3% ish Easy Access... At Vanguard!

jimjames

tunde10 said:

drob4 said:

From the Vanguard site:

Changes to the interest we pay you From 20 February we will be changing the way we pay interest. Rather than paying you a variable rate, we’ll pay you a fixed rate of 1.95%. 

We’ll keep any extra interest we receive on your cash above the 1.95% we pay you. 

We’ll review this regularly to make sure the amount of interest you receive is fair and offers good value.

This is why it's sometimes best to keep these things quiet and not reveal it to the masses.

Its no coincidence Vanguard decided on this move after more people became aware.

It's also entirely possible that the terms that were appropriate with a base rate of 0.5% are no longer appropriate for a base rate of 4% and they are updating as a result. The 0.5% (or lower) had been the base rate for the whole time they have been operating their platform in the UK.

cloud_dog

Fecky, fecky, fek, fek.

Will have to wait for Vanguard to confirm what the state of play will be.

Although a transfer back to AJB with their transaction fee and 0.25%, and using CSH2 (thanks for that BTW, will have a look at others also), won't be the end of the world.

EDIT:  CSH2 has got the highest unit price I've seen for a while!

NedS

Vanguard customers could always use their short term money market fund:

https://www.vanguardinvestor.co.uk/investments/vanguard-sterling-short-term-money-market-fund-investor-gbp-income-shares/overview

I've not looked at it closely, but presumably it is paying close to Sonia (which tracks BoE rates), less the low platform fees Vanguard charges to hold funds - which should be broadly equivalent to their interest on cash offer of base rate less fees.

Edit: @cloud_dog last month (Dec), the vanguard fund paid a distribution of £0.0028 (it's an income fund), which annualised is a 3.36% return. For half the month, base rate was 3%, rising to 3.5% in the second half of the month, so expectations would be for a return close to BoE base rate, and Vanguard charge 0.15% platform fees? That looks to be at least as good as their (previous) cash offer?

Swipe

NedS said:

Vanguard customers could always use their short term money market fund:

https://www.vanguardinvestor.co.uk/investments/vanguard-sterling-short-term-money-market-fund-investor-gbp-income-shares/overview

I've not looked at it closely, but presumably it is paying close to Sonia (which tracks BoE rates), less the low platform fees Vanguard charges to hold funds - which should be broadly equivalent to their interest on cash offer of base rate less fees.

Edit: @cloud_dog last month (Dec), the vanguard fund paid a distribution of £0.0028 (it's an income fund), which annualised is a 3.36% return. For half the month, base rate was 3%, rising to 3.5% in the second half of the month, so expectations would be for a return close to BoE base rate, and Vanguard charge 0.15% platform fees? That looks to be at least as good as their (previous) cash offer?

So you have to hold it until the end of Nov to get the distribution? Think I'll stick with my NS&I growth bond and invest what I have left in vanguard on the next decent pullback

GeoffTF

NedS said:

Vanguard customers could always use their short term money market fund:

https://www.vanguardinvestor.co.uk/investments/vanguard-sterling-short-term-money-market-fund-investor-gbp-income-shares/overview

I've not looked at it closely, but presumably it is paying close to Sonia (which tracks BoE rates), less the low platform fees Vanguard charges to hold funds - which should be broadly equivalent to their interest on cash offer of base rate less fees.

Edit: @cloud_dog last month (Dec), the vanguard fund paid a distribution of £0.0028 (it's an income fund), which annualised is a 3.36% return. For half the month, base rate was 3%, rising to 3.5% in the second half of the month, so expectations would be for a return close to BoE base rate, and Vanguard charge 0.15% platform fees? That looks to be at least as good as their (previous) cash offer?

I logged into my account and could not find the money market fund as an option to buy. I could use iWeb.

GeoffTF

Swipe said:

NedS said:

Vanguard customers could always use their short term money market fund:

https://www.vanguardinvestor.co.uk/investments/vanguard-sterling-short-term-money-market-fund-investor-gbp-income-shares/overview

I've not looked at it closely, but presumably it is paying close to Sonia (which tracks BoE rates), less the low platform fees Vanguard charges to hold funds - which should be broadly equivalent to their interest on cash offer of base rate less fees.

