85k to invest for 4/5 years advice please

tim30577

I'd say you goal of £110,835 from £85,000 is achievable from a high interest saving account. Which is deemed as a low risk.

icesave.co.uk are good at 5.7% GROSS (if interest is paid annually) it's a variable rate but is guaranteed to exceed the Bank of England Base Rate by at least 0.25% until 1 October 2009.

It's your choice thought!!

cheerfulcat

Yes, a combination of a high interest deposit account and a bit of extra saving over the next four years ( I make it an extra £1750/year on top of what you've already saved ) should get you there quite easily.

deefadog

Thanks, well i have seen the abbey isa 8% one each for me and the wife - it's a start and a top savings account, will be adding to it aswell. Also there is the newcastle fixed rate bond.

Will have to get my excell fingers going to work it all out LoL

Ian_W

deefadog wrote:

Thanks, well i have seen the abbey isa 8% one each for me and the wife - it's a start and a top savings account, will be adding to it aswell. Also there is the newcastle fixed rate bond.

Read the T&C's very carefully deefadog. I've only glanced at it but you have to put the same amount as you put in the ISA into a Guaranteed Equity Bond linked to the FTSE 100 index for 3 or 5yrs. These are usually pants - then some!
So you get 8% for 1 year in the ISA but your £3K in the GEB has to stay for at least another 2yrs longer with a guaranteed return of ... wait for it ... 3%pa!! Of course it might make more - but I wouldn't bank on it.

deefadog

Thanks Ian - This is a bit of a mind field ain't it

But am i on the right track? find the best differnet types of isa's bonds ect with the best interest around and keep an eye on them and keep switching (where possible) over the 5 years to maximise the interest?

Which way would you approach this Ian?

Cook_County

I'd look at this another way. How much interest are you paying until Sept 2011? What would happen if you were ill or were redundant. How would you pay this interest? Why are you borrowinng via secured debt (a mortgage) to invest? Will you really earn more interest after tax than you will pay?

deefadog

Well the history is, moved into new home in September last year, than i got left a house to me 2 months later (unexpected) - the house is now on the market and hopefully should sell quickly in the area it's in and the price range.

Are you saying i should pay this lump sum off my mortgage and set the reminder of the mortgage to finish in my time frame?

EdInvestor

What interest rate are you paying on your mortgage?
What is the monthly payment?

Post these details and let's see the position you would be in if you threw the 85k at the mortgage right now.

deefadog

120k @ 5.4 fixed for the next 5 years, paying £675 a month (this is based on over 30 years)

Just done a quick online calculator and it's almost exactly the same monthly payments @ 6% if i payed off the 85k now and reduced the mortgage to 5 years!

Thanks

EdInvestor

If you reduced the mortgage by 85k now and continued to pay in the 675 a month, you would end up in 5 years with a return of 156,992.

Compound interest is a wonderful thing