Where can I get 7% pa?

bigfreddiel

As title suggests, and how risky would I have to be.

Or is this an improbable ask?

fj

somethingcorporate

I would hazard a guess you would have to be very risky to achieve that kind of return. How much are you investing?

dunstonh

as a long term average, it would necessarily take that much risk. If you consider the last 10 years as being bad then even your basic balanced managed funds have managed around 5% a year. In the short term though you could be looking at +25%/-25% on a year by year basis

Aegis

I'm showing a time-weighted return of about 6.7% over the last 4 ½ years (since inception) with a pretty high risk portfolio heavily weighted towards equities. I can only imagine that over that timescale my returns would have been higher with a more diversified approach that incorporated some bonds, but I selected a position I felt was appropriate for my very high tolerance for volatility (and boy was it volatile!).

Moving forward, who knows? A diversified portfolio is probably going to do reasonably well in the long term though. I suspect that in the long term my own portfolio is going to show very strong returns, but with very high volatility associated with it, however I accept that this is by no means guaranteed and certainly isn't appropriate for everyone else!

fairleads

bigfreddiel wrote: »

As title suggests, and how risky would I have to be.

Or is this an improbable ask? fj

Depends on your time frame. Suggest you wisit www.trustnet and check out their Alpha Managers. You could start with say UK Equity Income. You will find several managers in that sector who have delivered 7% p/a plus for more than 10 years. Unfortunately past performance etc etc. Incidently you don't have to be risky to make a profit, you just have to invest in the right area/sector at a time of value. My take on risk is thus, the greater the risk the greater the chance of making a loss. Match the following three factors and you won't go far wrong. Investment time frame, market cycles, sector/area with the most value/ potential.

Mikeyorks

I have one cash account (Community Investment - CITR) that consistently returned 8.3% equivalent (10.4% if HR) over its first 5 years (5% taxback + 2% interest). Recently reducing to 6.8% as the interest dipped to 0.5% - for the next 5 years. Just wish I'd put 4 times the capital in at inception - as they're impossible to obtain now. And the best one can hope is that they roll over the capital + interest at each 5 year period. And - that the Govt maintain the tax concession.

Investments - running at 9% average over 3 years. A bit too much in Brazil / Russia otherwise it would have been higher.

Linton

For the last 5 years the markets have been very volatile and until the knock on effects of the credit crunch have been resolved I expect this to continue. So in the short/medium term anything could happen.

So, I would say that it all depends on the OPs timescales. Over the next 20 years could an investor reasonably average 7% annually without taking excessive risks? Probably. Over the next year is there any way of getting 7% with a low risk of failure? - no.

You could get 5%-6% with IMHO only a small risk of disaster with a collection of dividend paying blue-chip shares.

BLB53

Nationwide BS and Coventry BS PIBS both currently paying over 7%. How risky? Not very imo unless you think these BS are likely to fail?

I have held both in my income portfolio for several years and receive an average of 7.6%. Worth a look imo.

purch

My SIPP has been entirely invested in Bonds of various qualities and maturities for nearly a decade.

The income from this is well over 7%, and with compounding even higher.

As I do not (currently) intend to sell any of these Bonds before they mature I do not revalue them against the current market, but if I did the implied returns would of course be even higher.

Bonds have the added benefit of maturing at some point, so unlike an income producing share they do not have to be sold in order to take the proceeds.

Unfortunately you cannot expect to achieve 7% pa in the current Bond market without ramping up the risk level to an unacceptable level, so income producing blue chippers would probably be the best bet, albeit with a high level of potential risk.

atush

Isn't Tesco selling some bonds paying around that amt? Sure I read it somewhere, and although of the company failed you'd lose out I don't think Tesco is in any Danger of failing.

purch

Nationwide BS and Coventry BS PIBS both currently paying over 7%

In these cases the Coventry 6.092% PIB has a call date in 2016, when if not called the coupon resets to 3 month Libor plus 200 bp which means that the current YTM of 12%+ will drop to below 4% if not called, and for the Nationwide issues if they are not called the coupons reset to 5 year Gilt plus 300bp which will have a similar effect on their yields.