100K to invest for 6-9 months

Leafy_2

Hi
I want to sell my house and rent for about 6-9 months (so that I can get my son into the school he wants to go to) before I buy a new house. When I sell my house, I will have about 100 thousand to invest and want to find out what's the best thing to do with it so that I can try and make up the difference between my current mortgage and the rent I will be paying. Any ideas?
Thanks
Anna-Marie

dunstonh

You shouldnt be investing for that short time scale unless you are extremely high risk in nature. You ought to be sticking to savings accounts.

brasso

It's an impossible question because it depends on your attitude to risk.

Personally, I like risk. If it was me, and I had the £100K right now, I would put 5K in 20 different unit trusts/OEICs spread across different geographical areas, commodities and tracker funds. If that general investment strategy performs as well as it has done over the past 3 years, you could make a very significant gain in 9 months. I would check performance daily, and weed out under-performers every 2 or 3 months.

However... (BIG HOWEVER!), this is not the advice you would get from a more cautious investor. Just because the markets have been strong for 3 years, there's NO GUARANTEE that this will continue. Indeed, there is increasing speculation that we are due for a 'correction' anytime soon.

You don't have the £100K yet. It may be some months until it materialises, and the markets may have started their inevitable dip by then. If that's the case I would stick to a no-risk low-return strategy, like gilts or government bonds, or perhaps best, a regular savings account.

The risk is that the markets may not decline gently, but crash badly, and this would filter through to the funds pretty rapidly. You may not have the time to get out before you suffer a loss. You need to get advice from someone or some organisation you trust, though no point in doing that until you have the cash in your hand. Their advice will almost inevitably be to play safe.

tra_2

A friend of mine invested 100k in the premium bonds. She was aslo in the process of buying a new house. She said she won about £200 to £300 per month. It is of course based on chance. Not sure it is a risk I would personally take but it certainly worked for her. She also said it was good for her because she could not just dip into the money.

dunstonh

How did she manage to buy £100k of Premium Bonds when the maximum holding is £30,000 per person?

Plus you dont become eligible for a month after you buy the bonds so on a 6-9 month period, you are missing out at £420 that would have been paid in a savings account all in the hope you may get a "lottery" win which averages out to less than interest rates.

brasso

Yes, I'm pretty sure that most studies show that Premium Bonds are not great investments. Buying PBs to try to make money goes beyond "risk" and into blind hope. You may be one of the small band who strikes it rich but the chances are, you won't.

tra_2

dunstonh wrote:

How did she manage to buy £100k of Premium Bonds when the maximum holding is £30,000 per person?

I think she got her husband and parents to buy them for her!

dunstonh

tra wrote:

dunstonh wrote:

How did she manage to buy £100k of Premium Bonds when the maximum holding is £30,000 per person?

I think she got her husband and parents to buy them for her!

In other words, she has £30k, her husband does and the rest with the parents. Bit risky, she could face a 40% tax bill on the premium bonds in the parents name like that.