Edit: @cloud_dog last month (Dec), the vanguard fund paid a distribution of £0.0028 (it's an income fund), which annualised is a 3.36% return. For half the month, base rate was 3%, rising to 3.5% in the second half of the month, so expectations would be for a return close to BoE base rate, and Vanguard charge 0.15% platform fees? That looks to be at least as good as their (previous) cash offer?

So you have to hold it until the end of Nov to get the distribution? Think I'll stick with my NS&I growth bond and invest what I have left in vanguard on the next decent pullback

Yes, but the capital value increases up to the ex-dividend date, when you become eligible for the dividend (which is taxed as income not a dividend). It then falls by the value of the dividend. If you sell before the ex-dividend, you get a capital gain rather than income, but there will be equalisation. An ETF (e.g. CSH2) might be better. Whatever you do, the tax rules are complicated. Study them carefully or hire an accountant.

Jmc85

GeoffTF said:

NedS said:

Vanguard customers could always use their short term money market fund:

https://www.vanguardinvestor.co.uk/investments/vanguard-sterling-short-term-money-market-fund-investor-gbp-income-shares/overview

I've not looked at it closely, but presumably it is paying close to Sonia (which tracks BoE rates), less the low platform fees Vanguard charges to hold funds - which should be broadly equivalent to their interest on cash offer of base rate less fees.

Edit: @cloud_dog last month (Dec), the vanguard fund paid a distribution of £0.0028 (it's an income fund), which annualised is a 3.36% return. For half the month, base rate was 3%, rising to 3.5% in the second half of the month, so expectations would be for a return close to BoE base rate, and Vanguard charge 0.15% platform fees? That looks to be at least as good as their (previous) cash offer?

I logged into my account and could not find the money market fund as an option to buy. I could use iWeb.

First you need to select “show funds that pay you income”

You can find it in the “fixed income funds” section, under the “global” heading - last one in that list

Stargunner

You can also invest in an OEIC that tracks the overnight Sonia rate. Something  like 
https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/r/royal-london-short-term-money-market-class-y-accumulation

NedS

GeoffTF said:

Swipe said:

NedS said:

Vanguard customers could always use their short term money market fund:

https://www.vanguardinvestor.co.uk/investments/vanguard-sterling-short-term-money-market-fund-investor-gbp-income-shares/overview

I've not looked at it closely, but presumably it is paying close to Sonia (which tracks BoE rates), less the low platform fees Vanguard charges to hold funds - which should be broadly equivalent to their interest on cash offer of base rate less fees.

Edit: @cloud_dog last month (Dec), the vanguard fund paid a distribution of £0.0028 (it's an income fund), which annualised is a 3.36% return. For half the month, base rate was 3%, rising to 3.5% in the second half of the month, so expectations would be for a return close to BoE base rate, and Vanguard charge 0.15% platform fees? That looks to be at least as good as their (previous) cash offer?

So you have to hold it until the end of Nov to get the distribution? Think I'll stick with my NS&I growth bond and invest what I have left in vanguard on the next decent pullback

Yes, but the capital value increases up to the ex-dividend date, when you become eligible for the dividend (which is taxed as income not a dividend). It then falls by the value of the dividend. If you sell before the ex-dividend, you get a capital gain rather than income, but there will be equalisation.

The Vanguard income fund also pays monthly distributions, so you are only waiting until the end of each month - I'm not sure that was clear from my post? I used December as the example, as that was the last month where distributed income figures were available so I was unable to see the rate of return for Jan (yet).

And as @GeoffTF says, you can sell mid month for the equivalent capital gain.

If you have the option to keep cash outside of a tax wrapper (SIPP or ISA), there maybe better returning options depending on your individual tax circumstances, but for Vanguard investors, the options are pretty limited due to only Vanguard products being available on the platform.

Swipe

drob4 said:

Looks like Vanguard have removed the update:

https://www.vanguardinvestor.co.uk/need-help/answer/will-i-receive-interest-on-cash-held-in-my-account

So, not sure what the situation is…

According to a post on reddit someone contacted Vanguard and they said it was uploaded in error and they would give 30 days notice for any such change.