Safe investments!!!!!!!!!

Miss_Penny_Pincher_2

Have you thought about guaranteed tracker bonds? I'm no expert but these sound good for the cautious investor as are guaranteed not to go below a certain amount and could go higher if stock market performs well. I haven't invested in one because I'm putting nearly all money into making mortgage overpayments but Lloyds TSB was trying to sell me one a apparently return have been around 8% but these are more suitable for longer term investment.

NS&I have several guaranteed return bonds etc

http://www.nsandi.com/savingneeds/guaranteedreturns.jsp

If you decide to go down this route it's best comparing the different rates etc though.

dunstonh

Guaranteed Equity Bonds are complete and utter rubbish and should be avoided at all costs. See recent threads on the reasons why.

Lloyds TSB was trying to sell me one a apparently return have been around 8% but these are more suitable for longer term investment.

LTSB have only ever offered one version of a GEB that was worth having and that was around 1996 when they had something called a Premier Income Bond (or something like that).

Miss_Penny_Pincher_2

Sorry - I wasn't aware of that thread.

The banker who was trying to sell me the guaranteed tracker bond was saying I should have that! I had asked to sign up for the Lloyds TSB 8% regular saver to save money in to have instant access to and be able to use to pay lump sum off mortgage. He was saying to me don't sign up for that - it's an utter con but I was determined - I know the arguments about the drip feed but in first month have put £750 in so that will earn 8% for the term anyway and the rest would just be stuck in a lower interest account so may as well drip feed it into this.

EdInvestor

Pobby wrote:

Large cap stock 20% $24,600
Mid cap stock 9% $11,070
Small cap stock 6% $7,380
Foreign stock 11% $13,530
Bonds 20% $24,600
Municipal bonds 0% $0
Cash 34% $41,820
I used the calculator and this is the result based on £120,000 of savings,on going savings £8,500 per year,low tolerance to risk.
As to other details,beside the £100k savings there is a further sum in the bank of £20k.House is paid for,we have no loans or credit cards.
We both have full N.I stamps so will both qualify for the full basic state pension.Private/old company pensions will be worth approx.£6k a year between the 2 of us.

Have a look at this post Pobby.

Baldbloke's choice was quite similar to yours - UK investors are more risk averse that US investors.

Yours works out at
17% high risk ( UK small company shares or foreign shares)
30% medium risk ( UK big company shares)
and 53% no risk (cash)

moneytroll

This seems like a good funds selection tool if you decide to start investing a portion of your assets in equities. The tool picks funds with the best managers/longterm record accoring to your riskprofile.
When I chose my funds, I didn´t use this tool but after I ran it, I was surprised that many of the funds I picked, showed up (which doesn´t indicate much, but probably just means that the tool´s guess is as good as mine ...so might save time doing too much research)
I would add some property funds if necessary or change the percentage you would want to have in a high-interest saving account, depending how cautious you feel.

Pobby

Just to say thanks to all that have posted so far.I really am not very savvy about investments so all postings are very useful to me.

EdInvestor

Unfortunately that tool operates the wrong way round - it gets you to choose your risk profile ( how would you know if you are a novice?) and then hedges its bets on the asset percentages.

One of the "Very cautious" asset allocations includes 39% in "other assets" including, err, hedge funds :eek:

One of the Cautious portfolios has 61% in equities and junk bonds, including a substantial chunk at the riskier foreign and small cap end.Would anyone call that cautious?

IMHO one of the reasons UK investors are (understandably) risk averse ( ie frightened of losing money) is that over the years they have persistently been put into investments which were too high risk for their profile.

Until recently most people's pensions and endowments were in With profits funds and Balanced managed funds which were invested 75-80% in equities, with a large chunk in the higher risk tracker and foreign stocks.

How many people knew that?Very few, they would never have agreed because this asset allocation was too risky.

How many people are now getting the idea (like Pobby) that tracker funds are somehow "safe"? This is wrong.FTSE trackers are at the high end of the equity risk spectrum.

People like Pobby and Baldbloke need to get an understanding of risk and asset allocation in order to invest without taking excessive risk.If they don't want to do that, they might as well just stick with cash.In the absence of a good UK calculator the US one makes a reasonable start.

dunstonh

In the absence of a good UK calculator the US one makes a reasonable start.

