Lump sum savings

dcbradley

My Mother has just downsized property and as a result has a lump sum to invest - around £25k.

She's already used her ISA allowance for this year - what is best mix of short, medium and longer term accounts to ensure the lump sum grows at least with inflation each year- but without taking risks on the capital invested?

Thanks for your input.

atush

you can't beat inflation w/o any risk to capital these days.

You'd need to risk at least say 10K of the capital. But doe'st need to be hugely risky, maybe a good equity income fund perhaps. Mine are up this year.

Hominu

Inflation is currently at 3% and hovers around that mark, so if you don't want risk, you would need something like a 3 year fix with the Bank of India to keep up (currently 3.25% I believe). Going for longer isn't going to get you much more now, but isn't really advisable either as rates may increase in a few years.

dcbradley

Thanks for suggestions - maybe I should consider a foreign currency account where rates are higher... guess major risk then is exchange rate!!

innovate

dcbradley wrote: »

Thanks for suggestions - maybe I should consider a foreign currency account where rates are higher... guess major risk then is exchange rate!!

:eek::eek::eek:

Less than 24 hours ago you asked for suggestions that take no risks on the capital invested. No you are effectively talking about gambles.

dcbradley

You're right - I'd prefer not to take risk - but if that means getting a return that's less than inflation - then that in itself is a risk...

So let me rephrase my request - how best can the money be invested with minimum risk to the capital....

Thanks for the help so far:)

atush

I think you don't understand risk.

The 'risky[ option I gave you with investing 60% in cash at 3%, and investing 40% in equity income funds is much less risky than putting the lot in currency investing/deposits.

Min risk to capital is cash funds, which may (or most likely not) beat inflation. So to beat inflation you have to take some risk. but not the huge risk you described.

dcbradley

Thanks Atush - making more sense now... so by using a combination of investments the risk is mitigated and stands a good chance (but not a guarantee) of beating inflation. Time to start researching equity income funds!!