Best deal for cash savings in SIPPS

NedS

RetSol said:

I quite like the suggestion of the HL Royal London short term money market and will investigate further. Thank you Beddie.

Any suggestions for alternatives to the Royal London Short Term Money Market Fund?  There are presumably other, similar funds available? 

Yes, there are others - you can use HL's fund finder to list them:

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results?sectorid=138&start=0&rpp=20&lo=0&sort=fd.full_description&sort_dir=asc

I chose the RL fund on the basis is was one of the largest funds (AUM) with the lowest fees. They should all be similar if they track the same SONIA index but compare performance over the last 12 months.

I have also held the CSH2 ETF for large cash holdings as HL's platform fees are capped for ETFs meaning I could essentially hold it at no fee, but you must factor in the bid/offer spreads and trading fees.

RetSol

Yes, there are others - you can use HL's fund finder to list them:

Thank you very much, @NedS. 

quirkydeptless

I have a SIPP with HL and I am using the solutions offered earlier and also some individual short dated gilts. I got the latter during the Trusskwateng fiasco when they dropped in price. Can difficult to calculate their real return though.

It depends on how much cash you have. With say £44,444 in funds you'd pay ~£200 in fees whatever you held. So below that, you might was well go for a Money Market Fund, like Royal London mentioned earler. It was reassuring to see it rise by its usual daily slither of a percent during the recent stock market turbulance.

If your cash is significantly above that, it can work out better to buy things that are capped, i.e. ETFs like CSH2 and Individual short dated Gilts held till maturity (NB not Gilt funds/ETFs as there is exposure to volatility which I along with many others experienced the hard way last year - I'll chalk that one up to a learning experience), but as mentioned above you'd have to pay for fees and spreads etc.

cloud_dog

quirkydeptless said:

I have a SIPP with HL and I am using the solutions offered earlier and also some individual short dated gilts. I got the latter during the Trusskwateng fiasco when they dropped in price. Can difficult to calculate their real return though.

It depends on how much cash you have. With say £44,444 in funds you'd pay ~£200 in fees whatever you held. So below that, you might was well go for a Money Market Fund, like Royal London mentioned earler. It was reassuring to see it rise by its usual daily slither of a percent during the recent stock market turbulance.

If your cash is significantly above that, it can work out better to buy things that are capped, i.e. ETFs like CSH2 and Individual short dated Gilts held till maturity (NB not Gilt funds/ETFs as there is exposure to volatility which I along with many others experienced the hard way last year - I'll chalk that one up to a learning experience), but as mentioned above you'd have to pay for fees and spreads etc.

Have you tried....

https://www.candidmoney.com/calculators/investment-redemption-yield-calculator

Pat38493

NedS said:

RetSol said:

I quite like the suggestion of the HL Royal London short term money market and will investigate further. Thank you Beddie.

Any suggestions for alternatives to the Royal London Short Term Money Market Fund?  There are presumably other, similar funds available? 

Yes, there are others - you can use HL's fund finder to list them:

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results?sectorid=138&start=0&rpp=20&lo=0&sort=fd.full_description&sort_dir=asc

I chose the RL fund on the basis is was one of the largest funds (AUM) with the lowest fees. They should all be similar if they track the same SONIA index but compare performance over the last 12 months.

I have also held the CSH2 ETF for large cash holdings as HL's platform fees are capped for ETFs meaning I could essentially hold it at no fee, but you must factor in the bid/offer spreads and trading fees.

How should we treat risk with these kind of money market funds?  How does it compare for example to having your money in a bank savings account in terms of risk level?  e.g. is this safer than bonds generally or the same?

NedS

Pat38493 said:

NedS said:

RetSol said:

I quite like the suggestion of the HL Royal London short term money market and will investigate further. Thank you Beddie.

Any suggestions for alternatives to the Royal London Short Term Money Market Fund?  There are presumably other, similar funds available? 

Yes, there are others - you can use HL's fund finder to list them:

https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results?sectorid=138&start=0&rpp=20&lo=0&sort=fd.full_description&sort_dir=asc

I chose the RL fund on the basis is was one of the largest funds (AUM) with the lowest fees. They should all be similar if they track the same SONIA index but compare performance over the last 12 months.

I have also held the CSH2 ETF for large cash holdings as HL's platform fees are capped for ETFs meaning I could essentially hold it at no fee, but you must factor in the bid/offer spreads and trading fees.

How should we treat risk with these kind of money market funds?  How does it compare for example to having your money in a bank savings account in terms of risk level?  e.g. is this safer than bonds generally or the same?

There are risks, although these are generally perceived to be very low. The biggest risk is probably not being able to access your cash during a crisis when you want it most, to take advantage of crashing markets (dry powder, etc).

Have a read of this document:

https://www.fca.org.uk/publication/discussion/dp22-1.pdf

midlandsimon

We use InvestAcc and their Minerva SIPP product as mentioned above. We have a mix of NS&I guaranteed growth bonds along with other fixed term products from Cater Allen/ United Trust and Hodge Bank earning above 4%. No % based expensive fees either. 

thesheep

I might be misunderstanding something but the HL website seems to be saying that cash held in a SIPP earns 4.2% interest? I tried to post a link to that page here but the MSE system doesn't want to let me (apparently I'm too new). But if you search for HL interest rates on Google it should be the first result or so.

Doctor_Who

thesheep said:

I might be misunderstanding something but the HL website seems to be saying that cash held in a SIPP earns 4.2% interest? I tried to post a link to that page here but the MSE system doesn't want to let me (apparently I'm too new). But if you search for HL interest rates on Google it should be the first result or so.

Here's the link. The 4.2% is for £100K+. Most platforms pay some interest on cash held, but this can often be beaten by a money market fund tracking SONIA (~5.25% before fees), and no need to hold £100K+.

https://www.hl.co.uk/charges-and-interest-rates

zagfles

Doctor_Who said:

thesheep said:

I might be misunderstanding something but the HL website seems to be saying that cash held in a SIPP earns 4.2% interest? I tried to post a link to that page here but the MSE system doesn't want to let me (apparently I'm too new). But if you search for HL interest rates on Google it should be the first result or so.

Here's the link. The 4.2% is for £100K+. Most platforms pay some interest on cash held, but this can often be beaten by a money market fund tracking SONIA (~5.25% before fees), and no need to hold £100K+.

https://www.hl.co.uk/charges-and-interest-rates

Yes and higher if in drawdown for some reason, up to 4.65% AER, but note the interest applies to each tier and not the whole lot (ie if you have £200k cash you'd only get the top interest on £100k of it), which isn't how tiered interest usually works with banks etc.

But with a large amount particularly if you have an idea when you'd be wanting to spend the money, appropriately dated gilts, index linked if you want a guaranteed real return, held to maturity might be an idea. I've set up a gilts ladder, ie various gilts maturing at yearly/2 yearly intervals.