Thanks for all your hard work Dianne I always like watching and learning from your tutorials. As for Reeves being the chancellor I reckon you'd do a much better job than she is doing at the moment.
Great video, I have not had bonds for years, I changed my works pension fund so it did not include them. Retired 2 years ago at 55 and still stay away from them, have more money than when I finished. I am happy living on the same salary as when I worked and all great so far. January the best investing month for me ever 🙂
Something should be done about pension funds automatically moving into lifestyling when nearing retirement. It's an outdated concept from when most of us took annuities out. These days, most people will stay invested for 20+ years after retirement and go into phased drawdown. There's no need to derisk into bonds if you keep 2/3 years of living expenses in high interest easy access accounts.
I'd agree with this, it's a financial scandal that will materialize sooner or later. I prefer a SIPP to life styling. I know employers contribute nowadays, generally only to their own scheme because they can't be bothered with additional admin, but the answer is to move money annually by making a partial transfer from a works provider to one's SIPP - most will allow it.
@@porschecarreras992cabriole8I disagree, you'd be lucky to find a workplace provider that permits that kind of choice or has access to a sufficiently wide range of funds. Been in a SIPP for years - highly recommend.
Those on the cusp of retirement with a high % in gilts may also be pleased rather than concerned. Annuities saw a huge % increase in uptake of late to benefit from the yields.
As bond yields are currently higher than usual and the Bank of England is expected to lower interest rates, it is likely that bond yields will decrease alongside interest rates, causing the price of existing bonds to rise. Additionally, the Bank of England operates a programme through Open Market Operations (OMO) to purchase government bonds, aiming to align bond yields with its interest rate policy.
You may be asking about a fund holding gilts rather than gilts, which instruments behave in different ways. Both decrease in value as interest rates rise, but gilts can be held to maturity to get your money back. With funds the value changes over time as the holdings rotate, but that's a slow process. Alternatively, the value would go up if interest rates fall significantly.
Thing about big cap big tech is that those companies don’t have debts, are cash rich, cashflow CAGRat 25% and, everyone uses them even in wars and stock market turbulence. Probably more.
Interesting, I just moved from 70/30 to 50/50 yesterday, as age 63 in May and concerned about growing sequence of returns risk with volatility in shares market which is overpriced and likely to revert to mean……time will tell. 😂
Agree. First thing anyone should do with a works pension is set their retirement age to 74 and put everything in the ‘number one’ fund (of funds) which will be mostly equities. The nature of it being a pension fund means that (relative to completely managing your own portfolio of shares ) it’s low-ish risk anyway. Anything beyond that re choosing gets ridiculous because unlike buying ETFs in your SIPP etc pension fund providers tend to be rather opaque about their funds and the blasted things are all funds of funds within funds.
In theory correct. In practice the cash rates are a tiny, fraction above short term and long end of the Gilt curve . The highest offered on fixed is 5.12% as I write:Then you have tax on cash interest. If bond yields in the US and U.K. are hiked again or the markets drive them, the equity markets will collapse. Cash is safety only because of inflation makes the real rate negative. Forget the CPI, most people have rents or mortgages as 50% of their gross income . Rents have increased by 9%++++. Housing should be inputted as a factor ir the simple reason that you may be getting 5%- tax - 9% going out in rent expenses- 2.5% CPI ( but thats fudged).
This is the best explanation I've ever heard, clear, concise.. Thank you
Thanks for great clarification Dianne
Thanks for all your hard work Dianne I always like watching and learning from your tutorials. As for Reeves being the chancellor I reckon you'd do a much better job than she is doing at the moment.
Praise indeed! (Although I think I’ll pass on the Chancellor job lol)
@@DianneSullivan lol haha
Glad you're back on the finance as your last two videos went off the beaten track a bit for me as I've no immediate intention of leaving the UK.
Great video, I have not had bonds for years, I changed my works pension fund so it did not include them. Retired 2 years ago at 55 and still stay away from them, have more money than when I finished. I am happy living on the same salary as when I worked and all great so far. January the best investing month for me ever 🙂
Great overview, well explained thanks
Thank you for clarifying bond strategies.
