5 year drawdown fund
Posted: June 20th, 2018, 5:30 pm
(So I went to the MF site and you'd all moved, I should really try and keep up with these things....)
Today is a big day - After 20 years of relatively successful investing I've sold all the equities in my (Youinvest) SIPP and am now looking at what to do with the resulting pile of cash.
Why ? - I'm moving into FIRE range and I'm not going to let anything endanger it. The most recent spate of trade disputes has been the final straw. The downside risk has become too great.
The plan - I have a couple of DB schemes that will kick in at 60 (lucky me) followed by state pension at 67. The SIPP will be used to bridge the gap between 55 and 60. After taking a tax free lump sum I will be left with around £200K which I'll take as drawdown of £40K per year over 5 years starting this time next year.
The problem - What do I do with the cash in the 1-5 years until I need it for drawdown ? It has to be very low risk, which precludes equities in any form. Gilt yields are at historic lows but are at least safe when held to redemption. Corporate bonds, particularly those held to maturity are an option. Short dated bonds ETFs could be the answer.
Help please - What have others done in this situation, what have I missed ?
Thanks
Ø3
Today is a big day - After 20 years of relatively successful investing I've sold all the equities in my (Youinvest) SIPP and am now looking at what to do with the resulting pile of cash.
Why ? - I'm moving into FIRE range and I'm not going to let anything endanger it. The most recent spate of trade disputes has been the final straw. The downside risk has become too great.
The plan - I have a couple of DB schemes that will kick in at 60 (lucky me) followed by state pension at 67. The SIPP will be used to bridge the gap between 55 and 60. After taking a tax free lump sum I will be left with around £200K which I'll take as drawdown of £40K per year over 5 years starting this time next year.
The problem - What do I do with the cash in the 1-5 years until I need it for drawdown ? It has to be very low risk, which precludes equities in any form. Gilt yields are at historic lows but are at least safe when held to redemption. Corporate bonds, particularly those held to maturity are an option. Short dated bonds ETFs could be the answer.
Help please - What have others done in this situation, what have I missed ?
Thanks
Ø3