how to get min of 10% return?

homersimpson_3

what would you say is the safest savings and/or investment to make 10% each year (not including any income tax etc you have to pay)-.(apart from 10% accounts by barclays and alliance and leceister)

EdInvestor

10% each and every year, or 10% average over, say, 5 years?

dunstonh

That is quite an important question Ed. It would certainly give a different response depending on the answer. However, the "safest" comment would scupper the response I know you would come out with if it was average return over the period.

monki_man

Here is slight risky investment option. It's called match betting.

http://forums.moneysavingexpert.com/showthread.html?t=512

a quick summary of match better is betting on all the outcome that makes sure you come out with a profit. Taking advanatge of free bet offered by bookies can generates hundreds by the end of the month.

Then dump the money back into a high interest account and watch your money grow more. I would say match better is better than an ISA rate. Like an ISA account its Tax free.

I'm not sure how much you're likely to get from a 10% Reg saver acocunt from barclays, but i would imagine after investing £250 every month for a year, it be £150 Gross interest. Whereas you can get £150 from one bookie alone.

Anyways, the choice is yours. I hope this helps

homersimpson_3

I read on a reputable website- fsa. ifa or something similiar (can't remember)- that when determining how much pension fund needs to grow, people need to assume -7% growth and 2.5%? inflation- Hence the question referring to min of 10%). 7% +2.5% = 9.5% (rounded it up to 10%).
If you could ensure where you pension fund is saved or invested makes 10% each year before tax would you you meet the targets (if inflation increases just increase minimum %- so if increase in inflation by 1% make target growth 11%).

10% each and every year, or 10% average over, say, 5 years?

Both - Please also comment on above comments.

dunstonh

FSA approved projections have to be on monetary growth rate basis or SMPI basis. Monetary growth basis used 4,6 & 8% for taxable investments and 5,7 & 9% for tax free. SMPI basis uses 7% only with a deduction of 2.5% for inflation to give a real terms value.

The figures cannot be higher than those but they can be lower if the potential of the investment is likely to be lower than that reflected by the projections. i.e. 3, 5 & 7% instead of 5,7 &9.

With targeting, the middle rate on monetary growth rate is traditionally used. Not a problem nowadays but in the past it was a problem with past regulators setting higher figures reflective of past performance on a boom/bust economy and not forward looking with a low inflation, steady economy.

An investment could spend 20 years in excess of 10% a year but would still quote 6% on the mid rate projection. Projections are useful for comparing like for like on packaged products and can be useful for target investing. i.e. you want £100k in 20 years and to achieve that at 7% a year, you need to pay £X per month or at 5%, you need to pay £Y per month. If you put it in the same investment, the return will be the same but you are just adjusting your risk tolerance to hit target and you chances of actually hitting target.

A cautious sector allocated rebalancing portfolio would have averaged in excess of 10% a year if you invested just before the stockmarket crash. However, 2 of those years would have been less than 10%. So, a 10% target would have been achieved over the term. However, a straight line 10% a year requirement would not have been achieved.

Chrismaths

It's possible to invest in a leveraged loan fund that pays out about BBR+2%. If you apply 4x leverage to the leveraged loans (as its sister fund does), then you end up with about 10% pa. The nature of the beast is that this will average 10% per annum, right up until a loan defaults, in which case it could lose money. I'm just illustrating that you can get low volatility investments that pay 10%pa, but the problem with them is that when they go wrong, they go wrong - no return without risk I'm afraid - that's why in investments we talk about the "risk-free rate" (which is cash) - any return above this requires risk. There is no such thing as a "safe" investment which produces more than the risk-free rate (otherwise everyone would buy it, increasing the price and decreasing the return to the risk-free rate).