Investment for 1 year?

JamesN

Hi guys,

Considering investing about £20k that we have got saved for a house deposit. We are looking to maximise the gain over a year (as looking to buy next year). Was hoping for like an 8% return or so. Currently getting 3% on it through santander (obv less 20% tax).

I appreciate a year is very short but just wondering if there is anything worth considering? I'm curious as to what we can get and open to taking small risks.

Thanks

Ifts

I would say the safest bet is to keep it in the Santander Acc earning 3%.

You don't want to go investing it if its money for a house deposit, especially if you are looking to buy next year.

If you invest it and the investment goes down in a years time when you need to use the money for a house deposit you will have less than the £20K you have now.

SAHD_Jim

JamesN wrote: »

Hi guys,

Considering investing about £20k that we have got saved for a house deposit. We are looking to maximise the gain over a year (as looking to buy next year). Was hoping for like an 8% return or so. Currently getting 3% on it through santander (obv less 20% tax).

I appreciate a year is very short but just wondering if there is anything worth considering? I'm curious as to what we can get and open to taking small risks.

Thanks

Depends on the level of risk your prepared to take, but you could invest in lower risk investment funds. You say "we", so I assume you and oh, meaning you could each put £10K in a Stocks ISA and select a few funds each.

Or there is peer to peer lending with more risk than savings but higher potential return.

Or for the lowest risk (ie none) just shop around take adavantage of things like 5% in Nationwide flex direct on £2,500 and a number of regular savers that offer more than 3% for a monthly contribution of £250 if you are already a bank customer (eg First Direct, HSBC).

JamesN

Ifts wrote: »

I would say the safest bet is to keep it in the Santander Acc earning 3%.

You don't want to go investing it if its money for a house deposit, especially if you are looking to buy next year.

If you invest it and the investment goes down in a years time when you need to use the money for a house deposit you will have less than the £20K you have now.

Yeah, I guess its technically 2.4% after tax but still good in this market for risk free.

SAHD_Jim wrote: »

Depends on the level of risk your prepared to take, but you could invest in lower risk investment funds. You say "we", so I assume you and oh, meaning you could each put £10K in a Stocks ISA and select a few funds each.

Or there is peer to peer lending with more risk than savings but higher potential return.

Or for the lowest risk (ie none) just shop around take adavantage of things like 5% in Nationwide flex direct on £2,500 and a number of regular savers that offer more than 3% for a monthly contribution of £250 if you are already a bank customer (eg First Direct, HSBC).

Yeah, me and my oh is correct. Is there potential for returns on low risk that would exceed the cash at 2.4%?

I've read bits and pieces on peer to peer and it worries me due to the lack of regulation in the market at present. Do you have any tips on this area?

I guess with the lowest risk is that I don't have much time as i've only got a year so the ones where you can only get it on £300 a month or something won't yield much due to the low volume.

innovate

You'd be a high risk gambler if you put your £20K in any investments.

Keep it save and stick to your 3% (or 2.4% after tax). That will keep your capital intact, and you get around £480 in interest, which - n current inflation figures - maintains your purchasing power comfortably.

If you invested the money, you might be able get a higher return but you'd also risk getting back less than you invested.

Say you could make 5% net returns (after all costs) from an investment in a year - that would be just another £520 over and above you would get in a savings account. The difference being, your return from the savings account is 100% certain, whilst the return from the investment is anything but certain. For a mere £520 or thereabouts, I wouldn't risk my ability to buy my first home.

innovate

JamesN wrote: »

Is there potential for returns on low risk that would exceed the cash at 2.4%?.

Not if you are a tax payer, I'm afraid, for a 12-month horizon.

JamesN

Fair enough. Thanks for the advice guys. Pretty much in line with what I thought so will play it safe.

Ifts

JamesN wrote: »

Yeah, I guess its technically 2.4% after tax but still good in this market for risk free.

Sticking to savings/current accounts you can squeeze a little more out without any risk -

You are allowed to have 2 Santander 123 accounts in each name.

You can squeeze a little more by using the £20K you have in your Santander 123 acc by cycling money through accounts like -

Nationwide Flex-Direct - 5% on up to £2.5K (have to pay in £1k each month)
Halifax Reward - £60 reward/yr (have to pay in £750 each month / 2 DD's) + if you have an old account you can switch to the Halifax you can get an extra £100 (I did this myself, it was straight forward and the £100 incentive paid within 4 days of reward acc opening).

Little bit extra over the year without too much effort and more importantly no risk - you can sleep easy!