Credit deflation and the reflation cycle to come (part 2)

[Kudukid]

2 hours ago, DurhamBorn said:

I had one for 10 years at GSK and didnt even have to pay into it,when the redundancies came on they decided to boost the pension pots by 40% if you took redundancy.I knew that was a fantastic deal,the redundancy money was crap (£12k for 10 years),but i took their hands off due to pension.Roll forward to now and the transfer value is 43 times yearly pension,crazy numbers,im doing the transfer now (15 year gilt rates should be close to bottom fof the cycle).One guy i worked with there did 25 years and got the boost back then,he has just done the transfer and got half a mill.He worked on a packaging line.

I can see the door being slammed shut soon on transfers because the numbers are crazy.

DB pensions were never that common really,though if you got in a blue chip company you got one,they seemed to end new people joining in the mid 90s,Brown killed them off though with his massive tax raid to fund tax credits.

Hi Durhamborn, 

I have read this thread every day since tos, it is surely the best thread on the web and I thank you all who contribute.

I have never said anything because I have nothing to add and the reason I have posted now is due to the pension discussion.

I have a 300k pot with a major defence company and have been thinking about transferring out, I know somebody who did and it got their pot tax free due to the double tax treaty with Saudi, where I work.

Could you please elaborate on how the pot is enhanced from a db pension.

 

Thanks again.

 

[Harley]

Seems a perfect time to look at a few (longer term) monthly charts n'est pas?

Wish I could find that excellent post a while back which had that standard classification for a market stage (1 to n) so we could more easily standardise opinions.

Please tell me to stop posting if this is just clutter (else please chip in!), but starting with the FTSE:

Not the clearest to start with!  A right basket case compared to glory that is the S&P!  Up about 9% from the major low a year ago.  On this set of technicals, arguably looking toppy on the daily and weekly and getting there on the monthly.  But could just be pausing before a further run up.  Clearly, the three previous highs seem to have acted as a support zone for the Dec'18 low.  But the run up in price from say Sep'11 has been matched by an overall flat MACD which is arguably not a sign of great strength.  I would be salivating if we were seeing bottoms in the MACD, RSI and Stochastics as per previous sustained run ups but we aren't, unless we are indeed in a pause and that run up started in Dec'18.  Inverted head and shoulders chart pattern anyone?  Fundamentally though, it would be nice to think this market has a chance, post Brexit, to play catchup with some international inflows but there's a lot else going on out there. 

[DurhamBorn]

26 minutes ago, Kudukid said:

Hi Durhamborn, 

I have read this thread every day since tos, it is surely the best thread on the web and I thank you all who contribute.

I have never said anything because I have nothing to add and the reason I have posted now is due to the pension discussion.

I have a 300k pot with a major defence company and have been thinking about transferring out, I know somebody who did and it got their pot tax free due to the double tax treaty with Saudi, where I work.

Could you please elaborate on how the pot is enhanced from a db pension.

 

Thanks again.

 

Hi Kudukid,its a very complex area and down to each individual and their circumstance etc.Its not that they are enhanced,the trustees have to give you what it would cost to buy the same pension in the open market,so in that way the transfer value is always the same as not doing a transfer.It comes down to if you think gilts are likely to go up or down going forward,if your married,if you want a spouse pension,if you have other sources of income,if you prefer the capital and the risk,if you would rather have more risk but leave capital to kids etc.There is no set answer for any individual.For myself,my transfer value means i break even if i live to 102 and under perform inflation by 0.9% a year,thats under perform inflation.I think i can do better than that so i am doing the transfer.I dont need a spouse pension though,my partner has her own final salary council pension and other investments iv built her up.I also have 3 children so having it in my SIPP means i can leave my partner some (she wont need anything,but im leaving her enough so she can sell her house she rents out,add what i leave her to it,then buy my house from my kids,if that makes sense).Her house is worth about £50k less than mine,so il leave her £50k,means she doesnt have to move,has a better house and my kids dont lose out.She is leaving me 50% of her council pension if she goes first.

As you can imagine being un-married im also already in inheritance tax nearly so a SIPP means i can tax plan much better.I pretty much keep the inheritance tax level in ISAs/funds and the rest in my SIPP,that way if i die before 75 my estate will pass tax free.At 68 il set up a trust and move assets in there (7 year rule etc).

Its a very complex subject and this thread cant talk general,but cant go into specifics,the only thing is if you do transfer use a high quality IFA,youl get a high fee,but wont get put into car parks in Somalia or storage pods in the West Indies.

