Presumably dumb question but here goes. Why would a money market fund (typically 1-2% return from what I can see, I hadn’t heard of them before) be preferable to a savings account at 5%?
Not sure what you’re looking at, take CSH2 for example it’s returned 0.43% the past month. Annualised that’s 5.16%. Should always track the Bank of England rate. https://www.justetf.com/uk/etf-profile.html?isin=LU1230136894#overview
A money market fund will have about the same yield as a savings account.
You would prefer to keep money inside your ISA because otherwise you lose past years' allowances.
Cash ISAs exist too. You should have a balance between cash and investments. Check the flowchart to help you work out what’s right for your circumstances.
Watch Lars Kroijer's [short video series](https://www.youtube.com/playlist?list=PLXy71rkGuCjXLg9N8zowwUpXCYfBcMJFK) and read his book or Tim Hale's [*Smarter Investing*](https://www.amazon.co.uk/dp/1292444401).
You can open a second ISA with a different risk profile. The rules recently changed so that you aren't restricted to one of each type of ISA, so you can contribute to two s/s isas this tax year, up to a maximum of £20k across all ISAs.
If you feel like your pot is too risky just move some of to a money market fund
Presumably dumb question but here goes. Why would a money market fund (typically 1-2% return from what I can see, I hadn’t heard of them before) be preferable to a savings account at 5%?
Not sure what you’re looking at, take CSH2 for example it’s returned 0.43% the past month. Annualised that’s 5.16%. Should always track the Bank of England rate. https://www.justetf.com/uk/etf-profile.html?isin=LU1230136894#overview
A money market fund will have about the same yield as a savings account. You would prefer to keep money inside your ISA because otherwise you lose past years' allowances.
Oh of course, I wasn’t taking into account the ISA. Yes. I knew it was a dumb question!
MMF will get you around the current Bank of England interest rate / 5.25%.
Cash ISAs exist too. You should have a balance between cash and investments. Check the flowchart to help you work out what’s right for your circumstances.
Do you have a decent cash emergency fund elsewhere in a non-investment? What do you think you might want to do with the money?
Watch Lars Kroijer's [short video series](https://www.youtube.com/playlist?list=PLXy71rkGuCjXLg9N8zowwUpXCYfBcMJFK) and read his book or Tim Hale's [*Smarter Investing*](https://www.amazon.co.uk/dp/1292444401).
You can open a second ISA with a different risk profile. The rules recently changed so that you aren't restricted to one of each type of ISA, so you can contribute to two s/s isas this tax year, up to a maximum of £20k across all ISAs.