What do you think, will you be using Money Market funds?

@cisium1184

Жыл бұрын

Probably - do money market funds earn considerably higher interest than high-interest/low-service online banks? If so, it seems like it would make sense to put some of my emergency fund into a money market fund. My emergency fund is currently 6 months of income, but I would only need to get one month at a time; so delay in accessing the remainder should not be a consideration. That being said, I currently have the emergency fund spread across two savings accounts at two high-interest internet banks, so they are already making a little under 4% interest (I'm in the States).

@JamesShack

Жыл бұрын

@@cisium1184 Here's the index for the overnight rate in the US: www.newyorkfed.org/markets/reference-rates/sofr You can always hunt around and find good offers for savings accounts, some of which may be better than this rate. But they are often capped out at a maximum value. I personally don't have the time/patience to shift money around all the time so these funds work well for me.

@squadmeta

Жыл бұрын

Have been for the last 6 months.

@snakeindigo7085

Жыл бұрын

I parked some money inside an actively managed money market fund inside of a Mercer Master Trust pension. I was considering trying to time the market (bad idea, obviously) but then decided it was better to buy units of a passive index over 15 year gilts fund. My natural inclination is to invest in equities, however trying to temper that due to being 53 years of age. Anyway, Jack Bogle's books suggest that asset allocation is a key component of an indexes mutual fund strategy. However, it does not look like a one size fits all kind of scenario...

@tancreddehauteville764

Жыл бұрын

No - not for me, for various reasons.

Judging by the current market circumstances, it is important to familiarize with an effective financial management, prudent investing and proficiently maneuvering through the economic downturn. My interest is focused on boosting my stagnant portfolio of 332k. While I am focused on the future, the erosion of my savings due to inflation and daily depreciation of my portfolio demands immediate attention. And I think if the steps are carefully analyzed, carried out and applied the aim of making profit will be achieved easily.

@Maryford-rg2gf

Ай бұрын

The best way to handle the situation is diversifying your investments. One way to reduce the effect of the market crisis is to distribute your investments over varieties of asset classes, like real estate, bonds and international equities. It's important to seek professional advice which serves as an added and higher advantage in terms of clarity and when to engage in a trade.

@user-md2zc6mq2m

Ай бұрын

I think investors should look for stocks that have paid steadily, increasing the dividend for years, even decades and have not cut their dividends even under recession . Alternatively, speaking to a market strategist can help with pointers on equities and acquire exactly what was already pointed at,nice stuff.

@user-fi1ec6qj2v

Ай бұрын

Having the right financial plan is invaluable. My portfolio is well matched for every season of the market and recently it hit an 80% rise from early last year. My CFP and I are aiming for a 7 figure ballpark goal.

@HelenGibbs-hs1re

Ай бұрын

Wow.!! That is amazing. I have been sourcing for a financial advisor lately. I am looking at diversifying my 422k stagnant portfolio. It has been stagnant for a long while with very minimal profit. Please who is the financial advisor you're using??

@Tysonfletcher-kv7of

Ай бұрын

Quite outstanding.

keep in mind that regulated banks are insured by FDIC (CDIC in Canada). Money market funds are not insured.

Banks stopped being relevant to small businesses back in the 1990s. In our town, many banks cut credit lines. Then five years later they begged those small companies to barrow. It was too late, times had changed and business plans had changed as well.

I think you're missing another reason for low bank interest rates: they don't need our money to lend to others, they can get it from the central bank instead. This is one of the two bad changes to come out of the 2008 crisis (the other being massive money printing).

@puffingtonsmythe8690

10 ай бұрын

Yes you’re right, it’s called quantitative easing (empty money)

@garp9433

10 ай бұрын

It should be noted that Inter-bank lending is a contagion parameter when one bank collapses.

@Rakstawr

10 ай бұрын

QE isn't even the biggest issue. Its the fact that they need 0 proof of reserve anymore thanks to Trump's removal of the reserve limits. So they don't need to prove they have the reserves available for you to withdraw, which is how money is actually printed now. The govt has very little power when printing to affect inflation anymore thanks to this.

@Rakstawr

10 ай бұрын

It also means that we have 0 safety net because our jobs are at risk with banks failing due to lack of reserves.

@sTraYa249

10 ай бұрын

​@@puffingtonsmythe8690just print it up, but it's all just a giant ponzi scheme that USA is dependent on keeping everyone in debt or it all falls

Thanks James for a very timely video. Especially the last comment...

