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Q&A » Pensions
I'm 28 years old and have a SIPP where majority of shares and trackers are doing surprisingly well. Which made me think - understand this is a 'fluffy' question - at what point do you sell considering I've got so many years left to build up my pension.
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272You don't sell, ever if you can help it. Provided your shares are still performing well, and you expect them to keep doing so for the foreseeable future, then why sell them? They will keep growing in value inside your SIPP until you retire, when you can cash them in and buy a bigger annuity. If you sell them, you have to pay dealing fees and stop getting the capital gains.
If you think any of them are likely to start performing badly, then you should consider selling, but only if you plan to invest the proceeds in something else that you think will perform better over time.
Posted on 19 March 2010 |
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41Thanks Swarbs for your advice. I suppose the return seems too good to be true so instinct is to sell even though I'm in it for the long run - but I'll hold tight.
Posted on 19 March 2010 | Love 0 loves
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410You could consider selling if some shares have gone up abnormally. So if you originally had say 10 shares with equal amounts but 2 of them have gone up so much that they now account for say 50% of the value of your SIPP, then you could consider selling say half of each and investing the money in 2 more shares.
But if most shares are up because the market is up, then just relax . If you sell now and markets fall back, you will think you are a genius, but if they go on up, or stay static for a while then go up, you will have lost out. Trying to 'time' the market like this rarely works even for experienced investors.
There will be periods in the next 30 years when they don't all do brilliantly, so when that happens, try to remember the good times :)
manzanilla
Posted on 19 March 2010 | Love 1 love
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804The market has been through 2 major corrections recently. It over-reacted to the crash and then recovered to a much more equitable level.
If you caught the second stage then you were lucky in your timing. There is no need to change anything. You refer to trackers as having done just as well which should tell you that you haven't got any particular shares overheating.
You have another 40 years to go before State Pension Age in this country, if there are no further changes before then. I expect it to reach 70 before you do, by the way.
In 40 years, you will see many peaks and troughs. You have so much time to iron out those, so don't worry about them for now. There is a procedure called 'Lifestyling' which locks in gains over the last 5 years before retirement in case of a crash just before. I would recommend that unless you are going on to income drawdown.
Lifestyling is a switch of 25% of your fund to Cash funds over the last 5 years to fund the tax-free cash sum and 75% to bonds at the same time for the annuity portion. If going into drawdown, only do the 25% portion.
Obviously, if certain shares are a problem then switch them, but not as a general rule.
Mike
Posted on 19 March 2010 | Love 0 loves
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6Great question. Simply put, you should only sell if any of the following apply
1) The thought of losing the gain is keeping you awake at night?
2) You don't believe that by the time you retire the stockmarket will be higher than it is now?
3) You have a better (lower risk / higher reward) idea of what to do with the money?
The problem with 'taking your gain' is that even if there is a correction, unless you are very careful, you end up not getting back in 'because I might lose more money now the market is going down'. Most people are expecting a correction, which could well mean it won't happen (the majority are always wrong by definition - it's how markets work). If there is no correction you will have a harder time getting back in (as you concern will just get greater.
If in doubt, do nowt.
K6
K6
Posted on 20 March 2010 | Love 1 love
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41Thanks all for your answers, @K6pilor, none of your three points apply :) Thanks that made it a lot clearer.
Posted on 22 March 2010 | Love 0 loves
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