500K to invest, Best way??

Hi all,

I would like to invest 500K into a savings account of some kind. What is the best type of account to consider for such an amount. Most internet savings accounts have a limit to the amount you can invest. I am not keen on having accounts all over the place.

I am just wondering if anyone has advice on savings on such an amount?

Cheers
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  • jem16
    jem16 Posts: 19,393
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    For that amount of money a savings account will probably not be the best option as inflation is likely to eat away at your capital. There is also the problem of any compensation being limited to £35k.

    Why do you want to save as opposed to invest?
  • dunstonh
    dunstonh Posts: 115,904
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    I would like to invest 500K into a savings account of some kind.
    Thats not investing. That is placing 500k into a savings account.

    If you are aged over 65 or its long term then its a fairly weak option. Short term is fine though.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • jem16 wrote: »
    For that amount of money a savings account will probably not be the best option as inflation is likely to eat away at your capital. There is also the problem of any compensation being limited to £35k.

    Why do you want to save as opposed to invest?


    Possible reasons for saving as opposed to investing:-


    Clerical Medical With Profits Bond: Return 1.3% (Spring 2007 - now cashed in).

    Scottish Widows Property Life: Return:1.1% (Sept.2006 - Sept.2007).

    Invesco Perpetual:-

    Income Bond: Net annual return: 3.15%

    High Income Bond: Net annual return: 3.25%


    Currently online savings accounts are paying far better net returns than the above investments. Maybe it's a good idea to wait a while before investing as the returns are too low at the moment bearing in mind the risk factor.
  • dunstonh
    dunstonh Posts: 115,904
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    Maybe it's a good idea to wait a while before investing as the returns are too low at the moment bearing in mind the risk factor.

    And what period are you saying that returns are low at the moment?

    How do you know that the same period going forward will be low or not?

    When you invest, you do it for 5 years plus normally. You would typically expect a bad year or two in there. The longer the period the better as the good years you hope to be better than the bad.

    Take your scot widows property. No loses in the property sector from end of 1991 until July 2007. You would have averaged over 10% a year in that period but you get 1.1% in one year and in your eyes that doesnt make it a good investment? (it isnt for the next 3-6 months as it happens but after that?)
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Hi,
    I don't personally like investing as the terms make it clear that the value of your investment can go up or down!
    I always stick to savings and if i were you i would consider putting £30000 into premium bonds (that's the max for an individual) and split the rest between a Stropud and Swindown 1 year fixed rate savings account at 6.85% aer and a Cahoot account paying 6.25% aer (over £250k)
    Cahoot are Abbey's online bank.
    Hope this helps.
    If you dont need access to the money for a year then put it all with Stroud who have a max of £500.
    Kind regards
    Mindovermatter
  • jem16
    jem16 Posts: 19,393
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    Currently online savings accounts are paying far better net returns than the above investments. Maybe it's a good idea to wait a while before investing as the returns are too low at the moment bearing in mind the risk factor.

    What the OP hasn't mentioned is the length of time he/she wants to put the money away for. If it's short term savings is best.
  • chesky369
    chesky369 Posts: 2,590 Forumite
    "Maybe it's a good idea to wait a while before investing as the returns are too low at the moment bearing in mind the risk factor. "

    But if you invest (as opposed to save) now whilst the markets are depressed, you end up with a much better return once they pick up.
  • dunstonh wrote: »

    When you invest, you do it for 5 years plus normally. You would typically expect a bad year or two in there. The longer the period the better as the good years you hope to be better than the bad.

    Take your scot widows property. No loses in the property sector from end of 1991 until July 2007. You would have averaged over 10% a year in that period but you get 1.1% in one year and in your eyes that doesnt make it a good investment? (it isnt for the next 3-6 months as it happens but after that?)


    I am aware that investments are best suited for the longer term ie.at least 5 - 10 years.

    My Scottish Widows Property Life investment has been excellent over the past 5 years but if I had the same £20,000 to invest now, I would not invest it in a property fund, either bricks & mortar or unit trust.

    On that basis how could I possibly suggest that the OP puts a large sum of money into a property fund?
  • chesky369 wrote: »
    "Maybe it's a good idea to wait a while before investing as the returns are too low at the moment bearing in mind the risk factor. "

    But if you invest (as opposed to save) now whilst the markets are depressed, you end up with a much better return once they pick up.


    Your advice is good as long as the markets do pick up. Will all sectors pick up eventually, possibly not? The future for property funds is looking decidedly rough for unit trust type funds. Things could get worse for the bricks & mortar funds next.

    This problem affects people who are investing for income. If they require (say) 5% of the original investment as income each month how will they fare if the return on the investment is only 1.1%? They will immediately be digging into their capital!
  • jem16
    jem16 Posts: 19,393
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    I am aware that investments are best suited for the longer term ie.at least 5 - 10 years.

    My Scottish Widows Property Life investment has been excellent over the past 5 years but if I had the same £20,000 to invest now, I would not invest it in a property fund, either bricks & mortar or unit trust.

    On that basis how could I possibly suggest that the OP puts a large sum of money into a property fund?

    Why would you suggest that a large sum of money be put into one fund or indeed one sector?

    Even with £7k into a S&S ISA you would be looking to diversify using 7 funds.
    This problem affects people who are investing for income. If they require (say) 5% of the original investment as income each month how will they fare if the return on the investment is only 1.1%? They will immediately be digging into their capital!

    Again you seem to be focusing on everything being in one fund.
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