Money Market funds

easysaver

I need to moan, apologies in advance.
I'm fed up with poor easy/instant access rates. Best buy is what 0.88% below base rate, it requires constant moving of money, opening new accounts, managing regular savers, and the fraud checks which sometimes result in your cash losing interest with no compensation. I get it that banks/BS have no obligation and are there to make money, and nothing else. Basically, I'm bored of the game.
I'm seriously considering dumping the vast majority in to a combo of money market and very short dated bond funds. Yes, I understand the risk. Yes, I get I'm not comparing like (FSCS) for like.
Fixed rate accounts are out of the question unless they allow early access for a small fee (any other than First Direct @ £100 access???).
I'm trying to work out if such a move is rational but ultimately I want to get on with my life and not spend it following the forum!
Rant over, apologies again.

NedS

easysaver said:

I need to moan, apologies in advance.
I'm fed up with poor easy/instant access rates. Best buy is what 0.88% below base rate, it requires constant moving of money, opening new accounts, managing regular savers, and the fraud checks which sometimes result in your cash losing interest with no compensation. I get it that banks/BS have no obligation and are there to make money, and nothing else. Basically, I'm bored of the game.
I'm seriously considering dumping the vast majority in to a combo of money market and very short dated bond funds. Yes, I understand the risk. Yes, I get I'm not comparing like (FSCS) for like.
Fixed rate accounts are out of the question unless they allow early access for a small fee (any other than First Direct @ £100 access???).
I'm trying to work out if such a move is rational but ultimately I want to get on with my life and not spend it following the forum!
Rant over, apologies again.

Seems reasonable to me. I've not checked rates for easy access accounts, but I'm guessing there are some deals out there. I currently have £5k in a Barclays Rainy Day Saver which has been paying 5% for quite a while (this is my emergency easy access cash), and there are regular saver accounts where you can drip feed cash at even higher rates, but most of these will require some hoops or for you to be an existing customer etc.

In terms of money market funds, you can move cash into a GIA account and purchase a money market fund that will track SONIA rates. Many will charge no fees. You can sell some or all of your investment at any time. I use the Royal London sort term money market fund and the CSH2 ETF (not a recommendation).

You will be liable for tax on the "interest", so if tax is an issue, you may consider purchasing individual short dated government gilts (such as TN25) where the vast majority of the gain will be tax free. Normally one would hold these to maturity to lock in the rate, but you can sell some or all at any time at prevailing market rates. The glide path to par will be smoother the shorter dated (closer to maturity) the gilt.

easysaver

NedS said:

easysaver said:

I need to moan, apologies in advance.
I'm fed up with poor easy/instant access rates. Best buy is what 0.88% below base rate, it requires constant moving of money, opening new accounts, managing regular savers, and the fraud checks which sometimes result in your cash losing interest with no compensation. I get it that banks/BS have no obligation and are there to make money, and nothing else. Basically, I'm bored of the game.
I'm seriously considering dumping the vast majority in to a combo of money market and very short dated bond funds. Yes, I understand the risk. Yes, I get I'm not comparing like (FSCS) for like.
Fixed rate accounts are out of the question unless they allow early access for a small fee (any other than First Direct @ £100 access???).
I'm trying to work out if such a move is rational but ultimately I want to get on with my life and not spend it following the forum!
Rant over, apologies again.

Seems reasonable to me. I've not checked rates for easy access accounts, but I'm guessing there are some deals out there. I currently have £5k in a Barclays Rainy Day Saver which has been paying 5% for quite a while (this is my emergency easy access cash), and there are regular saver accounts where you can drip feed cash at even higher rates, but most of these will require some hoops or for you to be an existing customer etc.

In terms of money market funds, you can move cash into a GIA account and purchase a money market fund that will track SONIA rates. Many will charge no fees. You can sell some or all of your investment at any time. I use the Royal London sort term money market fund and the CSH2 ETF (not a recommendation).

You will be liable for tax on the "interest", so if tax is an issue, you may consider purchasing individual short dated government gilts (such as TN25) where the vast majority of the gain will be tax free. Normally one would hold these to maturity to lock in the rate, but you can sell some or all at any time at prevailing market rates. The glide path to par will be smoother the shorter dated (closer to maturity) the gilt.

Thanks NedS.
I've cooled off a little from my rant so I intend to wait a few days to see if anything approaching 4.5% easy(ish) access can be achieved. I do hold some BlackRock cash fund and the aforementioned CSH2 in tax wrappers.
I understand the tax advantages of holding short dated gilts to maturity (capital gain being tax free) but I compare these to fixed rate accounts because you may have to sell into a capital loss if rates were to continue to rise and I required access prior to maturity (if interest rates were to fall I could sell at a capital gain).
In terms of GIA getting the right platform is important to minimise fees (both trading and holding).