In my article, Consolidate Your Pension Pots, I mentioned that I had consolidated my wife’s pensions and transferred the funds into a low cost Self Invested Pension Plan (SIPP). This now enables me to invest the proceeds into something meaningful which will blossom over time, hey?
Ummmm. OK, that’s what should have happened. The operative word being INVEST! Now to be clear, that’s not the same as trade. Nothing wrong with trading, I do it. I trade within my own Individual Savings Account (ISA). Nowadays, there is often not much difference in trading costs between a normal trading or ISA account and a SIPP account. Personally though, I believe that trading should not form part of your retirement strategy. Although I do make money trading, I’m not sure I want to gamble away my retirement savings. I prefer to keep my trading and pension investing accounts separate, but that’s just my preference.
Investors do a thorough analysis of a company and INVEST based on long-term growth potential. They understand what the company does and its position in its market. An investor buys a company’s stock with the intent of holding on to the stock for a long time. For that reason, I have no problem with holding company shares within a retirement investment portfolio.
As you can see from the Assets and Liabilities statement below, I had a bad start trying to identify what it was that I actually wanted to invest in. In fact, truth be told, I hadn’t a clue. So I decided to TRADE….
Scroll / slide to see whole spreadsheet
Gold Is Good At The Moment, I’ll Have Some Of That!
In the absence of any inspirational investment decisions, I noticed that gold was back in fashion. Gold prices reached their peek in August 2011. The price reached $1963 per ounce. Today the gold price is $1286 (19 April 2017) after reaching a modern day low point in November 2015 of $1090. Recent political events and fiscal policy tightening by the Federal Reserve bank in the US, has led to a resurgence in the price of gold.
The increased volatility in gold prices makes for a good trading environment and that’s what I did. I bought gold. Now when i say I bought gold here, I didn’t buy physical gold. I bought into a gold ETF which in turn held physical gold. The ETF moved with the price of physical gold and was almost as good as owning actual gold. I also bought into the Blackrock Gold and General Fund which holds shares in gold mining stocks.
The main reason for taking a small position in gold was to cover any potential bigger loses from the portfolio as a whole. In times of trouble, investors switch from risk assets to safe-haven assets such as gold and bonds. I was concerned about over inflated stock market valuations at the time and so used gold to hedge my bets.
Gold itself doesn’t pay dividends or interest. Many people swear by holding gold for the long term. Keeping a small percentage of gold in a diversified portfolio can make sense. However, for me, there is no getting away from the fact that gold just sits there and does nothing to earn real dosh! This is a short term tactical holding….
Final Thoughts On Trading Within A Pension
There is nothing to stop someone using a SIPP account for trading stocks, ETFs, Funds etc. If someone wants to trade or gamble their life savings, it’s their choice (rightly or wrongly). You can see my transactions above and I won’t pretend that I am amazing and never make mistakes or do really stupid things. I won’t hide my mistakes either. In fact, consider me your education.