Another fantastic video - I always learn so much from your content. Thank you. (FYI - there’s a blank section with no video - just sound from 4:24 - 4:35 you might want to sort. )

This is the video I needed right now. Perfext!😊

Thanks for this important information. We are lucky to have you.

Thank you very much for explaining Money Markets, and so well. I keep hearing them mentioned, especially in US vlogs, but this is the first time I have fully understood what they are.

Your channel is really really really important for everyone alive!

This channel is so helpful. Thank you.

Really really helpful vid. Thx a lot. I have a house deposit sitting doing not very much while we try and find a house.

Sounds perfect for an emergency fund! Thanks, I was looking for something like this ❤ . Cheers

@JamesShack

Жыл бұрын

You're welcome.

Great video brotherman. Thanks for teaching me this. I have always been looking for ways to step out of the big banks

Very helpful reminder & great coverage of the pros & cons of MM funds. Thank you,

thanks James was looking for a safer way to store cash in my ISA and SIPP and wasn’t aware of these funds

Thank you for your time.

I get 4.7 % from a fixed term in the bank paid monthly interest, quite happy with this and another account I get 5.5% but thanks for covering MMF's never knew about this before.

Thank you for your insight.

Great information, well done!

Thanks James!

Great never heard of them before your video thanks 😊

Very interesting. Thank you.

Any good way to earn more than 3-4% on idle cash with virtually no risk right now? Willing to lock up for up to a year or so if needed. What are good options? I have about $173k retirement funds that i want to grow.

@MIchaelGuzman737

Жыл бұрын

Is this a real question? Buy T-Bills?

@kashkat987

Жыл бұрын

Anyone have recommendations for a reliable monthly investment? I hope to ultimately supplement my income from work with a monthly income from investments. I will still make long-term investments, but it would be wonderful to have a little additional money each month.

@Ammo-Hoarder

Жыл бұрын

@@kashkat987 My investment advisor, "JILL MARIE CARROLL," a US-registered CFP who you may have heard of or seen on the CNBC news, uses trade signals to help me diversify my money well, and I must admit that it has been a big comfort. Highly diversified portfolio, incredible profits, and minimal to no engagement on my part. Having grown by 20% on a monthly basis, my portfolio generated a $450k return in 2022.

@kashkat987

Жыл бұрын

@@Ammo-Hoarder Do you mean to mimic her trades as they are made in Etoro when you say you would use trade signals from her? I hope I'm not required to give over my money. I just looked her up, located her website, and read through her qualifications and resume, all of which seem excellent. Does she have a minimum to work with?

@Ammo-Hoarder

Жыл бұрын

I can't give anyone my money, so I'll caution you against doing so. My account only mirrors her trades, and I have no idea if she has a minimum, but you may get in touch with her through her website and find out.

Thank you James ... another excellent video - Very informative.

@JamesShack

Жыл бұрын

Very welcome

Another fantastic educational video. Thanks 👏

@JamesShack

Жыл бұрын

You're welcome!

Thanks for the video James! Extremely helpful 👍

@JamesShack

Жыл бұрын

Glad it was helpful!

Good stuff! thanks

Nice once again.cheers

Thanks James 😊 Please can you do a video about pension recycling?

Hey, great information thank you! Please can you put the Next Video link in the description? On my device the in-video links don't even display so I have no idea what video you're directing us to

Great Video James, Potentially another investment in my 'play portfolio'

Good info, food for thought.

Thanks James. I always wanted to know about Money Markets.👍

Thanks James. Really good video. I've been hearing about these Money Market Funds, but wasn't aware that they were available in the UK!!

@JamesShack

Жыл бұрын

No problem!

Great video, learnt something new for sure today. I am saving for a mortgage so this is very relevant, thanks!

@JamesShack

Жыл бұрын

Glad it was helpful!

Agree James I would just say that the funds will yield 4.3%, if you deposit in an ISA for example aj bell will take in total cost 0.52% annually) you’re slightly better off than an easy access at 3.4%

@JamesShack

Жыл бұрын

Hi Phil yes, it will depend on which broker you use. Some charge fixed fees other %'s that top out at a certain level.

Hey James, great video. Whats a good money market fund in EUR?

Great content James, as usual!😊

@JamesShack

Жыл бұрын

Glad you enjoyed it!

So useful for me, James. I’m on the verge of buying my first house and have a load of cash that I’ve freed up in my LISA. This will be a good place to park the cash in the short term

@JamesShack

Жыл бұрын

MM funds can be useful if you’ve got your cash inside a tax wrapper like this and therefore can’t get access to normal savings account rates.

