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  • jem16
    • #2
    • 25th Nov 07, 6:23 PM
    • #2
    • 25th Nov 07, 6:23 PM
    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
    • #3
    • 25th Nov 07, 9:46 PM
    • #3
    • 25th Nov 07, 9:46 PM
    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 a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
  • Thomas Crown
    • #4
    • 26th Nov 07, 12:42 AM
    • #4
    • 26th Nov 07, 12:42 AM
    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?
    Originally posted by jem16

    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
    • #5
    • 26th Nov 07, 1:49 AM
    • #5
    • 26th Nov 07, 1:49 AM
    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 a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
  • mindovermatter
    • #6
    • 26th Nov 07, 6:48 AM
    • #6
    • 26th Nov 07, 6:48 AM
    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
    • #7
    • 26th Nov 07, 8:03 AM
    • #7
    • 26th Nov 07, 8:03 AM

    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.
    Originally posted by Thomas Crown
    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
    • #8
    • 26th Nov 07, 8:16 AM
    • #8
    • 26th Nov 07, 8:16 AM
    "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.
  • Thomas Crown
    • #9
    • 26th Nov 07, 12:13 PM
    • #9
    • 26th Nov 07, 12:13 PM

    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?)
    Originally posted by dunstonh

    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?
  • Thomas Crown
    "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.
    Originally posted by chesky369

    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
    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?
    Originally posted by Thomas Crown
    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.
  • Thomas Crown
    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.



    Again you seem to be focusing on everything being in one fund.
    Originally posted by jem16

    The OP stated that they had 500k to save/invest.

    At no time did I suggest that the OP invests all this money into one fund or sector. I used the expression ''a large sum of money''. 20K is a large sum of money to me!

    I used the S.W.P.L. fund as an example of how returns may not cover required monthly income, therefore leading to loss of capital. E.G. A 20k investment could give 5% of initial investment as income each month (83.33) but if returns are only 1.1% per month (18.33) that is not a good situation to be in.

    Unfortunately jem16 you have read things into my post that I didn't actually say.
  • EdInvestor
    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!
    Originally posted by Thomas Crown

    People who want income usually invest in assets which pay dividends or interest.The dividends are paid out independently of what happens to the capital value of the shares The overall return is thus not really relevant in terms of the payment of the income.

    It is quite easy to generate a 5% annual income by investing in a mix of higher yielding blue chip shares, bonds/gilts , property investment trusts and cash where the income will not be affected to any major extent by the capital fluctuations (there is always some risk - but not as much as the fluctuation in interest rates).
  • mosfet
    Its been really interesting listening to all of your responses. I should have mentioned this is my first post but i do not want to tie up the money for a long period of time. For example over 6 months is too long. The reason being that i will invest in property when i see the oppurtunity. Hence why i asked about saving schemes. the problem i have is that internet savings account are often limited to a maximum you can put in. Plus with eveything that has happened with northern rock i naturally concerned about placing a large amount of money with one institute. On the flip side i dont really want several accounts all over the place. I would like advice on a solid savings account that i can rely on. I currently have the money in a deposit centre with my bank which is short term and i get an ok return. Are there any other recommendations or ideas that you people may suggest. To be honest i am a novice when it comes to saving accounts and bonds/shares. I have always had all my money tied up in bricks and mortor and it is only now i have the option to save a lump sum. Cheers, really good forum and some good points of view!
  • dunstonh
    Thomas, I think some of the answers to your questions are being based on your investment selection (which leaves a little to be desired - sorry) and your investment knowledge following the comments you made on the other thread about Inv Perp funds and the incorrect return figures you have given for them (as well as being incorrect on this thread too).

    At the end of the day, the OP has suggested that they are not looking at investing but at saving. So, investment discussion is largely irrelevant,
    I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
  • jem16

    Unfortunately jem16 you have read things into my post that I didn't actually say.
    Originally posted by Thomas Crown
    My apologies if you feel I have misunderstood but I don't think I have.

    However you said;

    On that basis how could I possibly suggest that the OP puts a large sum of money into a property fund?
    Whether you mean £20k or £500k I was simply pointing out that you would not just use one fund - you would want a spread of funds.

    However back to the OP.

    How about Sainsbury's Internet Saver? It is backed by the Bank of Scotland and the maximum you can pay in is apparently £2m. Interest rate is 6.25%.

    http://www.sainsburysbank.co.uk/savings/sav_internetsaver_is_skip.shtml
  • Thomas Crown
    Thomas, I think some of the answers to your questions are being based on your investment selection (which leaves a little to be desired - sorry) and your investment knowledge following the comments you made on the other thread about Inv Perp funds and the incorrect return figures you have given for them (as well as being incorrect on this thread too).

    At the end of the day, the OP has suggested that they are not looking at investing but at saving. So, investment discussion is largely irrelevant,
    Originally posted by dunstonh

    Ouch! dunstonh, your comments are straight to the point but I think they are mostly accurate. My investment selection was recommended to me by two different IFAs in January 2001 & April 2002.

    Yes I did misunderstand, ''Yield: Annual Net Return'' to be the total return on the Invesco Perpetual funds.

    I am not going to post on this thread again, I will leave that to other more experienced investors. I would like to discuss your comments in more detail on the ''Invesco Perpetual'' thread that I started last night. Thanks.
  • mosfet
    Cheers Jem, that savings account does look promising. How do you know its backed by the Bank of Scotland. Would you be happy trusting a Sainsbury saver with such a large amount of money. I guess if backed by Bank of Scotland it would be ok.
    Dont want to change the topic of conversation but what are your thoughts regarding Bradford and Bingely. Are they likely to get into trouble?
  • dunstonh
    Ouch! dunstonh, your comments are straight to the point but I think they are mostly accurate. My investment selection was recommended to me by two different IFAs in January 2001 & April 2002.
    Text has a way of coming across without emotion. Mine especially. Here you go to make it a bit friendlier...

    My investment selection was recommended to me by two different IFAs in January 2001 & April 2002.
    2001 with profits wasnt a great decision as the writing was already on the wall for many providers at that point. That said, I made my last WP investments in 2003 and they have been performing in excess of 10% p.a.

    The downfall of with profits didnt happen over night and its easy to apply hindsight. Especially when you consider that we didnt have access to the sort of data and information that exists nowadays back then. So investments tended to be a little more simplistic.

    The Scot Widows property fund 100% did actually work out well for you with your timing. Luck or judgement I dont know. However, a sector allocated spread would have performed better.

    I am not going to post on this thread again, I will leave that to other more experienced investors. I would like to discuss your comments in more detail on the ''Invesco Perpetual'' thread that I started last night. Thanks.
    Dont let it put you off. If you thought those things, then chances are many others did/do as well and if they read this they will benefit from it. All the regs are here to help. I will watch out for your other thread though.
    I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
  • jamesd
    mosfet, see the Savings Accounts article.

    The London and Country account paying 6.55% for the first six months then 6.15% seems suitable for your purpose, with a maximum deposit limit of a million Pounds. Annual interest payment, account operated by the Chelsea Building Society.

    I suggest avoiding ICICI for your purpose because of glitches that people occasionally suffer getting money in or out promptly, which is unacceptable when you have property purchase deadlines to meet.

    Not that the deposit guarantee scheme covers only the first 35,000, so you can't avoid splitting into chunks of that much if you want 100% protection. But it is worth noting that no saver lost their capital in the Northern Rock events.
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