Any low risk ways to beat savings interest?

kidmugsy

You could wait to see the Terms and Conditions of the promised new issue(s) of Index-Linked Savings Certificates from NS&I.

malik999

padington wrote: »

Gold is probably the least risky investment you could make. A stock market crash is on the cards if you ask me and gold should hold up well if it happens and do well if it doesn't. Its a gamble but a wise one IMO.

Crash is a strong term, but i agree with you.

opinions4u

padington wrote: »

Gold is probably the least risky investment you could make. A stock market crash is on the cards if you ask me and gold should hold up well if it happens and do well if it doesn't. Its a gamble but a wise one IMO.

I do love a non-risky gamble. For what it's worth, piling in to a single commodity years behind the "smart money" is rarely a good idea. Gold is risky.

jamesd

Ignore claims that gold or silver are safe: both are years past the time to put money in and well into bubble territory. It's just a question of time before the bubbles pop. Both are high to very high risk anyway, a bit above single country emerging markets funds, not what you're looking for.

The major stock markets are a couple of years into a bull run and those tend to last around three years from the low, which was around March 2009.

FTSE trackers, with dividends, are in profit over both five and ten years. They are still higher than medium risk.

To hit a risk target you can try individual investments, like say Invesco Perpetual Income but that's still not low risk.

What does low risk mean to you? A FTSE tracker will drop in value by 40-50% in bad recessions, 20-25% in moderate ones. By low risk I normally think of something like 10-15% drop. That requires commercial property funds, high quality corporate bonds and cash in savings accounts as part of a mixture, with the proportions adjusted to hit your risk target.

cepheus

switch76 wrote: »

Any suggestions and what kind of return I would get?

I looked at a FTSE 100 tracker but it wouldn't have done very well over a 5 or 10 year period.

What magnitude of investment are you looking at 1, 10, 100k?

StevieJ

malik999 wrote: »

Crash is a strong term, but i agree with you.

Is that for Gold or the Stock Market

ChopperST

What about looking into ZOPA or ratesetter, peer to peer lending.

Remember to factor in bad debt (cannot be offset for tax purposes) and fees but returns of 5-8% are possible but you need to tie your money up for 3 years.

Make sure you do plenty of reading around before taking the plunge. ZOPA is more established and has lots of useful data and a discussion forum also.

switch76

ChopperST wrote: »

What about looking into ZOPA or ratesetter, peer to peer lending.

Remember to factor in bad debt (cannot be offset for tax purposes) and fees but returns of 5-8% are possible but you need to tie your money up for 3 years.

Make sure you do plenty of reading around before taking the plunge. ZOPA is more established and has lots of useful data and a discussion forum also.

That 8% is APR, not AER like a savings account. If you loaned the money only once, you'd get just 55% of that rate, which is 4.4%.

To get the full 8%, you'd need to continually loan the money out as soon as you receive the money back from the people you've lent to. You'd always be 3 years away from getting all your money back.

switch76

jamesd wrote: »

Ignore claims that gold or silver are safe: both are years past the time to put money in and well into bubble territory. It's just a question of time before the bubbles pop. Both are high to very high risk anyway, a bit above single country emerging markets funds, not what you're looking for.

The major stock markets are a couple of years into a bull run and those tend to last around three years from the low, which was around March 2009.

FTSE trackers, with dividends, are in profit over both five and ten years. They are still higher than medium risk.

To hit a risk target you can try individual investments, like say Invesco Perpetual Income but that's still not low risk.

What does low risk mean to you? A FTSE tracker will drop in value by 40-50% in bad recessions, 20-25% in moderate ones. By low risk I normally think of something like 10-15% drop. That requires commercial property funds, high quality corporate bonds and cash in savings accounts as part of a mixture, with the proportions adjusted to hit your risk target.

Thanks for your detailed response.

Although the trackers are in profit, the return is less than 3% over 5 or 10 years, which isn't more than a savings account.

Maybe I should just ask for suggestions and remove the term low risk. I thought it would be easier than this since the stock market is meant to outperform cash.

Having just come out of a recession, I would hope that the next one will be some time away. If there is one, I'd sell if the investment dropped over 15% and keep the money in cash.

jimjames

It might be worth looking at other time periods as well. 5 & 10 years are fairly academic selections as many people would not have invested for exactly 5 or 10 years. Over other time periods you would be showing much higher increases. Also remember to include reinvested dividends which can also make a big difference.

This was a useful quote from iii comparing trackers to active funds.
http://www.iii.co.uk/articles/15123/do-active-fund-managers-warrant-their-cost

While outperformance is not possible for passive funds, their low charges make them popular with budget-conscious investors. For example, if you invested £1,000 in a fund with a 0.22% TER, assuming growth of 7% a year, you would lose just £456 (6.3%) of the returns in charges over 30 years; in a fund with 2.2% TER, however, you could wave goodbye to a staggering £3,530 in charges - 46% of the return.