I’m looking for a more efficient way to manage my USD cash (and potentially my GBP too) within my online broker account, as their cash account offers rather uncompetitive interest rates.
Until now, I’ve kept my cash in a UK-based USD savings account while deciding where to invest.
However, transferring funds from the bank to Interactive Investor has proven to be a slow and cumbersome process. Many phone calls, forms to fill, long waits and intermediary banks slowing down the process even further plus costs of transfers.
Recently, I discovered an alternative: holding cash in either money market ETFs or short-term Treasury ETFs.
These options not only eliminate the inefficiencies of using a savings account but also offer significantly better yields.
- Money Market ETFs (USD) 4.75–4.89%
- Short-Term Treasury ETFs (USD): 4.3–4.4%
These rates are notably higher than the 3.25% currently offered by the UK-based USD savings account.
As such, moving cash into these ETFs might prove to be a more practical and profitable solution for parking funds within Interactive Investor while I decide on investments.
Three USD ETFs I have looked at are:
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL)
iShares Short Treasury Bond ETF (SHV)
The iShares Prime Money Market ETF (PMMF)
Presumably there is some potential risk involved versus standard cash deposits but perhaps the very minor risks are worth the extra reward.
I would truly value some thoughts on this matter.