"Cash" in SIPP and ISA

valiant24

I've funded my ISA and SIPP for this year but, somewhat contrary to my usual "Don't Try to Time the Market/Just Keep Buying" policy, haven't bought any investments yet.

So that's £40,000 in the ISAs and £12,000 in SIPPs.   My platforms (iWeb and AJ Bell) won't be paying interest.

Just having those funds sitting in cash isn't great.   I've read elsewhere about "money market" funds available that are akin to interest-paying savings accounts, but am struggling to find any detail.

Does this ring any bells please?

EthicsGradient

AJ Bell sent me email only today, pointing out their interest rates went up on 1st May (they pay more in a SIPP than an ISA). Do you have a non-standard account?

Beddie

Here you go:

https://www.ajbell.co.uk/market-research/FUND:B8XYYQ8

cwep2

iWeb look up Royal London Sht Term Money Mkt Y Acc. 

It’s an accumulation account so effectively the price goes up a tiny amount each day reflecting the interest. 

£5 to buy and sell, you’re getting above 4% return so if you put 10k in there you’ve earned £10 in about 9 days, so as long as you have it parked there for at least that much time you’ll be fine but it’s not suitable to park it there for a couple of days. 

InvesterJones

This video takes a look at various options, including money market funds, and the potential catches that are worth knowing about.

https://www.youtube.com/watch?v=qMTkreV2CRU

valiant24

cwep2 said:

iWeb look up Royal London Sht Term Money Mkt Y Acc. 

It’s an accumulation account so effectively the price goes up a tiny amount each day reflecting the interest. 

£5 to buy and sell, you’re getting above 4% return so if you put 10k in there you’ve earned £10 in about 9 days, so as long as you have it parked there for at least that much time you’ll be fine but it’s not suitable to park it there for a couple of days. 

Thanks.  And nothing could possibly go wrong ....?!

InvesterJones

valiant24 said:

cwep2 said:

iWeb look up Royal London Sht Term Money Mkt Y Acc. 

It’s an accumulation account so effectively the price goes up a tiny amount each day reflecting the interest. 

£5 to buy and sell, you’re getting above 4% return so if you put 10k in there you’ve earned £10 in about 9 days, so as long as you have it parked there for at least that much time you’ll be fine but it’s not suitable to park it there for a couple of days. 

Thanks.  And nothing could possibly go wrong ....?!

Depends what you define as wrong. There are some risks to money market funds compared to cash, but they're lower risk than many other forms of investment. Always read the Key investor information document, which lay out the risks, including for example:

Investment Risk The value of investments and any income from them may
go down as well as up and is not guaranteed. Investors may not get back the
amount invested.

Credit Risk Should the issuer of a fixed income security become unable to
make income or capital payments, or their rating is downgraded, the value
of that investment will fall. Fixed income securities that have a lower credit
rating can pay a higher level of income and have an increased risk of default.

EPM Techniques The Fund may engage in EPM techniques including
holdings of derivative instruments. Whilst intended to reduce risk, the use
of these instruments may expose the Fund to increased price volatility.

Interest Rate Risk Fixed interest securities are particularly affected by
trends in interest rates and inflation. If interest rates go up, the value of
capital may fall, and vice versa. Inflation will also decrease the real value of
capital.

Counterparty Risk The insolvency of any institutions providing services
such as safekeeping of assets or acting as counterparty to derivatives or
other instruments, may expose the Fund to financial loss.

Inflation Risk Where the income yield is lower than the rate of inflation, the
real value of your investment will reduce over time.

Money Market Fund Risks A Money Market Fund is not a guaranteed
investment, and is different from an investment in deposits. The principal
invested in the Fund is capable of fluctuation and the risk of loss of the
principal is to be borne by the investor. The Fund does not rely on external
support for guaranteeing the liquidity of the Fund or stabilising the NAV per
share.

Not to mention lack of FSCS Guarantee.

Ciprico

CHS2 is another popular one.

If they track SONIA they are tracking UK base rates...

I couldn't find Royal London on my platform (Interactive Investor) but it is reassuring seeing a small rise everyday in CSH2 when everything else is in the red.

Swipe

I bought some Vanguard short term sterling fund with this year's cash in my ISA. I decided to make the switch when Vanguard stopped paying a decent rate for just cash in the account. I'll keep it in there for now and switch it to my regular global fund when rates start to drop.

Doctor_Who

Ciprico said:

I couldn't find Royal London on my platform (Interactive Investor) but it is reassuring seeing a small rise everyday in CSH2 when everything else is in the red.

I think this is the RL fund on II. Their search does seem a bit hit and miss.

https://www.ii.co.uk/funds/royal-london-short-term-money-mkt-y-acc/B8XYYQ8

valiant24

EthicsGradient said:

AJ Bell sent me email only today, pointing out their interest rates went up on 1st May (they pay more in a SIPP than an ISA). Do you have a non-standard account?

I stand corrected, they pay interest on both my SIPP and ISA (higher on the one than the other, as you say).
iWeb pay interest on the SIPP but not the ISA.
Thank you.