How do you stay liquid without sinking?

King_Weasel

Loughton_Monkey wrote: »

Were there to be any magic solution, we would have latched on by now. Either 'invest' with all the risks. Or go 'safe' and lose spending power. Most of us do a bit of both.

That sounds a fair summary. I'm doing "a bit of both too." So let me redefine the question a bit: what savings/investments can be regarded as the least risky after savings accounts? The conventional answer, I guess, used to be corporate bond funds but the prospects of an interest rate rise sooner or later might suggest looking elsewhere.

I'm aiming to progressively reduce my overexposure (as I see it) to equities and appreciate that diversification in itself tends to reduce risk, but I'm still looking for more cautious alternatives that have some prospect of retaining their real value over the next, say, 2-5 years.

Loughton_Monkey

King_Weasel wrote: »

That sounds a fair summary. I'm doing "a bit of both too." So let me redefine the question a bit: what savings/investments can be regarded as the least risky after savings accounts? The conventional answer, I guess, used to be corporate bond funds but the prospects of an interest rate rise sooner or later might suggest looking elsewhere.

I'm aiming to progressively reduce my overexposure (as I see it) to equities and appreciate that diversification in itself tends to reduce risk, but I'm still looking for more cautious alternatives that have some prospect of retaining their real value over the next, say, 2-5 years.

Aha!

Yes. Very relevent question.

I, too, am interested in this, since I have yet to find any satisfactory answer(s). Traditional 'answers' that trip off the tongue always tend towards saying Corporate Bonds, Gilts, or Fixed Interest. All very well but generally speaking, all these do is give you 'growth' not dissimilar to 'safe cash' but with higher charges.

This would be fair enough, but - as you allude to - the trouble is that Interest Rates rise, and now you are 'kicked' hard in your capital because you are effectively paying for the new buyers' increased yield. At least with pure Cash you can take it out and bung it somewhere a bit more lucrative when rates rise.

Perceived wisdom - for all with substantial equities locked up in Pensions or Stocks & Shares ISA's is to migrate to 'safe' funds when you approach the time of taking out the money. But my own understanding is that there is really no other answer than to go to an extremely cautious 'mixed' fund (blue chips, property, bonds, gilts, a little cash...) - or to some form of 'absolute' fund that contains all sorts of derivatives to try and cushion the blow.

However, my perception is that all you are doing, then, is swapping funds which are capable of annual 'mood swings', of, say, 20%, for other funds who's 'mood swings' could be, say, 7%. So they are not without risk at all. All they do is provide 50% chance (probably) of getting 0% to 7% - in which chance you probably say "Phew. Well at least I didn't lose anything - or even Super. 7% is more than I would have got at Nationwide....". But a 50% chance also of saying "!!!!!!. I should have stuffed the lot in Nationwide!"

Fred_Bear_2

padington wrote: »

The cost of living is going banana's here in london. A single bus fare is £2.20 these days.

You should consider getting an 'Oyster' card: this reduces the bus fare to £1.30. HTH

pqrdef

King_Weasel wrote: »

what savings/investments can be regarded as the least risky after savings accounts?

Foreign government bonds. You can work your way down the credit rating scale.

Is there a Eurozone sovereign junk bond fund?

de1amo

i am currently saving with vantange but toying with exporting my cash abroad as i live out of the country at the moment-i can either save the cash in the local currency (turkish lira) or put it into gold coins which have a 3pc premium for buying---the savings rate ihere is 6,5pc on cash and gold is seen a hedge.---my mortgage is in the uk and eventually the cash will have to be brought back to pay it off but my wife is foreign to act as the intermidiatry--what has stirred me recently is the fact that the pound has rebounded due to the market forcast of increased interest rates--im confused!

padington

Fred_Bear wrote: »

You should consider getting an 'Oyster' card: this reduces the bus fare to £1.30. HTH

http://www.bbc.co.uk/news/uk-england-london-11598617

dqnet

padington wrote: »

http://www.bbc.co.uk/news/uk-england-london-11598617

That's repulsively preposterous. I missed that news feed.
I mean for heaven’s sake, why don’t we just buy a bottle of water and all wake up at 5am to walk to work permanently. How can you charge that much for using the tube! What salary do they think we are all on!! 60k?????? So what does it cost now to use a bus..?

padington

dqnet wrote: »

That's repulsively preposterous. I missed that news feed.
I mean for heaven’s sake, why don’t we just buy a bottle of water and all wake up at 5am to walk to work permanently. How can you charge that much for using the tube! What salary do they think we are all on!! 60k?????? So what does it cost now to use a bus..?

Think its £2.20 if you forget you oyster card.

Loughton_Monkey

dqnet wrote: »

.....How can you charge that much for using the tube! What salary do they think we are all on!! 60k?????? ......

No!

That's the salary tube drivers are on (admittedly with a bit of overtime).

Francesanne

padington wrote: »

Think its £2.20 if you forget you oyster card.

Only £1.30 with Oyster card. Worth having one.