I want to start a 10 yr risk free plan every year

mindovermatter

This year I want to start a 10 year investment plan which is completely risk free (so that I get my total investment back at least).
I then want to start another in 2008 etc
By 2017 I will therefore have plans maturing every year.
I have been doing the same with a Mutual Society which guarantees my sum and may pay out more but has life cover as well. I have 8 of these at the moment each at £21.66 per calender month (£5 week) and I can cope with the monthly £174. The first of these pays out this september and I am not expecting a lot more than my £2600 back. This forecast is based on what colleagues have recieved back who started plans prior to me.
Therefore does anyone know of risk free investment plan at about £20 month which pays out after 10 years which I can stat exh year and have 10 running concurrently until they start to pay in year 10. I am not concerned with life cover as that is covered elsewhere now through work.
The other option is a 10 year plan that uses (risk free of course) my £2600+ from my mutual plan in september and thereafter that sum each year.
Best wishes
Mindovermatter

EdInvestor

You are really better off maxing out your cash ISA in a high paying account than using these friendly society plans which have high charges and low returns.

Chrismaths

With RPI @ 4.6%, your "risk-free" is actually a guarantee that you won't lose more than 36% of your money in real terms in 10 years' time. Perhaps you ought to consider some grown-up investing.

Chrismaths

If you want guarantees, then one way to achieve it (within an ISA) is to buy a 10 year gilt (or gilt strip). The 10 year strip costs £61.82 currently, and will pay out £100 in 10 years time, backed by the government. This allows you to invest the remaining £32.18 in some riskier assets, such as equities and the like, in the hope of protecting the value of your money against inflation, and perhaps growing it. If the equities fall to zero, you still have your £100 in 10 years' time. If they stay the same, you've made 32.18% (2.83% per year), if they grow at a realistic rate of around 10%, that's 83.5% gain overall, or 6.26% per year overall.

Better than the 0% return you'll earn from your current arrangements.

Ian_W

You're deluding yourself if you think that getting back -after 10yrs- around what you've put in = safe. It's value, even allowing for drip feeding it in, will be 15-20% less than £2600 was worth 10yrs ago due to inflation - and you're paying for life insurance you don't need to boot!

Can you ring the provider and ask for an estimate of what you'll get back in September? In a taxed savings account with a bank or bs £21.66pm, assuming you're a basic rate tax payer, would now be £3200 at 4% net rate. In a cash ISA at 5% tax free you'd be looking at £3770 or so by September. If your pay out isn't near to those figures then you need a rethink, unless you're happy to throw money away, as both are as safe as your option. Good place to start is the savings section of the site.

mindovermatter

thankyou for your replies so far - all noted and appreciated apart from the comment about 'grown up investing' - not all of us want to risk our hard earned cash!
I think that I will wait for the first of my payouts in september this year, you never know I might be pleasantly surprised.
It's just the idea of getting a guaranteed minimum yearly payout with bonuses that excites me rather than a dull month on month savings account.
kind regards
mindovermatter

Cannon_Fodder

You should be putting your monthly amounts into Monthly/Regular Savers, that pay around 6%, 7%, 8% at various banks. As risk-free as your mutual society - it could go bust, remember.

They are not 10-year schemes, but now you have completed your first ten years, you do not need to continue that just for the sake of it - especially if you can do better...much better...

Start thinking ANNUALLY, getting the best deal each year. Make hunting the best deal your "excitement", instead of pretending to be excited over the piddling poor payout from an out-of-date, expensive, poor performing scheme.

Then put your maturing lump sums into an ISA, around 5%-6% at the moment. Do that each year, as each lump matures.

Meantime, keep starting the Monthly Savers. When they mature, they can top off your ISA to make sure it is fully utilised.

And so on.


I initially thought Chrismaths was being harsh to say "grown-up". But your lack of "light-bulb" at the comments, is worrying. No suggestions so far have carried risks greater than you already face with a Mutual society. Please absorb what has been said.

PLEASE. PLEASE.

STOP putting money into the hands of these people who are just giving you your basic investment back.

Over ten years you should be 50% UP, not at break-even...WITHOUT risk.

Chrismaths

so you want "excitement", but no "risk". Savings are "dull", but "guarantees" with "bonuses" are cool.

You don't get returns in excess of cash without taking on risk. Investing in the stockmarket (and most risky assets) is like this:

You toss a coin. If it comes up heads you win £1.10. If it comes down tails, you lose £1. The "risk" is that the coin comes down tails - but the nature of the game means that if you play enough times, you will make money.

If you only play once, it is very risky. You have a 50% probability of making an overall loss. But if you keep playing long enough, you will make money.

Now you need to decide how much you want to risk. In pure probability terms, the more you risk, the more you make - but you run the risk of wipeout. So we take a view - like "I want a 99.9% certainty I won't be wiped out". Then we place our bets accordingly.

Risk is not "on" or "off" - you choose your own level. But the real risks you face to your wealth are inflation and tax (ask someone who lived in the 70s!).

Money, if not used, withers and dies. If you put it in a bank, the bank will take it and lend it to someone else to use, to generate a return. If you invest it, you cut out the bank. If you stick it under the mattress, then inflation keeps taking small, regular bites out of it, until it becomes worthless.

dunstonh

thankyou for your replies so far - all noted and appreciated apart from the comment about 'grown up investing' - not all of us want to risk our hard earned cash!

CM was saying it as a "make you sit up and think about it" comment. You need to read what has been said again because you have repeated that you dont want to risk your cash but that is exactly what you are doing.

I think that I will wait for the first of my payouts in september this year, you never know I might be pleasantly surprised.

Most of these plans have died off because they are obsolete. Only friendly society or direct options exist now and they are poor value.

It's just the idea of getting a guaranteed minimum yearly payout with bonuses that excites me rather than a dull month on month savings account.

I wouldnt think the end result would have much difference. A loss of real terms capital growth is likely in both cases.

These plans were the mainstay of the home service insurance agents from Pru, Pearl, Royal London, Refuge, United Friendly and many others. None of which exist in that form today and most have closed for new business because they couldnt survive without offering those plans and they couldnt offer them as modern alternatives were better for the consumer.

jamesd

Mindovermatter, Chrismaths gave an approach that guarantees getting your money back and offers a significant bonus potential.

Another approach, with higher bonus potential but not a 100% guarantee of returning your initial money would be a split among corporate bonds, commercial property, UK equity income and global growth funds. Here are a couple of examples from the commercial property and corporate bonds sectors - see the h-l links to see how little they vary when the stock market goes up and down.

• New Star Property (h-l) from Property all regions BI - real property uk, small REIT component
• Baillie Gifford High Yield Bond (h-l) from fixed interest - UK junk bonds

Your current option is a poor one, so one of the stocks and shares-based ISA approaches is a better idea.

Chrismaths

If you ask what people think, then be prepared to that they will give answers you don't like.

I'm sorry if you thought I was harsh - I can be a bit short sometimes - but my intentions are good.

People need to understand what risk is in order to deal with it - it seemed (and seems) you have your head in the sand in this regard.

There are several pros on this board who give up their time for free - it's usually worth at least thinking about what we say.