What's the risk with Money Market funds?

Doctor_Who

adindas said:

Forgetting that from the name suggest, investing is for a long term, to grow your initial investment. 

Those who think this is a good strategy, please provide hard evidence, from a well known proven investors or from people own investment journeys not from useless argument from random people on the internet.

I have been investing for nearly 40 years and have spent most of that time 100% in equity (currently ~80% equity/~20% bonds). I have a small amount (for me) of cash sitting in my SIPP (recent dividends have boosted this). I do not want to withdraw these funds until I know my tax position for the current financial year. My options are to leave the cash in the SIPP earning 1.5% or invest in a STMMF at ~4.4% with low risk (not no risk). Given the time frame (~10 months) investing in equity is not a sensible option. So a STMMF does make sense for me.

adindas

Doctor_Who said:

adindas said:

Forgetting that from the name suggest, investing is for a long term, to grow your initial investment. 

Those who think this is a good strategy, please provide hard evidence, from a well known proven investors or from people own investment journeys not from useless argument from random people on the internet.

I have been investing for nearly 40 years and have spent most of that time 100% in equity (currently ~80% equity/~20% bonds). I have a small amount (for me) of cash sitting in my SIPP (recent dividends have boosted this). I do not want to withdraw these funds until I know my tax position for the current financial year. My options are to leave the cash in the SIPP earning 1.5% or invest in a STMMF at ~4.4% with low risk (not no risk). Given the time frame (~10 months) investing in equity is not a sensible option. So a STMMF does make sense for me.

What about comparing it with risk free alternative, especially for new money ?? Also consider you do not need  to have large sum of money at  a time.

Doctor_Who

adindas said:

What about comparing it with risk free alternative, especially for new money ?? Also consider you do not need  to have large sum of money at  a time.

New money in the SIPP is not an option. I just needed somewhere to put the spare cash from dividends until the end of the tax year. Once I know my tax position I will decide whether or not to make an UFPLS (as in previous tax years).

Risk-free investments - I'm not sure these exist!

I don't understand what you mean by 'Also consider you do not need  to have large sum of money at  a time.'

adindas

Doctor_Who said:

adindas said:

What about comparing it with risk free alternative, especially for new money ?? Also consider you do not need  to have large sum of money at  a time.

New money in the SIPP is not an option. I just needed somewhere to put the spare cash from dividends until the end of the tax year. Once I know my tax position I will decide whether or not to make an UFPLS (as in previous tax years).

Risk-free investments - I'm not sure these exist!

I don't understand what you mean by 'Also consider you do not need  to have large sum of money at  a time.'

Risk free short term alternative is to put it to FSCS protected regular saving account. You could literary get 9.0%, 7.5%, 7%, 6%, a few 6.17% reasonable number of 5.5%+. typically these savings are easy access.

Also do not forget one year, two year,  fixed rate saving, you could get 5.25%, reasonable number available around 5%+. Three years 5.30%.

You do not need £20k of your money today or in a very short time, do you ?? If you need that even an MMF is a worse option.

If the current good investment is currently down significantly but has a very good chance to recover with more time, it is not a good strategy to sell it even a better alternative out there is available. But people use their personal experience to learn the lesson.

Doctor_Who

I didn't say anything about selling, just putting the available cash that is in the SIPP from dividend payments to use in a STMMF.

Regular saving/fixed term saving is not investing. They are FSCS protected, but they are just cash savings accounts. These are not options within my SIPP.

adindas

Doctor_Who said:

I didn't say anything about selling, just putting the available cash that is in the SIPP from dividend payments to use in a STMMF.

Regular saving/fixed term saving is not investing. They are FSCS protected, but they are just cash savings accounts. These are not options within a SIPP.

I never say investing, I say a risk free alternative. A few months is not investing anyway. To gain a tax relieve you could wait until close to the end of tax years, while sitting in RSAs, earning a better interest and later stash your money to SIPP you still get topped up 25%. This could also be used to avoid paying tax on saving interest.

But for you it is already too late as the money is already into SIIP, that is what I call it lesson learnt.

Swipe

adindas said:

Doctor_Who said:

I didn't say anything about selling, just putting the available cash that is in the SIPP from dividend payments to use in a STMMF.

Regular saving/fixed term saving is not investing. They are FSCS protected, but they are just cash savings accounts. These are not options within a SIPP.

But for you it is already too late as the money is already into SIIP, that is what I call it lesson learnt.

Didn't they say the cash was dividends received from investments held in the SIPP?

Dazed_and_C0nfused

Doctor_Who said:

I didn't say anything about selling, just putting the available cash that is in the SIPP from dividend payments to use in a STMMF.

Regular saving/fixed term saving is not investing. They are FSCS protected, but they are just cash savings accounts. These are not options within a SIPP.

They are with at least one SIPP provider. 

https://forums.moneysavingexpert.com/discussion/6449304/what-are-my-options-in-a-vanguard-sipp-if-i-wanted-to-give-stocks-a-rest-for-a-little-while/p2#Comment_80085355

Doctor_Who

adindas said:

I never say investing, I say a risk free alternative. A few months is not investing anyway. To gain a tax relieve you could wait until close to the end of tax years, while sitting in RSAs, earning a better interest and later stash your money to SIPP you still get topped up 25%. This could also be used to avoid paying tax on saving interest.

But for you it is already too late as the money is already into SIIP, that is what I call it lesson learnt.

I know how SIPPs work, my contributions have benefited from 40% tax relief over many years. Your suggestion of using regular savings/fixed savings accounts are not options for cash held in my SIPP. 

Doctor_Who

Dazed_and_C0nfused said:

They are with at least one SIPP provider. 

https://forums.moneysavingexpert.com/discussion/6449304/what-are-my-options-in-a-vanguard-sipp-if-i-wanted-to-give-stocks-a-rest-for-a-little-while/p2#Comment_80085355

Thanks for the correction, but it's not an option with my SIPP provider.