Something should be done about pension funds automatically moving into lifestyling when nearing retirement. It's an outdated concept from when most of us took annuities out.
These days, most people will stay invested for 20+ years after retirement and go into phased drawdown. There's no need to derisk into bonds if you keep 2/3 years of living expenses in high interest easy access accounts.
I'd agree with this, it's a financial scandal that will materialize sooner or later. I prefer a SIPP to life styling. I know employers contribute nowadays, generally only to their own scheme because they can't be bothered with additional admin, but the answer is to move money annually by making a partial transfer from a works provider to one's SIPP - most will allow it.
@@guymartinwicksnot really. Just stay in workplace provider and choose your own ETFs away from life styling. As easy as that!
@@porschecarreras992cabriole8I disagree, you'd be lucky to find a workplace provider that permits that kind of choice or has access to a sufficiently wide range of funds. Been in a SIPP for years - highly recommend.
I agree - I've made a previous video on just this subject in case you haven't seen it.
ua-cam.com/video/WEg871kkqss/v-deo.html
Thanks for commenting
Those on the cusp of retirement with a high % in gilts may also be pleased rather than concerned. Annuities saw a huge % increase in uptake of late to benefit from the yields.
As bond yields are currently higher than usual and the Bank of England is expected to lower interest rates, it is likely that bond yields will decrease alongside interest rates, causing the price of existing bonds to rise. Additionally, the Bank of England operates a programme through Open Market Operations (OMO) to purchase government bonds, aiming to align bond yields with its interest rate policy.
What would need to happen for uk gilts sitting at -35% to return to previous levels ?
A miracle?
Interest rates must fall
You may be asking about a fund holding gilts rather than gilts, which instruments behave in different ways. Both decrease in value as interest rates rise, but gilts can be held to maturity to get your money back. With funds the value changes over time as the holdings rotate, but that's a slow process. Alternatively, the value would go up if interest rates fall significantly.
@@jauld360 thanks ! I’m wondering if drip feeding it back into a global index might be better but this means crystalising the losses
@@DKNW62cut losers, run winners. You’re not crystallising a loss if you reinvest, only if you go to cash and stay in cash.
🔥🔥🔥
Thing about big cap big tech is that those companies don’t have debts, are cash rich, cashflow CAGRat 25% and, everyone uses them even in wars and stock market turbulence. Probably more.
Why would you own Gilts with a Labour government? Borrow borrow tax tax………might be a good time to buy an annuity if that’s your end game….
Interesting, I just moved from 70/30 to 50/50 yesterday, as age 63 in May and concerned about growing sequence of returns risk with volatility in shares market which is overpriced and likely to revert to mean……time will tell. 😂
I have zero bonds and zero life styling. I am all growth (full of stocks) ready for a long drawdown
Agree. First thing anyone should do with a works pension is set their retirement age to 74 and put everything in the ‘number one’ fund (of funds) which will be mostly equities. The nature of it being a pension fund means that (relative to completely managing your own portfolio of shares ) it’s low-ish risk anyway. Anything beyond that re choosing gets ridiculous because unlike buying ETFs in your SIPP etc pension fund providers tend to be rather opaque about their funds and the blasted things are all funds of funds within funds.
In theory correct. In practice the cash rates are a tiny, fraction above short term and long end of the Gilt curve . The highest offered on fixed is 5.12% as I write:Then you have tax on cash interest. If bond yields in the US and U.K. are hiked again or the markets drive them, the equity markets will collapse. Cash is safety only because of inflation makes the real rate negative. Forget the CPI, most people have rents or mortgages as 50% of their gross income . Rents have increased by 9%++++. Housing should be inputted as a factor ir the simple reason that you may be getting 5%- tax - 9% going out in rent expenses- 2.5% CPI ( but thats fudged).
Equity markets that are currently delivering more than 15% are not going to collapse if bond rates go up 0.5%.
your hair looks nice here