£30,000 Investment Challenge - Can you beat it?

jamesd

elliotj wrote: »

Whats the best way to invest £30,000 for a year in todays economic climate without risk?

I don't know anywhere to put the money without risk. The closest to zero risk would be UK government bonds (gilts) that mature within the year, held to maturity, or NS&I savings accounts. The UK government is one of only two that has never defaulted on its bonds (USA is the other) but there's always a first time.

elliotj wrote: »

The best I can reckon that can be done is:

• £3,600 in the obligitory Cash ISA. Scottish Widdows E-Cash ISA @ 6% AER, 6% NET
• £3,000 (Dripfeeding £250p/m x 12mths). Barclays Regular Saver @ 7.75% AER, 5.99% NET
• £6,000 (Dripfeeding £500p/m x 12 mths). Halifax Regular Saver @ 7% AER, 5.6% NET.
• £17,400 in an Alliance & Leciester eSaver Savings account @ 6.3% AER, 4.9% NET. Plus use this to Drip-Feed the other two.

None of those meets your without risk requirement. For each you risk loss of interest for some time if the FSCS becomes involved, a risk that you don't have with the UK government bonds and NS&I products.

For the A&L account you should check that it's still using a full UK FSCS membership and not the passport scheme, else you also have the risk of the Spanish guarantor failing to honour its passport scheme obligation. That's a risk you can choose to accept or not - Icesave savers did accept it and lost about two months interest as a result... and could have lost much more.

If you drip feed from the A&L account you'll lose capital at just below the inflation rate, whatever that is, since it pays no interest in months in which you take money out, except for July.

As usual when investing, your best option may be a mixture. Perhaps combine some of the extremely low risk government bonds or NS&I savings accounts with some of the higher risk commercial accounts so that you get a blend of risk and reward.