How best to put £255k in savings

BLB53

However, £60k can go into NS&I index linked certificates, which beat RPI and are tax free. They can do £15k each and hold £15k in trust for each other, so that takes care of £60k.

Withdrawn from sale this morning!

BLB

Aegis

bpm wrote: »

I still struggle to understand why anyone would invest money in any kind of savings account with the current rates of return?

Because cash is the least volatile asset class and forms quite a large proportion of many people's portfolios for that reason. Once you understand that, it's pretty obvious why someone would choose to receive some interest rather than none at all.

If the RPI and CPI (Inflation figures) are currently over 4% (and according to the governor of the Bank of England, due to go over 5% soon) then anything lower than this figure means your money is worth less when you invest it at a lower rate.

Its basic maths : if you invest £10,000 in year 1 and a loaf of bread costs £1, then you have 10,000 loaves of bread.
After 1 year at 3% (not including tax deductions) you have approx £10,300 but as inflation is 5% a loaf of bread is £1.05 so you have 9,809 loaves of bread. Thats less than you started with! Invest it for 5 years and youve lost loads.

Any one with a miniscule knowledge of economics knows that inflation is way above 5% due to the way they use a basket of products to measure it, which keeps changing. So youre even worse off.

Try running the same figures again for zero nominal return, then -5% nominal return. Those represent situations where you put cash into a current account instead of a savings account or into an asset which falls in nominal value instead of rising. Once you see that, you can appreciate why people might want to just have a small real loss rather than the potential for a large real loss.

We live in a time of recession, banks, savings institutions, stocks and bonds are currently the lowest performing assets. Look at history to see how many times this has happened. Invest in a commodity that is increasing in value, not decreasing.

Theres many out there, mostly metals and most people advocate gold due its relationship with the monetary system. Even central banks still hold gold reserves and they have started to increase these over the last few years. Why do you think the largest financial establishments on earth are doing this? Do you think theres something they know that you dont?

Precious metals are highly volatile investments and should not be considered as a comparable alternative to cash.

Meeper

Apologies for being down on the comments here, but really - looking to invest / save £255,000 and relying on the opinion of people you have never met on an internet forum is somewhat foolish, if you'll pardon my saying.

Why would you not seek out a financial adviser and get some appropriate assistance?

oldvicar

Meeper has a point: with £255K+ a bit of proper advice could be worthwhile. Just make sure that your adviser really understands the level of risk you are prepared to take.

gadgetmind

oldvicar wrote: »

Meeper has a point: with £255K+ a bit of proper advice could be worthwhile. Just make sure that your adviser really understands the level of risk you are prepared to take.

And the level of fees you're prepared to tolerate.

oldvicar

gadgetmind wrote: »

And the level of fees you're prepared to tolerate.

Yes. Most people who have already decided to stick to cash deposits can find the information they need for themselves. Here, and on comparison websites etc.

When looking at fixed/term accounts one thing to watch out for is whether or not you can get money out earlier in the event of an emergency. Generally speaking I find that penalties are increasing, but more importantly many many more accounts are stating absolutely no early withdrawals. I always intend to invest for the full term so don't mind a penalty (that much), but I don't like an absolute lock-in.

jayship

Indian banks in the UK will allow you to close the FD account and take your money at any time and still earn interest at the rate applicable for the short term.They are FSA protected.

eg. You deposit £1000 over 3 years @4%. The interest rate have shot up and you want to close the account and take your money elsewhere after 1 year. They will pay you interest based on the 1 year rate applicable @ the time. Let say 3%. Go onto their websites for more info.

atush

I have a big Q as the OP's mom doens' want any cash in the husbands name.

Big complicaitons here really, esp if he is carryingdebt and they own any assets together.

AS usual, we don't know enough to help.

B_Blank

Diversfiy. Depends how risk adverse you are. I am quite a lover of risk and would do the following:

Immiedely split money into as many banks as possible (not 85k each bank because will still cost you time if they go broke).

I would put half in cash and half in various funds. I would invest alot of the funds money via regular saving to make it less risky and would go for a mix of bonds and shares. Probably 60:40, with a combo of high yield bonds, high yield equities, growth equities, linkers, etc etc.

With the cash I would put some away for longer terms and some away for shorter terms/in regular saving accounts

Diversifiy.

bendix

Meeper wrote: »

Apologies for being down on the comments here, but really - looking to invest / save £255,000 and relying on the opinion of people you have never met on an internet forum is somewhat foolish, if you'll pardon my saying.

Why would you not seek out a financial adviser and get some appropriate assistance?

Finally someone states the bleedin' obvious.

A quarter of a million, and you're relying on anonymous amateurs from the internet who, frankly, don't give a damn whether you lose the lot?

What are you thinking?