Vanguard SIPP cash interest

Albermarle

Seems to be quite a trend ,
Savers And Investors Are Flocking To Money Market Funds. Here Are The Pros And Cons (forbes.com)

NedS

Albermarle said:

Seems to be quite a trend ,
Savers And Investors Are Flocking To Money Market Funds. Here Are The Pros And Cons (forbes.com)

With interest rates having been 0.5% for 13 years between 2009 and 2022, money market funds were simply not an option, as after fees for many they would have given a negative return (loss), and that's before inflation was taken into account.

Over the last 6 months, investors have slowly woken up to the increasing rates on offer, especially where platform providers are not passing on the returns they are able to get for holding clients cash. Every little helps!

Bravepants

NedS said:

Albermarle said:

Seems to be quite a trend ,
Savers And Investors Are Flocking To Money Market Funds. Here Are The Pros And Cons (forbes.com)

With interest rates having been 0.5% for 13 years between 2009 and 2022, money market funds were simply not an option, as after fees for many they would have given a negative return (loss), and that's before inflation was taken into account.

Over the last 6 months, investors have slowly woken up to the increasing rates on offer, especially where platform providers are not passing on the returns they are able to get for holding clients cash. Every little helps!

And all the "cons" mentioned are the same as savings accounts, apart from having to keep an eye on fees. Which for CSH2 is 0.07%, so low compared to the current SONIA (4.17%). I like the fact that one doesn't have to switch accounts when interest rates increase!  

L9XSS

Bravepants said:

I just dumped 4 years' worth of SIPP drawdown (~£50k) into CSH2 - LYXOR Smart Cash, by buying the ETF on HL.

I’ve moved approximately a further £70k into a MM fund from my SIPP. Looking to hold this for 3 to 6 months.

NedS

https://www.youtube.com/watch?v=k3wGqD_9SzY

I would think the risks in the UK are lower. Firstly we must remember that sterling MMFs only buy sterling assets, so there is limited risk of contagion from any issues in the US.

Also I would not imagine the average UK investor will be as concerned about the state of UK banks and will be withdrawing all their cash to invest in MMFs. Secondly, UK investors cannot buy short dates gilts directly from the government in the same way US investors can, so that limits the demand on short dated assets in the UK. Sort dated UK gilts (e.g, TN24) are still yielding ~4% YTM so there is no sign of large volatility in pricing.

Anyone who is concerned can build a bond ladder from TN24, TN25 UK gilts directly, knowing their investments are then held directly with the UK government.

Adyinvestment

NedS said:

Anyone who is concerned can build a bond ladder from TN24, TN25 UK gilts directly, knowing their investments are then held directly with the UK government.

Although this option is not available in the Vanguard SIPP.

RogerPensionGuy

The link below maybe of interest to some on this thread. 


https://www.aegon.co.uk/support/questions/whats-the-interest-rate-payable-on-money-held-in-the-cash-facility-of-all-aegon-products

RogerPensionGuy

RogerPensionGuy said:

The link below maybe of interest to some on this thread. 


https://www.aegon.co.uk/support/questions/whats-the-interest-rate-payable-on-money-held-in-the-cash-facility-of-all-aegon-products

Update, I read it wrong, it looked like 0.15% below the Bank of England rate but, pointed out to me on another thread to read the full article as they basically chopping it all up and maybe pay just half of the Bank of England rate.

I must learn how to link up different threads.

Tks to Pat & Doctor.