Where to put lump sum to get best return

Itsallaboutthemoney_2

Hi,

Been doing some reading on here for sometime now but just seems to have confused myself with it all.

I have 5K that I want to put somewhere and not touch. Ideally I'd like never to touch it again but I also want the safety net that should the - hit the fan, I can have at it.

Just wondering if someone can suggest where to put it to get the maximum interest return.

Halifax for example have suggested it be split into two sums. Any help / advice appreciated.

dunstonh

It sounds like you want to invest the money. Certainly the likely timescale and the fact you dont need it suggest that. A stocks and shares ISA would match the need. Although you dont say what your risk profile is.

jamesd

For people who want fairly low overall ups and downs I tend to suggest investigating this mixture of investments at the moment:

30% BlackRock UK Absolute Alpha
20% Cru Investment Portfolio
20% Invesco Perpetual Monthly Income Plus
20% Invesco Perpetual Income
10% Neptune Global Equity

The chart shows how the volatilities differ and why so much is in the more stable ones (colors are red, blue, yellow, green, gray in fund order).

You'd reduce the proportion in the lower three and increase the proportion in the first two if you're more cautious. Perhaps add some cash ISA holding as well if you're even more cautious.

Using the Halifax is a bad idea, though. Better a competitive stocks and shares ISA provider like Hargreaves Lansdown with a much better range of investment choices.

1echidna

... Share prices can go down as well as up. You may not get back what you invested....

earlgrey_3

1echidna wrote: »

... Share prices can go down as well as up. You may not get back what you invested....

Indeed, and I'm not sure of the sense in encouraging someone with just £5K, who has specifically said they want interest, to invest in stocks and shares in the present climate. There's still a huge downside risk in shares worldwide.

I'd assume Halifax would have advised to put the maximum in a cash ISA and the remainder in a savings account possibly at a fixed rate, at least until the markets stabilise, which would make much more sense.

CLAPTON

It depends upon your circumstances

how old are you
do you own property
do have have a regular income
do you have other savings... how much

jamesd

earlgrey, the timespan given suggests that interest-bearing accounts aren't the most suitable approach. Some of the investment options that I mentioned haven't gone down significantly and none are likely to be down significantly over periods of five years or more.

You might also wonder what Halifax suggested. Chances are that it's a combination of cash ISA with one year nice interest rate and guaranteed equity bond with five year lockin and poor return.

Whether now is a good time to buy or not depends on what you're buying, how much up and down movement you'll accept and for how long you expect to be invested.

In any case, the chart I linked to should leave nobody with any surprises about the level of up and down movements that they might see. That's part of why I included it.

irondog

Oh I love the Cru fund. Fantastic..... just keeps on going up and up. Risk/reward does not matter, not affected by the stockmarket at all etc etc..... brilliant. Don't listen to Warren Buffett, Burton Malkiel etc..what do they know about investing?!

Of course, back in the real world have a look at how the fund actually does what it says it does. Pay particular attention to the way they 'value' the private equity element (invested via a channel islands cell company). Think about what would happen if everyone attempted to cash their fund in at the same time and Cru were forced to sell what are VERY ILLIQUID assets on the open market, at potentially a bad time to sell....

Still happy?

jamesd

The private equity portion is set to be 25% so if that's the least liquid part it's quite a way from being touched.

Interesting that you've posted twice recently and both posts have been critical of low volatility investment options. Seems as though you simply see the words "hedge" or "private equity" and assume that they are inherently bad or risky.

Risk/reward definitely matters and it's why those who are interested in lower risk with lower potential reward might consider this fund.

jamesd

irondog was right to be cautious about liquidity. The Cru funds have been suspended after liquidity troubles and seem likely to be liquidated after some delay, similar to the treatment of the New Star Heart of Africa fund that also had liquidity trouble. With Arch prohibited from managing money it'll be up to Capita to manage the next steps for investors.

Arch: runs the funds via Channel Islands pieces. FSA has withdrawn its authorisation to run funds.
Cru: sales distributor for Arch, took £3.2 million interest free loan from fund components (investor's money) managed by Arch. Now has only skeleton staff left, some joined Africa Invest.
Capita (CF): is responsible for protecting the investors.
Africa Invest: new African agriculture investment vehicle run by many of the same people involved in Cru, independent of the Cru company. Citywire reported that Cru made a £2.4 million loan to the firm with no formal agreement to confirm the terms of repayment and that so far only £1.5 million has been paid back.