How to invest £5000???

sgl

I have £5000 and wish to invest it some where low risk for 6 to 9 years and will not need to touch it at all, i have looked at savings accounts but many of the interest rates are around the rate of inflation.... any advice will be very much appreciated. thanks

masonic

If you want low risk, then you aren't going to be able to beat inflation by much. With index linked savings certificates you can get RPI inflation + 0.5% (tax free). Otherwise, you are stuck with the best fixed rate accounts, which you've probably already looked at. If you want a higher return, you'd need to be willing to take on more risk.

diable

Spend it and have fun.

junglejim2

Presumably you don't have a mortgage or other debts?

Doshwaster

Indeed. It's important to have an understanding of "risk" as a lot of people run away when they hear it. It's often better to think of it as "uncertainty": the more certain you want to be about returns, the less you stand to make.

If you stick your £5000 in a 1% savings account for 9 years then this would be classified as "low risk" but you'd still be losing money due to inflation. If there was a total risk free way of beating inflation then everyone would be doing it.

If you are investing for 6-9 years then it is reasonable to take on some moderate risk as it really doesn't matter if the value goes down in the short term as long as the trend is upwards.

You need to ask yourself how devastated would you be if your £5000 turned into £4000 (or less)? Is that worth the risk it might turn in £10,000 (or more)? The golden rule is don't invest what you cannot afford to lose.

Here is a good article on explaining investment risk: http://www.which.co.uk/money/savings-and-investments/guides/understanding-investment-risk/

masonic

Doshwaster wrote: »

If there was a total risk free way of beating inflation then everyone would be doing it.

There isn't a total risk free way of possessing money, but it is possible to beat inflation with less risk than hiding your money under the mattress.

sgl

i was thinking something linked to china and keeping a good eye on it

kidmugsy

But you said "low risk". Good grief!

Doshwaster

sgl wrote: »

i was thinking something linked to china and keeping a good eye on it

You mean buying a £5000 Ming vase and putting it on the sideboard?

Probably would be a better investment than cash, anyway.

kidmugsy

If you really think that China will continue to prosper, invest somewhere with a more trustworthy legal system and social customs that will prosper along with it e.g. countries from which it buys raw materials. Options would include Canada and Australia. But personally I expect more financial disaster than prosperity for much of the world.