 

[Bricks & Mortar]

14 minutes ago, Harley said:

Please tell me to stop posting if this is just clutter (else please chip in!), but starting with the FTSE:

Not able to chip in.  But very interested in your thoughts and information.  Maybe, if I pay attention, I'll be able to pitch in one day.

[DurhamBorn]

@Harley interesting how it plays out with sterling gaining 8%,its already up nearly 3% and dollar down 1.5%.Off to the cinema,have to keep the other half happy £5 to get in)

[Castlevania]

With regards to SIPP’s if it gets passed down to your children when you die, does it just get added to their own pension pots or can they get it as cash?

[DoINeedOne]

No thought as i have not even started ladders with oil yet but just sharing from a magazine

 

[sleepwello'nights]

4 hours ago, DurhamBorn said:

.Roll forward to now and the transfer value is 43 times yearly pension,crazy numbers,im doing the transfer now (15 year gilt rates should be close to bottom fof the cycle).

Now I'm confused. In earlier posts you mention that Bonds are likely to fall along with shares.

Isn't a Gilt just a bond issued by a Government? So I thought you were thinking they were likely to fall in value. More so if interest rates increased as the return on cash or near cash investments would rise.

Looking at the Vanguard holdings of Gilts that I've currently got the inflation linked gilts have fallen since August but the non index linked have maintained their price. I know its because I topped up my inflation linked holdings so whoever's watching me decided it was a good time to sell 

[Sound Money]

1 hour ago, sleepwello'nights said:

Now I'm confused. In earlier posts you mention that Bonds are likely to fall along with shares.

Isn't a Gilt just a bond issued by a Government? So I thought you were thinking they were likely to fall in value. More so if interest rates increased as the return on cash or near cash investments would rise.

Looking at the Vanguard holdings of Gilts that I've currently got the inflation linked gilts have fallen since August but the non index linked have maintained their price. I know its because I topped up my inflation linked holdings so whoever's watching me decided it was a good time to sell 

I believe he’s saying rates are bottoming and will go up in the next cycle, meaning capital value of gilts/bonds will go down - the capital value moves inversely to the rate.

Quick reminder to all that good health is more important than money and investments. Ive had a first hand bad reminder of this lately

But happy new year and thank you to all the posters!

[BadAlchemy]

2 hours ago, DoINeedOne said:

No thought as i have not even started ladders with oil yet but just sharing from a magazine

Interesting article... thanks for sharing.

I am a little confused about RDSA vs RDSB when buying Shell and am hoping one of you chaps here could briefly explain/recommend which one to get? I found something explaining that RDSA is the original Dutch listed company and therefore subject to Dutch withholding taxes ( presumably not an issue inside a SIPP), whereas RDSB is UK listed? Both are available to deal in GBP on Hargreaves Lansdown. I was thinking RDSB would be the 'correct' one to buy as it gets mentioned here more than RDSA? I would be adding some to my SIPP initially but might also add some to an SS ISA at some point.

[Lavalas]

1 hour ago, Sound Money said:

I believe he’s saying rates are bottoming and will go up in the next cycle, meaning capital value of gilts/bonds will go down - the capital value moves inversely to the rate.

Quick reminder to all that good health is more important than money and investments. Ive had a first hand bad reminder of this lately

But happy new year and thank you to all the posters!

I can vouch for this too and I really hope you’re ok.

Not really been contributing because the last 4 months have (nearly) been worst nightmare health wise. Looking like things might be ok now. Funny though as it massively stiffens ones resolve to make sure things are ok for loved ones but also reminds you none of this shït matters either. 

Happy New Year everyone. Thanks to you all and here’s to a prosperous future for us 

[Bobthebuilder]

8 minutes ago, BadAlchemy said:

Interesting article... thanks for sharing.

I am a little confused about RDSA vs RDSB when buying Shell and am hoping one of you chaps here could briefly explain/recommend which one to get? I found something explaining that RDSA is the original Dutch listed company and therefore subject to Dutch withholding taxes ( presumably not an issue inside a SIPP), whereas RDSB is UK listed? Both are available to deal in GBP on Hargreaves Lansdown. I was thinking RDSB would be the 'correct' one to buy as it gets mentioned here more than RDSA? I would be adding some to my SIPP initially but might also add some to an SS ISA at some point.

RDSA divis are paid in Euros, RDSB £s.

