Is Vanguard short term money market fund a sensible place to put money required in two months?

dharm999

masonic said:

Hoenir said:

Low coupon short dated Government Gilts would be an option. Buy direct. No issues with liquidity. 

Not at Vanguard though, and if an ISA transfer is to be avoided, taxable savings accounts may be worth considering. T24 looks to be the only option and that last taxable coupon will make up most of the return.

Had a look at that.  The buy price on HL is £99.79, so if I hold to maturity, I get back £100,so a small gain of 21p per £100, do I also get the 2.75% interest on the £550k?  I assume this is pro rata to cover the amount of time I own it?  Apologies if this is a stupid question, but I don’t understand gilts

Thanks

masonic

dharm999 said:

masonic said:

Hoenir said:

Low coupon short dated Government Gilts would be an option. Buy direct. No issues with liquidity. 

Not at Vanguard though, and if an ISA transfer is to be avoided, taxable savings accounts may be worth considering. T24 looks to be the only option and that last taxable coupon will make up most of the return.

Had a look at that.  The buy price on HL is £99.79, so if I hold to maturity, I get back £100,so a small gain of 21p per £100, do I also get the 2.75% interest on the £550k?  I assume this is pro rata to cover the amount of time I own it?  Apologies if this is a stupid question, but I don’t understand gilts

The interest is paid semiannually, so you'd get half the annual interest, but pay a dirty price that includes the accrued interest on the gilt for the first 4 months. Overall it would be equivalent to 4.63% AER before tax and the majority of the return is taxable.

OldScientist

With £550k, apart from the MMF, here are some other options

1) If you are using the Vanguard platform, I note that they currently pay 2.6% on cash (see https://www.vanguardinvestor.co.uk/need-help/answer/will-i-receive-interest-on-cash-held-in-my-account ). However, this is only protected to £85k by the FSCS and the rate is lower than available elsewhere.

2) Withdraw to about 6 or 7 easy access accounts (FSCS protection to £85k in each one). Assuming 4.5% interest, you'll receive about £4k in two months roughly £2k of which will be taxable (depending on how much interest you receive from other sources). If you don't want the faff of multiple accounts, the direct saver offered by NS&I has a lower interest rate (4%), but is fully protected to £2 million.

Of course, a combination of MMF, and options 1 and 2 is also possible.

dharm999

OldScientist said:

With £550k, apart from the MMF, here are some other options

1) If you are using the Vanguard platform, I note that they currently pay 2.6% on cash (see https://www.vanguardinvestor.co.uk/need-help/answer/will-i-receive-interest-on-cash-held-in-my-account ). However, this is only protected to £85k by the FSCS and the rate is lower than available elsewhere.

2) Withdraw to about 6 or 7 easy access accounts (FSCS protection to £85k in each one). Assuming 4.5% interest, you'll receive about £4k in two months roughly £2k of which will be taxable (depending on how much interest you receive from other sources). If you don't want the faff of multiple accounts, the direct saver offered by NS&I has a lower interest rate (4%), but is fully protected to £2 million.

Of course, a combination of MMF, and options 1 and 2 is also possible.

Thanks.  I decided to go for the NS&I option, the interest may not be the most competitive, but at least the money is protected in full until I need it in September