Great video James, I may move part of my emergency fund into a money market fund while interest rates are high.

Good video. I think I’d use one in my SIPP when and if I decided to convert it, or part of it, to an annuity to avoid any last minute market changes affecting the annuity income.

@JamesShack

Жыл бұрын

Hi David, I can't say if that is suitable for you specifically but that is often a valid use case.

Great work James - I think I'm pretty savvy when it comes to my money but I haven't heard of this before! Worth noting that if you're a higher rate tax payer, unless these funds are held in a tax wrapper (like an ISA) then Mr Tax Man will get a decent chunk of those rates! This is therefor ideal timing as the ISA allowance for 23/24 has just reset! whoop whoop!

@JamesShack

Жыл бұрын

The tax man will always have his fill. But yes you can buy these funds in an ISA too.

@MrLaughinggrass

Жыл бұрын

Just in case you weren't aware it hasn't reset yet, it resets on the 6th of April. I don't want you accidentally over filling your annual ISA allowance and having to pay tax down the line.

@mightywokka

Жыл бұрын

@@MrLaughinggrass good point - I nearly missed that!

@tk4780

Жыл бұрын

My understanding (UK).... if you were to own 'shares' in an Accumulating Money Market Fund then the tax you pay is CGT upon disposal. If you were to own in an Income MMF fund then you pay tax on the monthly income each tax year and the income is treated as Interest income. This feature gives you some more options, if you are investing outside a SIPP / Isa. Choose your share class accordingly!

@hearmenow909

Жыл бұрын

ISAs are pointless. There's other things like luxury watches that will give you a better return and even outperform property.

With how prestigious Lloyds presents itself to be, they sure do screw over the people that they call customers.

Interesting video for sure. There are a ton of easy access savings accounts in the UK offered by named providers over 4%. Unless the interest difference is huge im not sure if this approach is qorth the hassle at the moment. Still, its something i wasnt aware of so appreciate you taking the time to educate us.

Hi James, could you do a video about protection of shares and EFTs in ISA S&S ? I tried to looked up if the £85k protection from FSCS and FCA covers shares and ETFs and it is not really clear for me if this is, in terms of company / funds going under (not investment risk itself). There seems to be some niuance about the fact if you received "advice" to invest or not. Will be great to hear it from trusted source. Love your content. Thank you.

It's tempting, but just last week the FT was writing about the US Treasury warning about structural vulnerabilities in money market funds. I think I'll stick with FCA covered cash savings instead of possibly losing a painstakingly saved house deposit.

@James-tk9to

Жыл бұрын

This is prudent and sensible. Many of these alternative off market schemes are scams.

THANK YOU

Thanks for this James. I always wondered why someone who invest in a money market fund

Very useful. I tend to mix easy access with fixed term accounts. Had never considered MMFs before, I guess partly because rates have been so low for so long. Thanks for enlightening me! This takes the effort out of chasing the best (altho I take your point about it being less useful in a falling interest rate environment...)

@zakman9244

10 ай бұрын

Money Market Funds are Not secure unlike a Money Market Account is insured by the F.D.I.C. !! You can lose your money in Money Market Funds !! This is something you really need to study on before doing anything !!!

@cossym

10 ай бұрын

@@zakman9244 doesn't bother me. Particularly the US-centric FDIC insurance

Good video. I’ve subscribed. Good idea to invest in MMFs within an ISA? Or would platform fees and/or other charges negate any tax benefits. I hear what you say about these being generally of a short term nature…

my dad always said Put your money under a big rock!

Hi James - long time watcher, first time commenter! Contrary to your point about the large banks, JP Morgan Chase (UK) actually have a really good savings interest rate at the moment with 3.1%.

@JamesShack

Жыл бұрын

Hi Cam Thanks for the comment! That is true, although in the UK Chase is more of a challenger bank that has to offer high rates to attract new deposits. It's established in the US but not in the UK.

Nice video. And OMG - a new room! 😁

Good work. I use premium bonds as my emergency fund currently

@tancreddehauteville764

Жыл бұрын

Bad idea!

@IMBlakeley

Жыл бұрын

I did that for a while between houses as I didn't want to lock my cash, worked it out afterwards the small wins meant I got the average return with a small chance I could have (but did not) score a big win.