When i first bought some years ago i bought RDSA not knowing the difference, still got them though.

[leonardratso]

i can only by the RSDB's in lloyds (aka halifax), so ive started on those, very small alloc, will watch it and collect divis while i wait.

[sleepwello'nights]

14 minutes ago, BadAlchemy said:

 I found something explaining that RDSA is the original Dutch listed company and therefore subject to Dutch withholding taxes ( presumably not an issue inside a SIPP), whereas RDSB is UK listed? 

That's it. Its explained on the Shell website.https://www.shell.com/investors/retail-shareholder-information/information-on-shares.html

[sleepwello'nights]

1 hour ago, Sound Money said:

I believe he’s saying rates are bottoming and will go up in the next cycle, meaning capital value of gilts/bonds will go down - the capital value moves inversely to the rate.

 

Yes, get it now. I was just focussing on capital values, and of course the capital value will fall as the required yield changes. So to match the DB pension return will mean a lower capital value will be needed.

Thanks. Hope you're recovering.

[Democorruptcy]

3 hours ago, Castlevania said:

With regards to SIPP’s if it gets passed down to your children when you die, does it just get added to their own pension pots or can they get it as cash?

HL info:

https://www.hl.co.uk/retirement/preparing/tax-matters/what-happens-when-i-die

 

[DurhamBorn]

4 hours ago, sleepwello'nights said:

Now I'm confused. In earlier posts you mention that Bonds are likely to fall along with shares.

Isn't a Gilt just a bond issued by a Government? So I thought you were thinking they were likely to fall in value. More so if interest rates increased as the return on cash or near cash investments would rise.

Looking at the Vanguard holdings of Gilts that I've currently got the inflation linked gilts have fallen since August but the non index linked have maintained their price. I know its because I topped up my inflation linked holdings so whoever's watching me decided it was a good time to sell 

When bonds fall yields go up,when yields go up transfer values go down.When GSK were giving me a 2/3rds final salary pension rates were over 7% they are now around 1%.GSK promise me £5k a year,to buy that now insurance companies base it on 1% yields,GSK promised it on 7%+ yields.So if yields rise transfer values will fall.Given they take cycles to play out iv decided now is the time to make a move (plus door might be slammed shut)

[DurhamBorn]

5 hours ago, Castlevania said:

With regards to SIPP’s if it gets passed down to your children when you die, does it just get added to their own pension pots or can they get it as cash?

Depends on age,if 75 or below they can cash them in,get the money tax free and it isnt added to inheritance tax at all.If your over 75 then they can cash it and pay tax at their top rate,or transfer into a pension themselves (provider will simply add their names on,or if more than one,split and add seperate names on) and then withdraw whenever,again paying tax at their top rate,so better to leave as and take when tax suits.You can also transfer into a pension if below 75,but better to take the tax free lump sum then and instead pay back in from their earnings,as theyl then get the tax relief etc.

[Sound Money]

2 hours ago, BadAlchemy said:

Interesting article... thanks for sharing.

I am a little confused about RDSA vs RDSB when buying Shell and am hoping one of you chaps here could briefly explain/recommend which one to get? I found something explaining that RDSA is the original Dutch listed company and therefore subject to Dutch withholding taxes ( presumably not an issue inside a SIPP), whereas RDSB is UK listed? Both are available to deal in GBP on Hargreaves Lansdown. I was thinking RDSB would be the 'correct' one to buy as it gets mentioned here more than RDSA? I would be adding some to my SIPP initially but might also add some to an SS ISA at some point.

I did some quick searching when I bought it and it seemed in most circumstances RDSB is the best to go for, for tax withholding and dividend reasons. That’s what I bought. Happy to hear others more detailed thoughts as well

[MrXxxx]

8 hours ago, Harley said:

Seems a perfect time to look at a few (longer term) monthly charts n'est pas?

Wish I could find that excellent post a while back which had that standard classification for a market stage (1 to n) so we could more easily standardise opinions.

Please tell me to stop posting if this is just clutter (else please chip in!), but starting with the FTSE:

Not the clearest to start with!  A right basket case compared to glory that is the S&P!  Up about 9% from the major low a year ago.  On this set of technicals, arguably looking toppy on the daily and weekly and getting there on the monthly.  But could just be pausing before a further run up.  Clearly, the three previous highs seem to have acted as a support zone for the Dec'18 low.  But the run up in price from say Sep'11 has been matched by an overall flat MACD which is arguably not a sign of great strength.  I would be salivating if we were seeing bottoms in the MACD, RSI and Stochastics as per previous sustained run ups but we aren't, unless we are indeed in a pause and that run up started in Dec'18.  Inverted head and shoulders chart pattern anyone?  Fundamentally though, it would be nice to think this market has a chance, post Brexit, to play catchup with some international inflows but there's a lot else going on out there. 

