretty worthless anyway.

Anyone who cannot see the benefit of what is going on here I'm afraid is really, really, dumb IMO.

I can really see the benefit of losing 25% of your money and relying on a dividend stream that's about to dry up and having your money locked in to 55 (no doubt 60 next budget time), and paying the fees every year reducing your growth by several % and relying on a fund manager.

Stop it, I'm crying.

I'll stick to making 100% on property, and then switching to Gold and later commodities and make another 100% in a few years.

[Fred Bloggs]

Now then, I'll try to explain...........

I have been buying income unit trusts for quite sometime in my SIPP, a £1k per month investment. A while ago the trusts were paying about 4% income into my SIPP, rolling up. The capital value today is about 25% less than it was. But......... I'm still getting the same income payments rolling up into my SIPP on those investments each year. The capital value is irrelevant for now. It's only an actual loss if you realise it.

Today, because the price of the trust(s) I'm buying is now 25% lower, every unit I buy now pays 5% income, still rolling up in the SIPP. It is possible that the trusts will reduce their dividend yields, however, the best trusts haven't done this in 15 or 20 years or more.

It is my intention to eventually take the 25% tax free capital and put it into ISA's to continue to generate that same 4 to 5% income whilst then drawing that 4 to 5% out of the SIPP as a retirement income on the remaining SIPP capital.

Ofcourse, the real yield is really more than 4 to 5% as I paid absolutely no tax on the money put into the SIPP. The capital value is almost irrelevant as long as the income is being paid.

If the income stream ever stops then we really are doomed and any money has by then become pretty worthless anyway.

Anyone who cannot see the benefit of what is going on here I'm afraid is really, really, dumb IMO.

[DieScum]

Interesting discussion. While it would be nice to leave stuff for the family I'd much prefer to spend it while I am alive and they can earn it themselves just like everyone else.

I put in a grand a month but I am a permie so get a contribution.