Best saving product £5K for 5 years

guygamps

I want to tuck away £5000 in a savings product for 5 years fixed term, and get the best guaranteed result at end of it.

I want my £5K protected and I want a guarantee of at least some growth,

Preference would in fact be for a safe guaranteed fixed interest product, not something indexed linked or stock market linked.

I don't need access to the money

I don't need to draw the interest payments as income, any interest earned can be paid back in to the plan.

I simply want to tuck away £5000 and 5 years and know that at the end of the 5 year period I have a done my best and got £5K plus back out of it.

Product recommendations?

GUY

mcbean2011

halifax fixed term isa?

guygamps

4 year product at 4.4%, a good rate, but can I do better? can I find a 5 year product?

mcbean2011

you wont get that much more return than that for an extra year.

Skipton building society is a good 5 year one.

http://www.skipton.co.uk/savings_and_investments/isas/fixed_rate_cash_isa/

4.% percent. So only getting .1% more for an extra year, no worth it IMO.

have a good look around.

guygamps

If I go with the Halifax 4 year product, it will mature 1 year before I need access to the funds, meaning I will need to re-invest for 1 year.

At todays rates that would mean years 1 - 4 I would get 4.4%, but in year 5 I would only get 3% tops

Whereas if I go with the Skipton 5 year product, I will get 4.5% on all 5 years.

Of course, if between and 2015 shorter term interest rates increase which they are probably likely to do, then in 2015 I should be able to get a better 1 year product than 3% for the last year,

decisions decisions

_s79

guygamps wrote: »

If I go with the Halifax 4 year product, it will mature 1 year before I need access to the funds, meaning I will need to re-invest for 1 year.

At todays rates that would mean years 1 - 4 I would get 4.4%, but in year 5 I would only get 3% tops

Whereas if I go with the Skipton 5 year product, I will get 4.5% on all 5 years.

Of course, if between and 2015 shorter term interest rates increase which they are probably likely to do, then in 2015 I should be able to get a better 1 year product than 3% for the last year,

decisions decisions

How do you work that out?

guygamps

I need to cash in the investment in 5 years time, if I take a 4 year product when it matures I will need to put the funds in to a 1 year product, currently the best 1 year products are at about 3% (e.g Halifax ISA), meaning year 5 I am getting 3% ish if interest rates state where they are,

Whereas, if i take a 5 year product that pays 4.5% for all 5 years, I already know that in year 5 I will still get 4.5%

Of course rates are not likely to stay where they, the question that of course no one can answer is where indeed will they be in 4 years time.

I have another investment maturing in the NS&I RPI index linked certificate, so I am "spreading the risk" by already using that investment method.

As a higher rate tax payer, I am attracted to the 4.5% 5 years Skipton ISA as opposed to the 5% taxable AA product, (or indeed the 4 year Halifax product)

Guy

Bigsmak

guygamps wrote: »

I want to tuck away £5000 in a savings product for 5 years fixed term, and get the best guaranteed result at end of it.

I want my £5K protected and I want a guarantee of at least some growth,

Preference would in fact be for a safe guaranteed fixed interest product, not something indexed linked or stock market linked.

I don't need access to the money

I don't need to draw the interest payments as income, any interest earned can be paid back in to the plan.

I simply want to tuck away £5000 and 5 years and know that at the end of the 5 year period I have a done my best and got £5K plus back out of it.

Product recommendations?

GUY

You say you want growth! Is it real Growth or Nominal Growth.. Please be aware that because inflation at the moment is around the 4% mark, any growth will be significantly eroded by this inflation over the 5 year term...

If you want growth, a Cash ISA is not the correct vehicle for it,
If you want your £5k to be safe, then it probably is.

opinions4u

Using an assumption that interest rates will be higher in 4 years time, I'd suggest 4.4% for 4 years plus unknown rate for 1 year is a better bet than 4.5% for 5 years and gives you flexibility sooner.

But it's a close call.

guygamps

Bigsmak wrote: »

You say you want growth! Is it real Growth or Nominal Growth.. Please be aware that because inflation at the moment is around the 4% mark, any growth will be significantly eroded by this inflation over the 5 year term...

If you want growth, a Cash ISA is not the correct vehicle for it,
If you want your £5k to be safe, then it probably is.

Good point, last year I invested nearly £10K in NS&I issue 19 certificates which track at inflation +1%, so those deliver some guaranteed growth ahead of inflation, but looking at NS&I website today, no such investment is available

The £5K I am looking to re-invest now, is money my wife and I have saved up for our kids, including birthday and XMAS contributions from aunts and uncles etc, so I don't feel entitled to put the capital at risk in return for the possibility of a better return. I do have other investments apart from the NS&I certificate too, and some of those are tied to stock market performance, so I am putting different eggs in different baskets.

Accepting that interest rates will surely be on the rise soonish, and trend upwards step by step over the next few years, then the recommendation of "Opinions4U" is kind of where i am coming down too, since 4 years on, the balance of probability is that interest rates will be higher, and I will be able to get a 1 year product at better than todays 3% rates.

GUY

Guys_Dad

Given that NSI savings certs are widely forecast for next financial year, worth waiting till mid April to see if they appear.

Personally, would not tie up money for 5 years as, with inflation rising, the Bank of England will have to raise interest rates later this year. But by how much? That's the question.