I cant be sure but its quite possible that the lack of these available outside of the advice channels could be due to the FSA. There are a number available to advisers and each one is based round different models and assumptions. The FSA issued a briefing about risk and refused to indicate what they consider as appropriate and left it in the hands of advisers to decide (typical FSA approach. Give no guidence to advisers and wait until they decide someone has done something wrong and then make an example of them leaving all the others to quickly change the way they do things). Execution only companies have to be careful between what is seen as information and what is seen as advice and an asset allocation tool could be seen as advice as to how to invest if it doesnt contain the necessary warnings. Plus most of the UK asset allocation tools require payment and a low cost provider may not have the margins to include that.

The best ones, in my opinion (and what i use myself because of that) allow a range of questions to be asked which particulary focus on what happens when things go down and how you would react to that position. It then risk "scores" you on those points. No-one gets upset when things rise and its only when things go down when you know if your portfolio matches your risk profile.

moneytroll

"One of the "Very cautious" asset allocations includes 39% in "other assets" including, err, hedge funds"

Yes, quite right. This tool is not ideal when it comes to "overall" asset allocation, however, within equity splits, it seems to throw up quite good quality funds IMO (which could save you time when searching for funds, comparing performance, sectors, managers, looking which shares etc etc)... so it´s not completely useless.

Dunston:
"The best ones, in my opinion (and what i use myself because of that) allow a range of questions to be asked which particulary focus on what happens when things go down and how you would react to that position. It then risk "scores" you on those points. No-one gets upset when things rise and its only when things go down when you know if your portfolio matches your risk profile."

I wonder how this works; (sorry if it sounds too simplistic)
when you decide on the appropriate risk for the client, do you mostly take into account the psychological tolerance of the client? ("how you would react to that position"). If so, then surely if you told all the clients that if they chose the "adventurous" type, and stuck to it for at least 10 years, then they would get the most reward? So therefore everyone would be choosing the riskiest profile? (and try to ignore the high volatility in the meantime - if, after 10 years, the reward for taking on higher risk is almost guaranteed, then shouldn´t it be possible to overcome the anxieties from these capital fluctuations?)
I presume there must be more subtle elements involved when it comes to risk assessments (something that none of the calculators could tell you, but possibly only a good IFA), like individual financial needs, tax circumstances and other things I can´t think of at the moment... would be intresting to hear comments.

Also I can imagine that most people cannot possibly know how they would tolerate the volatility psychologically until it actually starts being volatile! (then they panic and think they made the wrong financial decision etc, take out the money - usually at the worst possible moment, when the market bottoms - and loose out on the rebound). How can one then make a reasonable assessment then? people´s reactions are as unpredictable as the market

PS: I am not sure we are all talking about the same kind of "risk" here. Trackers and with profits are risky because they are, excuse me, crappy investments. But having a larger proportion of your assets in emerging markets/more focused sectors gives you more volatility (hence they are much "riskier") but in the longrun should provide better return... Am I missing something?

margaretclare

Miss_Penny_Pincher wrote:

The banker who was trying to sell me the guaranteed tracker bond was saying I should have that! I had asked to sign up for the Lloyds TSB 8% regular saver to save money in to have instant access to and be able to use to pay lump sum off mortgage. He was saying to me don't sign up for that - it's an utter con but I was determined - I know the arguments about the drip feed but in first month have put £750 in so that will earn 8% for the term anyway and the rest would just be stuck in a lower interest account so may as well drip feed it into this.

'The banker who was trying to sell me the guaranteed tracker bond.....' you've said it all.

When you go to your bank or BS (or any bank or BS for that matter) you don't get advice, what you get is someone trying to sell you something.

'Guaranteed' - what's 'guaranteed' in the investing world? It's like that horse you hear about that 'can't lose' and someone wants you to back it. 'It's a cert'. 'Can't lose, a cert'? There's no such animal. Same with investments. They can go down as well as up.

Pobby, congratulations on both having the sense to have full NI contribution records. I have a tidgy little amount of capital compared to you, but I'm learning - have learned a lot recently. And I insist on ethical funds. However, some of them are doing pretty well, considering the jitters all last week.

One of my main funds is called the Aegon Ethical Corporate Bond. Alongside that I have the Aegon Ethical Equity Accumulator. To spread it all out a bit as in 'eggs not in one basket' I've got the Aberdeen Ethical World Income Accumulator. And also Henderson Industries of the Future Income Accumulator.

I had my reasons for choosing all of those. Everyone will have their own reasons, goals, plans for the future.

Good luck!

Margaret Clare