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    • itm2
    • By itm2 19th May 19, 2:03 PM
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    itm2
    Good low risk fund to park cash?
    • #1
    • 19th May 19, 2:03 PM
    Good low risk fund to park cash? 19th May 19 at 2:03 PM
    I have a SIPP with Interactive Investor and an ISA with Halifax iWeb. Both have a relatively large amount of cash following disinvestments (about 15% of the total). I'd like to "park" the cash temporarily in a zero or very low risk investment, until I decide on a longer term home for it. Can anyone recommend something which will provide a modest return while not exposing the cash to significant risk?
Page 1
    • Linton
    • By Linton 19th May 19, 2:21 PM
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    Linton
    • #2
    • 19th May 19, 2:21 PM
    • #2
    • 19th May 19, 2:21 PM
    There is always "cash", which may attract a small amount of interest in a SIPP. The other option in normal times is gilts, UK Government bonds. In current circumstances you need to look for a short dated gilt fund (one that holds gilts that are due to mature in a year or so), not a general gilt tracker which will have greater risk of falling in value. You may want to go as far as a short dated low risk corporate bond fund. Short dated gilts wont provide any better return than cash.
    • itm2
    • By itm2 19th May 19, 2:37 PM
    • 797 Posts
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    itm2
    • #3
    • 19th May 19, 2:37 PM
    • #3
    • 19th May 19, 2:37 PM
    There is always "cash", which may attract a small amount of interest in a SIPP. The other option in normal times is gilts, UK Government bonds. In current circumstances you need to look for a short dated gilt fund (one that holds gilts that are due to mature in a year or so), not a general gilt tracker which will have greater risk of falling in value. You may want to go as far as a short dated low risk corporate bond fund. Short dated gilts wont provide any better return than cash.
    Originally posted by Linton
    Thanks. I don't think II or iWeb pay any interest at all on cash, so any return would be better than nothing.
    • dunstonh
    • By dunstonh 19th May 19, 4:29 PM
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    dunstonh
    • #4
    • 19th May 19, 4:29 PM
    • #4
    • 19th May 19, 4:29 PM
    I'd like to "park" the cash temporarily in a zero or very low risk investment
    There is no such thing as zero risk. Cash has the lowest investment risk but you increase your shortfall risk and inflation risk by using it.

    Thanks. I don't think II or iWeb pay any interest at all on cash, so any return would be better than nothing.
    What is going to take you so long that a cash account is not suitable? Is it just deciding how to invest or is there a scenario that needs to play out first before you know what you do/do not need?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • itm2
    • By itm2 19th May 19, 4:47 PM
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    itm2
    • #5
    • 19th May 19, 4:47 PM
    • #5
    • 19th May 19, 4:47 PM
    There is no such thing as zero risk. What is going to take you so long that a cash account is not suitable? Is it just deciding how to invest or is there a scenario that needs to play out first before you know what you do/do not need?
    Originally posted by dunstonh
    I'm planning to restructure my portfolio, but will probably not get around to finalising it for a couple of months at least. I just don't like to see that much cash lying around slowly being eaten away by inflation.
    • dunstonh
    • By dunstonh 19th May 19, 9:30 PM
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    dunstonh
    • #6
    • 19th May 19, 9:30 PM
    • #6
    • 19th May 19, 9:30 PM
    I'm planning to restructure my portfolio, but will probably not get around to finalising it for a couple of months at least. I just don't like to see that much cash lying around slowly being eaten away by inflation.
    Originally posted by itm2
    What not put it in a multi-asset fund that matches your investment profile?
    That way it is still invested within your risk tolerance and it wont really matter if it takes you 3 weeks, 3 months or 3 years to sort it.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • itm2
    • By itm2 19th May 19, 10:07 PM
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    itm2
    • #7
    • 19th May 19, 10:07 PM
    • #7
    • 19th May 19, 10:07 PM
    What not put it in a multi-asset fund that matches your investment profile?
    That way it is still invested within your risk tolerance and it wont really matter if it takes you 3 weeks, 3 months or 3 years to sort it.
    Originally posted by dunstonh
    Selecting the right mix of funds, spread across asset classes, risk profiles, sectors, etc, is the aim of the longer term restructuring exercise. It's a short-term home for the cash that I'm looking for.
    • Malthusian
    • By Malthusian 20th May 19, 10:03 AM
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    Malthusian
    • #8
    • 20th May 19, 10:03 AM
    • #8
    • 20th May 19, 10:03 AM
    Perfect is the enemy of good.

    A multi-asset fund matching your investment profile is not going to significantly lose you money compared to if you had invested in your "right mix" (whatever it is). Cash however will over a long enough timeframe.

    If you have the expertise to decide an asset allocation and fund selection that is right for you, it's an afternoon's work. Overthinking does not generate alpha.
    • FatherAbraham
    • By FatherAbraham 20th May 19, 12:45 PM
    • 990 Posts
    • 755 Thanks
    FatherAbraham
    • #9
    • 20th May 19, 12:45 PM
    • #9
    • 20th May 19, 12:45 PM
    Selecting the right mix of funds, spread across asset classes, risk profiles, sectors, etc, is the aim of the longer term restructuring exercise. It's a short-term home for the cash that I'm looking for.
    Originally posted by itm2
    Dunstonh's point was that a cash-like investment is likely to be far further from the characteristics of your eventual portfolio after restructuring than a single multi-asset fund will be.

    A cash deposit is almost certainly not what you want in the long term, so it doesn't send to hold such in the short term either.
    Thus the old Gentleman ended his Harangue. The People heard it, and approved the Doctrine, and immediately practised the Contrary, just as if it had been a common Sermon; for the Vendue opened ...
    THE WAY TO WEALTH, Benjamin Franklin, 1758 AD
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