@JamesShack

Жыл бұрын

Premium bonds are a very clever way to get people to save more (because they know we all love a lottery). Still, the problem is that - just like all lotteries - they are not as good as you think, and people hold onto Premium Bonds when they should instead be investing for the long term. The average yield at the moment is 3.3%, but that is the "mean" which is heavily skewed by the £1m winners. The average (median) yield is either 0% if you have a small amount or just 2.55% if you have the full £50,000. See here: www.moneysavingexpert.com/savings/premium-bonds Yes, that yield is tax-free, but most people do not max out their ISA allowances any way, which would be a more reliable alternative. Don't get me wrong, I think they are a clever way to get people to save more, and they can be useful to park your emergency fund or money you need in the short term. However, people often hold far too much in them when they should really be investing for the long term.

Thank you. Do money market funds compound interesrt? if so how often typically?

Great video! Going to park the emergency fund in one of these. Cheers 👍🏻

@JamesShack

Жыл бұрын

You’re welcome!

Hi James, as always great content. My Mrs and I have been trying to get in touch with your business to get financial planning/advice but haven't been able to do so. We completed the questionnaire, as well as filled the form. Is there an easier or more direct way to book the appointment? Please let me know, thank you.

@JamesShack

Жыл бұрын

Hello! My diary is often back up, but you should be able to book some time to speak with my team through our website: octopuswealth.com/

You should do a video for what you put your cash in when rates are getting cut and overall low.

Hi James, is there a Sterling fund that is government backed only? Ultra short term government bonds only

When there are high yield savings accounts that give 4.29% APY and the deposit is insured by FDIC why would i bother for the added hassle its not worth it.

I don’t understand… in the last week one of Australia’s top banks have pulled cash completely, no deposits no withdrawal and as I believe it’s not the only one in the world ?????

But income earned from MMFs wouldn’t be treated as savings income so you might be taxed on it depending on the person. Still a great choice given the differential in rates but something to be aware of all the same.

Gold … a hedge against inflation is obviously higher return than interest offered by anyone right now 👍

If you think that banks take depositors money and then lend it out, you’re still working with primary school thinking... that’s clearly not how it works with fractional reserve banking.

Trade Republic 2% Interactive Brokers have 4.33% on their login screen (US only probably)

Great stuff, just the video I needed. You been Skiing James? You look like you've caught the sun!

@JamesShack

Жыл бұрын

I have, Ischgl in Austria! It took me a week to recover...

@pixel-fudger

Жыл бұрын

@@JamesShack nice.

CD's at JP Morgan Chase are currently 4% completely safe, savings is lower, but you only keep small amounts in savings as a holding place for money that will be invested in higher yielding CD's, bonds or treasuries.

That was enlightening for those who don't know indeed , on the other hand i've never been so open to the concept of interest on cash i personally prefer direct capital profit on cash therefore i've never cared about how much interest i'll be getting from a bank as much as i care about keeping the cash safe and secured and that's the ultimate use of a bank to me personally but thank you for sharing

As a matter of interes5 on a money market fund have you found if there is a consistently best time to withdraw , ie say two days before end of month or say two days after month beginning ?

Crisp and concise presentation... I am a subscriber

Our "professional advisor" persuaded us years ago to move it to high interest MM funds. What he did not tell us was that it was invested at Mex Peso's. A week later the peso fell 50%! And our stupid tax system made us pay tax on the interest, even when we lost half the principal :((

@RayMondElec

Ай бұрын

Ever stop to thi k if so called financial advisors are qualified to advise us on were we should invest our hard earned cash. Then why are they still having to work for a living ? 🙄 🤔

This is very timely as I've just been researching mm fund. Would it be a good idea to put pension contributions into a money market fund as you get close to retirement in order to benefit from the tax advantage but minimise the risk of markets being down at the point you retire and want to draw some cash from the pension? Thanks.

@JamesShack

Жыл бұрын

That is a potential use case, yes. Although I can't say whether it would be suitable for you personally.

Hi James, if i'm looking for a MMF or ETF in GBP, which invests in gilts / treasuries, what the best way to draw up a short list? Thanks

I haven't used banks for years. I use only Credit Unions. Anything that uses stock market in any way, it could drop like a rock and you lose it all or most of your money.

@sarahr6089

6 ай бұрын

Investing in the stock market is for the medium to long term. Everyone has a different attitude to risk. The stock market will have ups and downs, but you need to ride out the downs - you lose money if you cash in on a down, you make money if you cash in on an up.

