Best place to put £40k for 2-3 years? Low risk only, please

Wywth

I've seen the recent thread regarding how to invest £50k, but I am looking for a low risk strategy, by which I mean the capital is guaranteed but I am prepared to risk any interest.

I have £40k to invest. As I say, the capital must be guaranteed.
I will need access to the total amount in about 30 months time, so I am happy to lock the money away for 12 or 24 months if necessary, but not 3 years or more.

I currently have a savings account that I could earn 1.92% p.a net in (which I think is 2.4% gross) variable, so I am looking for something that would beat that.

Any suggestions, please advise if the interest is variable or fixed and specify if it includes any particular bonus that may expire after a certain period (e.g. 2% p.a which includes 1.5%pa bonus for first year only, so will then reduce to 0.5% p.a.)

Please do not include any ISA products in your suggestions as I already have my plans for those

Edit: Btw, I am a basic rate taxpayer

ColdIron

Premium bonds for 30K?

Wywth

ColdIron wrote: »

Premium bonds for 30K?

Possibly, but as you say, I think I can only put £30k into those

With an average 1.5% p.a payout (although this is essentially what you gamble with, so winnings, if any would be tax free) I'm not sure it would be a good investment opportunity compared to my existing savings account

Martin is not a great fan, either, I understand:

You're actually likely to get quite a lot less than 1.5%, and there's a negligible chance of winning a million.

http://www.moneysavingexpert.com/savings/premium-bonds

But thank you for the suggestion

ColdIron

I'm not much of a fan either but they do seem to match your requirements, capital assurety and a gamble with the 'interest', hey you might get lucky
Though it pains me to say it, if you are a higher rate taxpayer PBs are just about viable in the current climate

Wywth

Fortunately, or unfortunately, depending on how you view things, I am only a basic rate taxpayer.

JohnRo

What about something like the Halifax Reward Saver, similar to premium bonds in some respects but with at least a small interest rate to have something to show for your efforts even if you don't win anything extra. Shove £5K in there to qualify for the draw?

The downside is that unlike premium bonds, a larger account balance has no more of a chance to win than those accounts with the minimum £5K in the monthly draw..

ColdIron

You say you are getting 2.4%, that wouldn't be the old Virgin/NR Easy Access e-saver would it? I think you'll struggle to get much better than that even with a 2 year fix and at least with easy access you can hang out in hope that rates will improve which they probably won't

What is often suggested here is to open a Santander 123 account and a few Lloyds Vantage accounts and the BoS equivalents. They pay 3% but are limited to 20K and 5K. The 123 will give you cashback on your utility bills

Wywth

ColdIron wrote: »

You say you are getting 2.4%, that wouldn't be the old Virgin/NR Easy Access e-saver would it? I think you'll struggle to get much better than that even with a 2 year fix and at least with easy access you can hang out in hope that rates will improve which they probably won't

Yes, that is indeed the savings/deposit account I have.
Had it a while now, so thought there may be something better that had come along, especially for a larger amount I was prepared to tie up for a year or two if necessary ... but it appears perhaps not.

ColdIron wrote: »

What is often suggested here is to open a Santander 123 account and a few Lloyds Vantage accounts and the BoS equivalents. They pay 3% but are limited to 20K and 5K. The 123 will give you cashback on your utility bills

Yes I have a LLoyds Vantage account already, but as you say that only pays top rate of interest on a relatively low balance (for me 4% on total amount for balances £5k to £6k, but that reduces to maximum 3% for balances £3k to £5k from end October this year)
The difficulty is keeping the balance strictly within the amounts and the annoying questions I constantly get from the LLoyds staff if there is anything sizeable amount in it.

I have taken a look at the Santander account but it charges £2 per month (£24 per year) and the 3% is only payable on balances up to £20k
Cashback is only available if I pay in at least £500 per month.
(not that I want to change my current account anyway)

Wywth

JohnRo wrote: »

What about something like the Halifax Reward Saver, similar to premium bonds in some respects but with at least a small interest rate to have something to show for your efforts even if you don't win anything extra. Shove £5K in there to qualify for the draw?

The downside is that unlike premium bonds, a larger account balance has no more of a chance to win than those accounts with the minimum £5K in the monthly draw..

Sorry, my initial post may appear to have wrongly implied I was interested in using any interest for gambling/lottery purposes.

What I was really thinking of was something along the lines of a product that would perhaps invest in say the FTSE100, but at the same time guarantee the capital invested at the end of the term. So if the FTSE fell then I would not get any interest, but if the FTSE rose then I would receive say an equivilent amount by which it rose over that time, perhaps capped at say 10%.

These type of products used to be avialable - I'm not sure if they are now.
Again, I am not specifically looking for this type of product, just not ruling such a product out if there was an opportunity for larger growth than I would receive on my deposit account.

badger09

Wywth wrote: »

Sorry, my initial post may appear to have wrongly implied I was interested in using any interest for gambling/lottery purposes.

What I was really thinking of was something along the lines of a product that would perhaps invest in say the FTSE100, but at the same time guarantee the capital invested at the end of the term. So if the FTSE fell then I would not get any interest, but if the FTSE rose then I would receive say an equivilent amount by which it rose over that time, perhaps capped at say 10%.

These type of products used to be avialable - I'm not sure if they are now.
Again, I am not specifically looking for this type of product, just not ruling such a product out if there was an opportunity for larger growth than I would receive on my deposit account.

They are still available -try a search for 'Structured Deposits'.

However, they are not popular on here, or for example with Which? because of obscurity of T&C, high charges etc.

Wywth

badger09 wrote: »

They are still available -try a search for 'Structured Deposits'.

However, they are not popular on here, or for example with Which? because of obscurity of T&C, high charges etc.

Thanks, I'll see what a search produces.

The ones I remember were not very obscure in their T&Cs (unless you perhaps got into the nitty gritty of trying to end the policy before the agreed termination date) - the example above was typical, although the cap would have been higher reflecting the typical growth rate expected at the time and perhaps you only got say 70% of growth percentage rather than 100%.
As for charges, well there weren't any specific ones I remember if you let the policy mature until the agreed date.

Edit: just did a look on MoneySuperMarket.com and they all seem to be 5 or 6 year terms now