can i get 5% on my lump sum

marklv

bendix wrote: »

This is not a debate about house prices. Try reading the OP again. They want a 5% return and (effectively) a capital guarantee.

I don't think investment properties are quite what they are looking for, do you?

If the person wants capital safety, a property is a good deal. If they want capital safety in cash then the only option seems to be some kind of income bond fund. 100% safety is not really possible, but you can get close to it.

dunstonh

If the person wants capital safety, a property is a good deal.

Poor liquidity and drops of 30-40% likely every 10 years or so does not equal cash.

100% safety is not really possible, but you can get close to it.

You are right that 100% safety is not possible but you can make reasonable judgements on risk. Plus, the OP seems to be only focused on one risk and not all of them. It would be nice to get some follow up from the OP.

Lokolo

marklv wrote: »

If the person wants capital safety, a property is a good deal. If they want capital safety in cash then the only option seems to be some kind of income bond fund. 100% safety is not really possible, but you can get close to it.

So negative equity does not exist no?

bendix

Debt_Free_Chick wrote: »

No - sorry

Going back to the OP, what about the Barclays 5 year 5% fixed income bond? This could be done as part of income drawdown, surely?

Maximum investment of £75,000 though.

I don't think the chances of Barclays defaulting are very high . . . .

jamesd

tamzin03, there are some term deposit accounts (often called bonds) that will pay around that.

You'd probably be foolish to use them for it all, though. That's because they pay without allowance for inflation, so after allowing for inflation you only end up with around 2%.

What almost everyone should be doing in your situation is using a mixture of investments, some of that in term deposit accounts, some in capital guaranteed products like those dunstonh mentioned, some in corporate bond funds and some in share funds. This can give you an income of about that 5%, with some capital value variation over the short term, but also with enough long term growth to keep ahead of inflation.

I suggest that you visit unbiased.co.uk and find a local IFA who can give you some personal advice. Don't hesitate to ask questions about it here, so we can check whether you're getting good advice or not.

Jake'sGran

marklv wrote: »

Yes - by using the lump sum to purchase an investment property. This should generate well above 5% per annum, plus you have the capital gains from the property as prices increase. But be prepared for the hassles of being a landlord/lady.

I have read more than once recently that this is no longer a good idea. There are a lot of properties that are not selling and there are problems renting them too.. Personally, I could not stand the hassle. There are a few bank accounts paying around 4% at the moment but not many pay interest monthly. You need to do some research.