Best long term savings?

mrposhman

DiggerUK wrote: »

Madra,

If you had gone out on January 21st 1980 and put the whole inheritance in one purchase of gold you would have paid about 370 pounds per ounce.
On January 21st 1984 your children would have been given gold at the value of 264 pounds per ounce.
Result unhappiness.

If however you had made 10 purchases at six monthly intervals over 5 years your average cost would have been 254 pounds per ounce. When you presented the gold to your children it would have risen to 271 pounds per ounce.
Result happiness.

Hope this clears up any confusion from Masomnia.

P.S., 21/01/1984 was the height of the gold spike.

Good luck.

Ok so clearly you still haven't read the OP.

HE DOESN'T SEEM TO WANT THE RISK THAT HE COULD GIVE LESS THAN £10K TO HIS KIDS.

What guarantee is there that gold will stay at or above the current rate?

Most people a month or so ago (gold bugs) indicated that gold was clearly going to outperform any other investment and QE would cause wholesale increases in gold. Well the gold price in $'s has actually FALLEN over the last month so all you goldbugs were WRONG.

Whats to say you would be right over a 5 year timeframe?

At least with shares over a 5 year timeframe, these should rise due to the large fall but again this has the possibility to lose the original investment.

I would agree with the poster that stated that guaranteed investments would be the best call.

mrposhman

DiggerUK wrote: »

Madra,



If however you had made 10 purchases at six monthly intervals over 5 years your average cost would have been 254 pounds per ounce. When you presented the gold to your children it would have risen to 271 pounds per ounce.
Result happiness.

So the gain would be a mammoth £17 per ounce which over a 5 year period would result in an increase of 6%. Result unhappiness as the original investment has actually DECREASED in real terms.

DiggerUK

Madra,

The figures quoted by mrphosman are wrong, the return would have been 7%. Were are returns of that amount being found today?
Don't forget this would have been 17 pounds in 1984. My calculations were based on making your first purchase at the peak of the market.
Prices in 1980 also went into the 220's.

Prices in UK are down from 700 a month ago to 600 now and may dip for a while.
Happy time to buy? quite possibly.

Best of luck.

mrposhman

DiggerUK wrote: »

Madra,

The figures quoted by mrphosman are wrong, the return would have been 7%. Were are returns of that amount being found today?
Don't forget this would have been 17 pounds in 1984. My calculations were based on making your first purchase at the peak of the market.
Prices in 1980 also went into the 220's.

Prices in UK are down from 700 a month ago to 600 now and may dip for a while.
Happy time to buy? quite possibly.

Best of luck.

Try reading my name before quoting me.

Ok slight calculation error but 6.6% is hardly a great return over a 5 year period. That means the average annual increase is 1.3% which is lower than a cash ISA can provide at the moment.

Yes the price has reduced recently but the price of gold in $'s is also up from around the $600 mark to around $900 in the last 2 years which suggests that this may be somewhere near the top as it currently stands.

Gold is hardly a prudent investment for the OP and he SHOULD NOT follow your advice.

mrposhman

mrposhman wrote: »

Try reading my name before quoting me.

Ok slight calculation error but 6.6% is hardly a great return over a 5 year period. That means the average annual increase is 1.3% which is lower than a cash ISA can provide at the moment.

Yes the price has reduced recently but the price of gold in $'s is also up from around the $600 mark to around $900 in the last 2 years which suggests that this may be somewhere near the top as it currently stands.

Gold is hardly a prudent investment for the OP and he SHOULD NOT follow your advice.

Just to confirm how poor DiggerUK's point is.

The inflation rates (RPI) from 1980-1984 were as follows:

1980 = 18%
1981 = 11.9%
1982 = 8.6%
1983 = 4.6%
1984 = 5%

Doesn't make a 6.6% return seem very good really does it?

Aegis

DiggerUK wrote: »

Madra,

The figures quoted by mrphosman are wrong, the return would have been 7%. Were are returns of that amount being found today?
Don't forget this would have been 17 pounds in 1984. My calculations were based on making your first purchase at the peak of the market.
Prices in 1980 also went into the 220's.

Prices in UK are down from 700 a month ago to 600 now and may dip for a while.
Happy time to buy? quite possibly.

Best of luck.

Better returns than 7%? Savings accounts will manage that over 5 years. However, this is irrelevant, the OP has stated that he wants a safe investment, and gold is not safe.

JoeCrystal

@madra While I applauded your idea of ensuring that these money are invested wisely, have you consider that instead of investing them, just saving them until they are twenty one. Surely the whole point is to ensure that the value of such amount are protected, rather than investing in hope for potential gain. Investing the amount in such a way that may be losses should not be the point of these inheritances.

As it is, the idea of putting them in gold are foolish and too much of the problem. I kindly suggest that putting them in ways that returns which are guaranteed such as NS&I Index-linked Savings Certificates which should hedge it against inflation. (I must declare a conflict of interest that I am fanatical enthusiast for NS&I Index-linked Savings Certificates)

Also, you do not have to put entire amount of inheritances into one basket, just spread them around among different baskets.

DiggerUK

@madra,
Joe Crystal makes a suggestion that is sound.
If you haven't used your NSI index linked allowance for this issue consider it.
If you buy them in your children's names they can get their hands on the inheritance so I would suggest that you buy in your own names.
My pension pot is 1/3rd index linked. I'll let you and Joe guess were the rest is !!
Take care.

dunstonh

I also feel as their father and executor of the Will I am duty bound to make sure their money is invested wisely. Can anyone offer me some sound advice?

Its not just a feeling. Its a legal requirement. You not only have to do whats best but also be seen to do what is best.

I would definately go with the Roth IRA or the Roth 401K. Basically this will be all pre taxed funds, meaning whatever you have in there is YOURS and you won't have to worry about taxes being taken out when you make withdrawals.

IRA means something very different in the UK. However, you are spamming so I will ignore that, as should others.

Twickenham_Green_FA

[FONT=&quot]Hi Madra, joined this thread quite late on. Unless your children will definitely require the funds in 5 years time, I would look into a longer term investment that would give them a good financial start, such as pensions, stocks & shares ISA's etc. I would also seek advice from an financial planner professional.[/FONT]