Low - Medium Risk Investment To Keep Up With Inflation Over 2 - 3 years

ChopperST

Any suggestions welcome.

We plan to buy a second house in 2-3 years time. Looking at having a £50K deposit which is currently at the £16k mark and saved in cash ISA's. This is currently in ISA's paying 3.5 / 3.7 AER respectively between myself and my wife.

Both these products expire in a weeks time and we need to move the funds. Obviously the new cash ISA offerings are not going to do the job of matching inflation either this year or the next. We both have pensions, no debt other than our current mortgage which is 3.2%

Ideally we want to keep our current property as a rental concern going forward and therefore need access to the cash for a deposit on a new house rather than overpaying the mortgage and needing to release the equity.

I have a S+S ISA with Fidelity which currently houses a HSBC FTSE-All Share tracker which is performing reasonably well but the money is there for the long term.

Obviously this is a contradiction in terms but are there any funds anyone can suggest that would match inflation over the next 2-3 years with a low to medium risk i.e. give returns of circa 3-4%

I think I know the answer and may just have to bite the bullet and stick it with Santander at 2.5% but any advice or opinions welcome.

Thanks

jem16

ChopperST wrote: »

Obviously this is a contradiction in terms but are there any funds anyone can suggest that would match inflation over the next 2-3 years with a low to medium risk i.e. give returns of circa 3-4%

I think I know the answer and may just have to bite the bullet and stick it with Santander at 2.5% but any advice or opinions welcome.

Thanks

Too short a timescale for any investment. Best stick to cash.

ChopperST

jem16 wrote: »

Too short a timescale for any investment. Best stick to cash.

As I suspected, thanks for taking the time to reply.

Linton

No fund could guarantee to match inflation over 2-3 years. With that time period there is a reasonable chance that you would lose money. Unfortunately it's a fact of life that low risk means low returns.

Now if you could split the money and put part of it away for 5+ years and the rest in your short term 2.5% Santander account there is a much better chance that you will beat inflation overall.

ChopperST

Linton wrote: »

Now if you could split the money and put part of it away for 5+ years and the rest in your short term 2.5% Santander account there is a much better chance that you will beat inflation overall.

I think there in lies the problem there is a realistic chance we will need the funds before that. I guess inflation is relative to what the money is needed for. Just hope we don't see significant growth in the housing market over the next 24 - 36 months.

Jegersmart

ChopperST wrote: »

As I suspected, thanks for taking the time to reply.

Pay off the mortgage.

imho

J

ChopperST

Jegersmart wrote: »

Pay off the mortgage.

imho

J

Thanks for the suggestion but as per the original thread we want cash savings to buy our next house. Our current house is going to become a buy to let and as such don't want significant equity tied up in it that we would need to release.

Jegersmart

ChopperST wrote: »

Thanks for the suggestion but as per the original thread we want cash savings to buy our next house. Our current house is going to become a buy to let and as such don't want significant equity tied up in it that we would need to release.

Yes, but that is in 2-3 years time right? You would be struggling to earn more than 3.2% NET on anything that is not higher risk?

J

kidmugsy

Check whether your current mortgage will both accept overpayments and later let you borrow back the overpayments. Ours will, and it's proved wonderfully convenient.

Thrugelmir

ChopperST wrote: »

Just hope we don't see significant growth in the housing market over the next 24 - 36 months.

Needs to be far more than hope for the market to move significantly upwards.

Personally I would see a better return in paying down the mortgage and then selling. Always buy an investment property at a later date when you've saved the capital. Best tax free return is on ones own residential property.

ChopperST

Thrugelmir wrote: »

Needs to be far more than hope for the market to move significantly upwards.

Personally I would see a better return in paying down the mortgage and then selling. Always buy an investment property at a later date when you've saved the capital. Best tax free return is on ones own residential property.

kidmugsy wrote: »

Check whether your current mortgage will both accept overpayments and later let you borrow back the overpayments. Ours will, and it's proved wonderfully convenient.

Never thought about drawing back down the overpayments. Will contact my mortgage company.