Having recently retired I am currently looking at places to hold my shortish-term cash holdings. Most of my long-term holdings are in the various stock-markets across the world, so am now looking to plant some cash so I do not need to worry about market gyrations across the medium term. Happy to take some small risk to gain a bit more, but do not want to be aligned to the stock-market moves 100%.
Most of the savings rates are sourced from HL Active and I appreciate there maybe some other good rates out there, but for ease I have stuck to a single source.
Not looking for advice - simply thought it might be useful to lay out my current options as I find it helps my thinking - Others may find it useful to look at - feel free to comment if you think I have missed anything.
Obvious places include;
- Savings accounts; Current savings rates seem to max out at the 4.7%-5% level, but likely to be dropping in the short-term. Extremely safe, but risk that the rate could drop off and for years 2 & 3 likely to be a lot lower than this.
- Fixed rate bonds - 5.05% for a 1-year bond and 4.8% for 18mths - again, very safe, but longer-term likely to be well down on these rates
- Gilts - probably a 4% return - would look to go for a low coupon to minimise any tax. Potential to ladder a variety of bonds to provide cash needs each year as they mature.
- Money Market Funds - simply reflect the return of short-term money market rates, so likely to be dropping off as the BofE reduce rates.
- Corporate Bonds - higher up the risk ladder, but offers a chance of greater returns. Likely tax to be paid and risk of default, but going for higher quality ones should reduce this. Any thoughts on decent bond funds or specific bonds would be appreciated.
- Capital preservation Trusts eg. Capital Gearing Trust (LON:CGT) , Personal Assets Trust (LON:PNL) etc. There are three or four here, but their performance over the last three years has not been good and have bene very poor performers - often not doing what they have said on the tin.
- Absolute Return Funds - Similar to the IT's above, but are normally open-ended rather than closed. For example Argonaut Absolute Return. This fund has…