And also Gold bars Silver. Platinum and Palladium precious metals people are switching to. Profit wont been seen for approx 5 years but Gold has risen in value regardless of what currency is doing and banks are buying large amounts too

Thanks

If your assets (stocks, bonds, not affiliated with the bank etc) are held by a brokerage within a bank, and that bank were to become insolvent, are those assets still secure?

I use SAGA instant access savings account which is designed for the over 50s and its pays me monthly an interest rate of 3.3% gross.

If you can lock your money up, look at CDs. Nearly the same rate, but the rate is 100% guaranteed and not subject to interest rate fluctuation. There’s the suggestion that MMF rates could be dropped quickly. I just got 4.25% on a 13 month CD.

@JamesShack

Жыл бұрын

Of course, if you want are happy to tie your money up, you can usually get higher rates. These are alternatives for easy access cash.

James, are money market funds sterling held within a sipp as an income, are these protected by fcsc? Because I'm getting conflicted information

Thanks, very interesting. The current interest rates offered by most high street banks are a joke compared to what other offers are out there.

Very interesting!

@JamesShack

Жыл бұрын

Glad you think so!

The reason its performance is so smooth and its fees so cheap is because that Lxyor fund is a synthetic fund, which means it's actually an equity fund with a swap against the bank Societe General. There is an underlying basket of equities in the fund which is used as collateral. It's something to be a little cautious about compared to the Vanguard fund since it doesn't actually hold any of the assets you highlighted earlier.

@jimbojimbo6873

Жыл бұрын

No such thing as a free lunch

@JamesShack

Жыл бұрын

Hi Matthew, this is facilitated by a Swap agreement which brings in more concentrated counterparty risk, but what makes you define this as an Equity fund? To be clear - for other viewers - the risk attached to this fund is comparable with other Money Market funds, not an equities fund.

@spivvo

Жыл бұрын

Ooops caveat emptor

@matthewshipton9069

Жыл бұрын

@@JamesShack Wrote a longer reply which seemed to disappear, but if you look at the fund factsheet it's literally holding nothing but equities whose performance is "swapped" for the SONIA index via Soc Gen. So long as Soc Gen is solvent it's all fine, which makes the risk very small. I raise it just because one of the points you make in the video is that it distributes the money around multiple banks which isn't the case here.

@JamesShack

Жыл бұрын

@@matthewshipton9069 Thank you for the comment and well raised.

Nice one James

@JamesShack

Жыл бұрын

Cheers

Since you are talking about funds, you need to add in the broker fund custody fees, which can be significant (often 0.2% to 0.4% a year)

Does this apply to the American financial system?

Hi James. Great content as ever. A quick query, I am assuming that any gain would be treated as gross interest rather than CGT. Would this interest have to be declared on a personal tax return regarding the amount accrued in any given tax year or on withdrawal of the money market product?

@JamesShack

Жыл бұрын

In the year the income is accrued, even if you keep holding the fund.

R these money market funds as liquid as savings/checkings accounts at a retail bank?

Also middle holding or clearing cos. Other reasons for sml bank failures incl bad paper.

Why not just put your money into the smaller bank with the higher interest rate?

A really helpful video. I am going to be taking a DB pension later this year, but need an extra £10k cash per year to supplement this. I have been wondering where to hold this for the first year, years 2 and 3 I thought I could lock up in a bond. This could then trickle down into the MMF each year (so long as interest rates stay up). Would that seem a good idea?

@JamesShack

Жыл бұрын

Hi Rob, I can't say if that is suitable for you specifically, but people often do use Money Market funds for this purpose.

Hi James legendary channel and thanks for the posts what you are doing, helping people with pensions and planning tips is invaluable. I had one question on your money market fund in terms of putting spare business cash into one. Wouldn't you pay capital gains on money invested into one of these funds therefore reducing the effectivness of this as an investment for short term?

@JamesShack

2 ай бұрын

You would pay corporation tax on the interest income, just like with a bank account.

Cardano 4,17% self custody I trust more than anything rewards five days

great video

Very interesting video. Slightly inaccurate when it comes to interest rates on offer by the larger banks who are now offering much more than 1%, but point taken

Hi James. Really enjoy your videos. I notice in a reply to a US contributor, you made reference to SOFR (the US equivalent to SONIA). Are you aware of any MMFs available to UK investors that attempt to track the SOFR. I've failed to find any ...

@JamesShack

Жыл бұрын

I'm not, but I haven't looked. You might be able to find a US fund that is hedged back to GBP.

Interesting!

Please could you say what amounts you need for these funds, and where to find them? Thankyou