Any low risk ways to beat savings interest?

switch76

jimjames wrote: »

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.

I looked at HSBC FTSE 100 Index Acc. Being an accumulation fund, does the performance already include reinvested dividends?

malik999

StevieJ wrote: »

Is that for Gold or the Stock Market

Both.

Stocks and currencies are struggling. I dont like the look of what i'm seeing. I think he's right.

Gold - should be part of anyones diversified portfolio imo to protect against the above. As i have mentioned before my gold play is in NYSE:GLD I am not a fan of physical gold. My play in gold although it has obviously been very profitable for me I see purely as protection and I haven't sold any of my Gold holding - Currently: 144.

jamesd

switch76 wrote: »

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.

That's far less than their real result. The Sunday Times reports this each week. Here's what it had to say yesterday:

Over ten years shares are up 3.4% (up 48.1% with dividends).
Over five years shares are down 1.15 (up 18.8% with dividends)
Over three years shares are up 1% (up 13.15 with dividends)

It looks as though you've been confused by looking at the index value (the sort of thing those who claim that markets have gone nowhere in ten years quote) while what you really get in a tracker fund is the return including dividends.

Over ten years that's 4% a year compounded growth.
Over five years it's 3.505%.

For both you'd also have to deduct the tracker fund fees, typically from 0.1% to 1%, depending on just which one you buy and how.

Both of those are likely to be about what a savings account did, though both are well below what the UK markets have historically done. Not at all impressive overall, given the extra risk involved.

jamesd

switch76 wrote: »

I looked at HSBC FTSE 100 Index Acc. Being an accumulation fund, does the performance already include reinvested dividends?

Yes.

Otherwise you look at the total return for an income fund and that'll show you the return combining capital and dividends.

ChopperST

switch76 wrote: »

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.

Appologies for not posting in more detail and mentioning returns are APR as opposed to AER. It depends on your attitude to your investment activity and how involved you want to be, you can compound your return by reinvesting the returned capital and interest. I find it a fun way of diversifying my portfolio as it requires a bit of user participation as opposed to depositing into a fund and leaving it for a peroid of time. ZOPA has terms from 3-5 years. RateSetter has a rolling market which you can lend on a monthly basis offering you an alternative time scale based upon your ability to tie up funds.

Gorgeous_George

switch76 wrote: »

... You'd always be 3 years away from getting all your money back.

Zopa have introduced Rapid Return. Using this feature, a lender should be able to get most of their money back quickly.

My earnings at Zopa are greater than 6.7% (after fees and bad debt but before tax). Pretty reasonable and more fun than my ISA, NSand I tracker, shares etc.

GG

cepheus

Gorgeous_George wrote: »

Zopa have introduced Rapid Return. Using this feature, a lender should be able to get most of their money back quickly.

My earnings at Zopa are greater than 6.7% (after fees and bad debt but before tax). Pretty reasonable and more fun than my ISA, NSand I tracker, shares etc.

GG

If it is a NS&I Interest rate tracker you should be getting more than Zopa after tax at the moment since the former is tax free.

padington

With high inflation nothing is low risk, some things are however a much wiser investment. Could you suggest something better and we track the price of each over the next year ? Money where your mouth is and all
that ?

padington

cepheus wrote: »

If it is a NS&I Interest rate tracker you should be getting more than Zopa after tax at the moment since the former is tax free.

With real inflation being more than the percentages offered this is a guarantied way to lose money and get nothing from the potential energy contained within your hard earned money, not an investment and not low risk, just guaranteed loss.

cepheus

padington wrote: »

With real inflation being more than the percentages offered this is a guarantied way to lose money and get nothing from the potential energy contained within your hard earned money, not an investment and not low risk, just guaranteed loss.

Why is 'real inflation' more than RPI? On what basis do you measure average inflation for the nation, do you include all the items which usually go down in price such as electronic gadgets?

Even if what you say was true, I am just comparing index linked savings with this quote, so what you suggest applies to this as well.

My earnings at Zopa are greater than 6.7% (after fees and bad debt but before tax).

If you pay tax I can't see how you can get better than index linked savings without taking significant risk. From memory I think the real returns from the stockmarket above official inflation estimates are only around 6% before taxes and fees.