No risk stable investment

maintenanceman

I have an older relative who has a reasonable amount (20k Plus) to invest. He is looking to invest 2 years plus and does not need immediate access to it. His main concern is that the capital must , absolutely, be guaranteed and not put at any risk.
So a simple investment with a reasonable fixed % return would be adequate.
He has been to Barclays and was suggested MoreForMore savings split into 3 plans. The term of the plans were 4, 5 and 6 years dividing the 3 amounts into roughly 8K investments. From what he has told me the interest is variable. It doesn't seem suitable so any recommendations would be appreciated.

DiggerUK

maintenanceman,
If your relly can go to 3 years then Index Linked from NSI would suit.
Short term readies can get about 3% in Cash Isa, or you can go Premium Bonds for a bit of fun.
http://www.nsandi.com/index.jsp

dunstonh

He is looking to invest 2 years plus and does not need immediate access to it.

Timescale of two years is really two short to consider investments. He should stick to savings. The guaranteed investment options tend to be 5 years or thereabouts.

He has been to Barclays and was suggested MoreForMore savings split into 3 plans. The term of the plans were 4, 5 and 6 years dividing the 3 amounts into roughly 8K investments. From what he has told me the interest is variable. It doesn't seem suitable

You are right. If he is looking at two years then considering options that are 4, 5 & 6 years aren't suitable.

maintenanceman

Thanks for the reply. quick look at NSI and, although it does sound secure the returns of 1.25 % don't seem particularly attractive. Their other offers of bonds etc don't seem to be available. I thought the banks were crying out for money and thought there must seem some good offfers for long term investment say 5 to 6 years. I would have thought 4-5 % interest would be acheivable.

DiggerUK

maintenanceman wrote: »

*Thanks for the reply. quick look at NSI and, although it does sound secure the returns of 1.25 % don't seem particularly attractive.

**I would have thought 4-5 % interest would be acheivable.

*It's RPI Index + 1%, look out for Biggles posts, very clued up on NSI IL.
We are at 5356.00 for 2 years in a 3 year bond, we are RPI+ 1.35%. That makes it just over 3% net pa., and we have had negative RPI inflation for 10 months don't forget. Just gone positive.

** You will have to keep an eye out for 4/5%, they come up, and disappear quick. Lurk around here for news.

Edit.
http://forums.moneysavingexpert.com/showthread.html?p=25013791&highlight=#post25013791

maintenanceman

Sorry for the confusion. The investment period would have been 5 years plus. The Barclays investment didn.t seem suitable because the interest was variable and seemed like a risk. The 2 years was an assumption I made as I didn't gave the correct information.
So 5 years minimum investment without any immediate access, guaranteed capital security, with possibly a guaranteed interest rate with possible bonus. Is it asking too much??

Mikeyorks

maintenanceman wrote: »

I would have thought 4-5 % interest would be acheivable.

Click on the Moneysupermarket link (directly above - centre - your 1st post) - change the drop down to 'Fixed rate Bonds' - put in the appropriate value - and click 'Compare Now'. Then (right hand side) change the timeframe to what you want?

Up to 4.5% for 2 year period - 4.65% for 3 years (BM or Close Bros) ..... but do check out the finer detail (right hand side of each option)

EDIT

Sorry - posted that prior to seeing your later note re 5 years. "Is it asking too much" you say? Well, yes, it is .... if you want cast iron guarantees. Given recent history, then fixed term savings is about as good as it gets. But, with interest rates at historic lows then fixing for 5 years becomes a risk in it's own right .... that interest rates won't leave you in the lurch as they increase - but you're tied in?

You can get a 5 year 'Bond' at >5% ....... but ideally you look for one where you can break the fix if interest rates leave you behind .... and only suffer a max of say 90 days interest penalty. And they're currently thin on the ground.

Worth reading this - in particular the last 30% covering fixed rates?

http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

maintenanceman

Mickeyorks. Thanks for the reply. So in effect it is better to invest for 2-3 years in a bond, which leaves the option open if the current situation betters?

Mikeyorks

I've moved most of my cash into Funds - but that doesn't meet the 'no risk' criteria.

Were I tying cash up at the moment - I wouldn't do it for more than 1 year.

maintenanceman

HI
Sorry to bump up this thread
I am a bit worried he will walk into a bank and be sold something he doesn't entirely undersatnd. As previously mention he was offered Morefor more savings from Barclays which was split into 3 plans. No idea why it was split into 3 plans, but the total arrangement fee came to over 900 quid. 349 for one plan 352 for the second plan and 258 for the third plan. All taken out at the same time but for varying amounts and term. The terms were 4-5-6 years respectively.

Anyhoo I still haven't found any suitable investments and am a bit confused. One post says min investment is five years and another answer is from 2 years.
So just to reiterate my relative has around 25k to invest and wants to invest it in a high Street bank because he is not internet savvy. Any term, 2, 5, lets say upto 7 years deposited. Instant access is not required but the capital investment must be guaranteed. He is not too keen on variable , tracker, share funds and the like. He just wants a fixed percentage per annum and told me he would be happy with 3/4 percent interest 'clean'.

Porcupine

Hmmm... MoreForMore savings are paying a princely 0.7% on balances up to £25K. I recommend sharpening your bargepole.

Are you sure that's what they were selling? It sounds very odd to take commissions for a savings account. I think you may have been looking at the Defined Returns Plan, which pays (for 4 years) 24% if the FTSE100 rises, otherwise returns the capital (I think, the Barclays website is broken so I can't see the individual product pages).

That's a return of 5.5%pa. You can get not far off that in a fixed term savings account, without any risk that you'd lose money. Don't forget inflation: £100 in four years time is worth less than £100 today, so while Barclays may return your 'stake' you have still lost money in real terms. It's also not clear if they pay as interest or capital growth (if the former, you'll pay tax just as on a savings account, if the latter you won't unless you make more than about £10K capital gains per year)

And if you include the £900 fee, even if the FTSE100 rises you only make 4.5%pa. If it falls you lose about 1.1%pa. I can't see many reasons why anyone would want to take them up on this. Especially as someone above has quoted a 4.5% fixed rate savings account.