This would be a perfect time (if you or another didn't mind) to use this figure to explain a few basics of charting, nothing in depth, perhaps just what each of the three below are and what they can tell us :-)

[MrXxxx]

8 hours ago, DurhamBorn said:

l.For myself,my transfer value means i break even if i live to 102 and under perform inflation by 0.9% a year,thats under perform inflation.I think i can do better than that so i am doing the transfer.

Hi DB if you don't mind, can you give me a worked example of this with some numbers (fictional, not your own!) to help me get my head around it?

[DurhamBorn]

54 minutes ago, MrXxxx said:

Hi DB if you don't mind, can you give me a worked example of this with some numbers (fictional, not your own!) to help me get my head around it?

Take the amount they offer you and increase by say 2% a year.Take the amount the pension is each year minus the 25% tax free cash and increase by the first number  +1% and see when the amount added up goes past the first figure.It took my over an hour to work mine out but it came out at 101/102 years old on 43 times earnings.If i could equal inflation it was way out into crazy ages.The key amount is the starting amount ie how many times your annual pension they offer you.

The local government scheme only offers around 18 times and so its far better to stay in the scheme.

There might be a calculator online somewhere that does it but i couldnt find one so i did it myself.

[BadAlchemy]

2 hours ago, Sound Money said:

I did some quick searching when I bought it and it seemed in most circumstances RDSB is the best to go for, for tax withholding and dividend reasons. That’s what I bought. Happy to hear others more detailed thoughts as well

Thanks everyone for all the replies on this. Confirms what I thought to be the case.

[Harley]

3 hours ago, MrXxxx said:

This would be a perfect time (if you or another didn't mind) to use this figure to explain a few basics of charting, nothing in depth, perhaps just what each of the three below are and what they can tell us :-)

Sure, will do, no probs.  Out and about tomorrow but will try later in the day.  Suffice to say for now the three bottom charts are the (slow) stochastic, the MACD, and the RSI.  You can internet search them but I'll explain more, especially the interaction between the first two and price and the potential clues they can give.

[Bear Hug]

On 21/12/2019 at 16:53, BearyBear said:

Dave Hunter is predicting gold reaching $1800+ and silver $26 in Q1...

I think they will both go up but it's unlikely to reach these levels in Q1, especially for silver.

He followed up with some quite specific short term predictions:

https://twitter.com/davehcontrarian?lang=en

Quote

• David Hunter‏ @DaveHcontrarian 10h10 hours ago

  More

  For some reason my reply to you wouldn't send so here's my response:Gold is beginning a rally that will take it to $1800 in 1st Qtr but from there I expect a big decline later in 2020 during the deflationary bust. I am very bullish long-term with a forecast of $10,000+next decade

   
•  

  David Hunter‏ @DaveHcontrarian 31 Dec 2019

  More

  Equity market pullback has begun.I expect we'll see the S&P down to 3000,Dow to 26750 & Nasdaq to 8100 in January.Then we should see the market mount its final parabolic melt-up rally into a secular top. My targets remain S&P 4000,Dow 36,000 & Nasdaq 11,000.Happy New Year to all!

   

   
•  

  David Hunter‏ @DaveHcontrarian 31 Dec 2019

  More

  The US dollar is poised for a big drop here. My target remains 85-86. The commodity currencies, CAD & AUD are poised for big rallies. Euro,GBP & Yen are all starting nice rallies as well. Even the Mexican Peso,Brazilian Real & Russian Ruble are poised for some decent gains vs USD

   
•  

  David Hunter‏ @DaveHcontrarian 30 Dec 2019

  More

  T-bonds & precious metals may be a bit weak this morning but both are poised for nice rallies while equity markets are overbought & ready for a 6-8% correction. My rally targets for gold & silver remain $1800 & $26 respectively. GDX to $45, GDXJ to $70 & SIL to $60.

   
•  

  David Hunter‏ @DaveHcontrarian 23 Dec 2019

  More

  Both T-bonds & the precious metals appear to be ending their corrections & are setting up for nice rallies. This suggests that the equity markets may be nearing a pause.