REPLACE - Cash - h1

1. Summary
 Interest rates
2. Benefits
3. Risks
4. Alternatives to cash deposits
5. Funds
6. Investor protection

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Current interest rates
Historical interest rates
Future interest rates

Bank of England: Interest rates and Bank Rate - NO LINK ADDED - >>>
Includes:
What are interest rates?
What is Bank Rate?
How chnages in Bank Rate affect the economy
Official Bank Rate history data from 1694

Bank of England: Explainers:
What is money?
What are interest rates?
How is money created?

Bank of England:
Effective Interest Rates
Excel Historic Bond dataset cn be downloaded
Official Bank Rate History
Bank Base Rates from Jan 1975 onwards
Excel dataset can be downloaded

Historical interest rates:
Add svg
Source: Bank of England
Explain different base rates / MLR etc used
If multiple rates within a month used indicative rate
Bank of England: Interest rates and Bank Rate - ADD LINK
Historical dara: See Bank of England > inflation calculator > How we created our calculator for alternative indices / data sets:
A millenium of macroeconomuc data for the UK (Excel) - saved in IM > Excel docs > General

Future interest rates:
Cash - returns may be lower than inflation - so lose money in real terms

Inflation and interest rate policy
Bank of England: Explainers > Why have interest rates in the UK gone up?
Inflatio - Interest rate ('Monetary') policy

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1. Inflation
2. Interest rates
3. Security

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NS&I - Premium Bonds
Short term UK Government debt ('gilts')
Short-term money market funds

Potential benefits of alternatives:
Higher returns (can be higher than cash depsit rates, particularly if rates are tiered (often on platforms)
More tax efficient (a consideration if outside an ISA / pension)
Greater investor protection

NS&I:
Guaranteed by UK Government
Could increase investor protection if over £85k per institution

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Consider funds in IA Short Term Money Marklet sector
Royal London Short Term Money Market fund is one of the ii most purchased funds list Dec 2022.
Min £1m on factsheet but available va platforms.
Should compare with cash rates offered.
Compare with cash rates offered by platform - often tiered. Platforms may take % charge.

FT / Rafe Uddin article 20/04/2023

ETFs (GDP) justETF . ETF Screener > Money Market
Lyxor Smart Overnight Return UCITS ETF C-GDP (HL calls it Lyxor Smart Cash). Actively managed. TER 0.07%. Replicates the performance of the underlying index synthetically with a swap.
PIMCO Sterling Short Maturity ETF Dist. Actively Managed Sampling. TER 0.35% Spread 0.09%

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Can provide higher returns than cash
if below par gains tax-free - beneficial outside ISA/pension

Summary of gilst and how to buy: FT/Mary McDougall article on 24/06/2024

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