Money market rate

dont_use_vistaprint

My short-term Money market rate within interactive investor is showing as 4.51% but this is performance over the last year rather than what it is doing right now.

If I check the 1 month total return, it is showing 0.35%, if I multiply this by 12 it gives me 4.2%. Then there are the buy and sell fees to take into account.

If base rates stay at 4%,  Would you  expect this to slowly adjust to just below 4%?  Over how many months do short-term money markets typically lag behind base rate changes if at all ? Do they tend to stay just below them or equal to them or just above them?

Are there any type of money markets funds for SIPP that can match 4.55% on offer by banks/building societies ? 

If you can stay out of tax in retirement due to interest from ISA’s , do you think it makes sense to take money out of a SIPP that is sat in money markets and move it around building societies as they generally pay significantly above the Bank of England base rate. 

I understand this will need to be a fairly permanent decision as putting money back into a  SIPP when you are not working/earning has a lot of limitations.

so in summary, taxation to one side, are the building societies always gonna beat the money markets / SIPP  ? 

masonic

Sterling money market funds will deliver a return similar to the BoE base rate. Consumer savings rates will often be better. If you want a better rate from a retail investment, then you could look to longer duration and/or lower credit rating bonds. There will be additional risk associated with the higher average return.

Unwrapped cash in consumer savings accounts has a role to play in scenarios like yours. I would not be without my portfolio of high paying savings accounts, even with some tax liability (though I am still currently working/earning).

If you are not earning, then you will probably be living off your investments yes? So it just means pulling money out earlier (assuming you can do so tax efficiently) and holding some cash reserves outside rather than inside. There shouldn't be much need to reverse the situation as you could just run down your savings if things change.

Cus

You get what you pay for. A market leading cash bank account might pay 4.55%, but do you have to leave your money there for a minimum period?  Will they raise the rate if boe rates go up, as much as if it goes down? Etc etc.  If you can find a cash bank account that will accurately match the boe rate/real market rate, free withdrawals as many times as you like, can put in as much as you like, then go for it

eskbanker

Cus said:

You get what you pay for. A market leading cash bank account might pay 4.55%, but do you have to leave your money there for a minimum period?  Will they raise the rate if boe rates go up, as much as if it goes down? Etc etc.  If you can find a cash bank account that will accurately match the boe rate/real market rate, free withdrawals as many times as you like, can put in as much as you like, then go for it

For those wishing to track base rates, there are various such tracker savings accounts available, although typically at a discount to base rate rather than a premium.

dont_use_vistaprint

Cus said:

You get what you pay for. A market leading cash bank account might pay 4.55%, but do you have to leave your money there for a minimum period?  Will they raise the rate if boe rates go up, as much as if it goes down? Etc etc.  If you can find a cash bank account that will accurately match the boe rate/real market rate, free withdrawals as many times as you like, can put in as much as you like, then go for it

I was actually thinking of things like the West Brom 4.55 instant access vs short-term money markets.

I don’t understand your point. It’s possible to beat the bank of England base rate with retail savings accounts, with a bit of effort opening accounts speculatively in case you need them when another one your in
drops its rate