What's the best way of earning around 5% with as little risk as possible?

Hi,

What's the best way of holding cash, or near to risk-free cash, and earning around 5% in a SIPP?

Thanks.

Your question was about a SIPP, which is of course a type of retirement savings account shielded from tax. But for those readers with similar questions who have money outside an ISA or a SIPP, it’s worth investigating ‘gilts’ or Government bonds. The money you make on these is mostly tax-free so they are well worth looking into, particularly for taxpayers who have also maxed out their annual personal savings allowance.

We also asked finance expert, Mark Dampier, for his two cents:

Most platforms charge for funds, including cash-like "money market funds", so that takes off some of the cash return. Money market funds are not completely risk-free, but are a type of fund designed to be very low risk and are primarily made up of short-dated bonds.

You could try an ETF, such as the iShares GBP Ultrashort Bond UCITS ETF, which has a yield of around 5% at the time of writing. That's one that I hold. You can buy/sell on any business day, which seems to be something you're looking for rather than a longer fix which ties up the money.

Mark DampierFinance expert