Default how to maximise interest on small lump sum no risk

darentriskit

Forgive the multiple postings but I,m a newbie to this !

hi everyone I too like this lady have spent the last two days reading this site and you guys are really knowledgeable and helpful - I wonder if anyone can please help me with my question
i'm 57 with 10k ( poss 17k) to make work over the next 8 years till my state retirement age - house is paid no debts and managing ( just ) on small pension
unlikely to work again ( ill health ) BUT and heres the rub i'm so averse to risking this money its almost making me ill - cos neither can I stand looking at it squandering in my measely 1% e-saver natwest account
I reckon only to risk 10 of it as the rest will be my rainy day fund and I,ve seen that santander 123 give 3% , and Skipton ( just ) 5 year bond @ 3.5%
I do not have an ISA and am wondering would a mix of cash and stocks n share ISA be a suitable low risk - if so which can anyone recommend - I simply cannot put any of the capital at risk so it must be secure -also is there a "right" timing for putting a lump sum into an ISA ? apologies if this sounds "thick" but like I said I am new to this !!

I suppose I need to ask myself am I wiling to let this be "tied up" and not accessible ( ie 3% saving account 5 year) OR have the hassle of moving my whole banking over from natwest to santander - am I just being lazy? pathetic - or are there other products out there which may better suit my risk averse nature - any advice would be gratefully received - thaks so much

very kind regards

bigadaj

Unfortunately if you can't afford any risk then you're looking at cash only, the probability is that shares will outperform but no guarantee and it will definitely go up and down over time.

Eight years is probably ok for shares investment, and it doesn't sound as though you wouldn't need it all at once so could be worth more consideration on your part.

Are you a taxpayer currently, as if you aren't there is no benefit to isas really.

Current accounts are best options really but you generally don't have to switch everything if you don't want to, flex direct is paying 5% up to £2500 currently, normally just need funding by a certain amount every month and may need direct debits, but you can circulate money around to meet the former. Santander charge a fee but give cash back on direct debits so could make more than the 3%.

Generally can't see base rates rising for some time. If you listen to the markets could be two years, Bank of England indicate four so unlikely to improve any time soon.

BobQ

OP,

As said above if you will not take any risk you just need to look at the best buys and put it in a savings account.

Its your call if you want to lock in to a savings account for 5 years, you know what you will get but cannot get at your money and rates could go up. Leeds are offering 3.05% fixed for 5yr but you can get that in the Santander account for £2 a month (but its not guaranteed)

darentriskit

thanks bigadaj and bobq - i have been thinking about your responses and its made me realise if i could be less risk averse I might get better returns - - will i get better returns opening a series of drip feed accounts like first direct @6% for instance , than stashing the whole lot away (10K) at one go in Santander 123? - and opening some account to slip the monthly interest into which is a bit "riskier" - like trying my toe in the water with a stocks and shares isa - in fact is there one which will accept such low amounts as £25 a month regular?
Or do you have any other routes / options you might suggest i consider ?

many thanks for your help

jamesd

Think about the value of investments inside a stocks and shares ISA as like a rollercoaster in reverse. Lots of ups and downs but an overall upwards trend. Different investment types have different levels of steepness - risk, volatility - in both the ups and downs and the overall growth. So there is a general theory that the more risk - ups and downs - you're prepared to accept, the greater the returns.

The volatility changes to risk and loss if you're forced by some deadline to withdraw money during one of the down times. If you don't have a fixed deadline you can wait it out, though the wait can be many years, of in extreme cases even decades, though that long is quite rare.

To give you some idea, the main UK stock market can be expected to drop by 20% every year or two and by 40% every five to ten years. But in between it's growing an on average over the last hundred plus years has returned 5.2% plus inflation, around 8-9% total.

£50 a month is easy enough to find, though there are some that will accept £25. Or you might consider say spending £1,000 or £2,000 to buy some of the Invesco Perpetual High Income fund now. This is one of the most popular funds for retired UK investors. The downward moves are similar to the main UK stock market. While it may go down by say 50% in a bad year, if it's only £2,000 out of £10,000 the overall effect is only a 10% drop.