Bond ETFs as an alternative to bank account

Hi guys. Is any of you using ETF as an alternative to saving account? My current one is yielding 0,000000% and I was thinking about moving at least part of my reserves to ETF. I might need some of this money at the end of 2021, but I’m also able to cover my needs from other sources so I don’t mind some price fluctuations. Looking forward to your suggestions!

Maybe even less, due to the inflation and the fees.

Maybe considering Inflation-linked Bonds ETFs, to have a Real Return (return adjusted to inflation)? :wink:

For US Bonds ETFs see TIPS ETFs, several flavors (including currencies, distribution/accumulation).

Also Global, GILT and EUR Inflation-linked Bonds ETFs → Only USD and GBP/GBX

Can also search for new additions in this category and ask T212 to add them. :wink:

For so short term, it’s risky, you could end loosing some money, and won’t have time to recoup.

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If it’s money you actually need i would leave it outside of the market in any shape or form.

The longer period of time you have in the market, the more your risks reduce.


What currency do you need, that may also play a factor in options.

As already mentioned, there’s risk even with bond ETFs and if you need to cash out in the shorter term, that risk is obviously heightened.
I use rolling notice accounts as ‘mini-bonds’ and manage withdrawal schedules so I know exactly when I can exit with each one, cancelling and rescheduling withdrawals to extend the lock if I can stay in.
Not many around right now but you can get at least .5 on a 45 day. A lousy rate but still better than nothing and without the market risk, though the .1 you’d be getting above an EA account would only be worth it if you have a very high balance.
Just an idea.

In GBP you can get 2% on balances up to 1k, and two 3% regular savers for £50 a month on balances up to 1k(can withdraw any time).

Other than that you are talking 0.4% easy access, but Premium Bonds probably worth it.

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Excellent topic. I’ve seen treasury bonds ETFs like VDTY etc. on T212 (there are approx. 30 of them), but they don’t look like a good buy (at least they didn’t turn out that way in the last few months).

What would you recommend as a replacement for savings, something with a minimal max drawdown?

Just a small clarification - it´s not like I would need all the money as I will accumulate some more savings during the upcoming months, and I´m also able to wait if the value drops - so let´s say that in Jan 2022 the value of my investment will be lower than what I invested initially, I can wait couple of months or I can cover my cash needs some other way. So all in all - I´m looking for someone who is currently using the strategy I´m asking about - short term cash invested in bond ETF which will at least partly protect my money from inflation. I already checked couple of ultrashort and inflation linked ETFs, but I would be interested what you are using :slight_smile:

What currency do you need, that may also play a factor in options.

Euros, I live outside UK.

I used to park some free cash in the iShares $ TIPS UCITS ETF USD (Acc) (IUST), it’s an EUR version.

It’s an inflation-linked US Treasuries (TIPS), better interest rates and higher inflation than in other countries.