100K investment for 3-5 years

IanGC_2

Hello All, I'm looking for some investment advice from you knowledgeable folks

I'm in my mid 20's have been fortunate enough to have £100k to invest for around 3-5 years, ideally to go a long way towards a house in a few years time.

I have had this money sitting in an ok savings account for almost a year now and I don't think it's really worth it at all. The stock market has shot up since 2003 so I've been very wary about investing it in that, as what goes up must come down (and over a long period of time it’s not too much of a worry, but as I'm looking at 3-5 years it may not be a good idea).

If I opted for a managed fund or something like that, would that probably go down with the stock market if that dropped? I'm of the opinion that the housing market and stock market have been doing so well recently they can't keep going up and up (but I don't wear a tin foil had and horde gold under my pillow).

Any ideas would be very welcome, as I am well and truly confused. My current thoughts are sticking lots of it in one of the NS&I RPI trackers (up to £15k in each issue).

I'm a higher rate tax payer, and I'd be looking to have fairly low risk investments - I don't mind some risk, but I wouldn't like to stomach a 30% loss or anything like that!

dunstonh

The stock market has shot up since 2003 so I've been very wary about investing it in that

Stockmarket is not one risk level. It is a sliding scale. The FTSE100 is still lower than the high point before the crash and the UK is not considered overpriced at this time.

but as I'm looking at 3-5 years it may not be a good idea

Thats your problem. Its a bit short to use equity investments unless for a small amount that may be for the 5 year end of things.

If I opted for a managed fund or something like that, would that probably go down with the stock market if that dropped?

Only if it was in the stockmarket. Managed funds are available in other asset classes.

I'm of the opinion that the housing market and stock market have been doing so well recently they can't keep going up and up (but I don't wear a tin foil had and horde gold under my pillow).

With respect, what is your investing knowledge and property knowledge to make that guess?

My current thoughts are sticking lots of it in one of the NS&I RPI trackers (up to £15k in each issue).

Probably a good idea.

I'm a higher rate tax payer, and I'd be looking to have fairly low risk investments - I don't mind some risk, but I wouldn't like to stomach a 30% loss or anything like that!

You have waited 12 months and lost money in real terms as cash after higher rate tax has lost money in real terms. Had you invested in a cautious or medium risk spread 12 months ago you would have achieved double digit returns. When you invest, the key is not to put all your eggs into one basket. You have asked about "a managed fund" but you shouldnt invest it in a managed fund. Maybe 10-15 with that amount and spread over the sectors but averaged out to match your risk profile.

as for 30% loss, the UK equity income sector lost less than that at the worst point of the last crash and within 12-18 months was back in profit again. had you invested before the crash, you would have doubled your money now with any half decent spread. So, you have to look at short term fluctuations in context. However, as mentioned earlier, 3 years is too short. 5 years is the minimum you should consider.

IanGC_2

Thanks for your advice on this. :beer:

dunstonh wrote: »

Only if it was in the stockmarket. Managed funds are available in other asset classes.

Is there a site that can give me a list of funds available and their past performance? If there was a fund spread across several sectors then I'd like to take a look

dunstonh wrote: »

With respect, what is your investing knowledge and property knowledge to make that guess?

You are quite right, as I don't have any previous experience here - however as I'm in an industry where I analyse trends and figures (albeit in engineering terms) I'm cautious that house prices seem too high (compared to historical data) and interest rates are rising. Perhaps this is just the way things are, but that was my gut feeling.

dunstonh wrote: »

as for 30% loss, the UK equity income sector lost less than that at the worst point of the last crash and within 12-18 months was back in profit again. had you invested before the crash, you would have doubled your money now with any half decent spread. So, you have to look at short term fluctuations in context. However, as mentioned earlier, 3 years is too short. 5 years is the minimum you should consider.

If I opted to invest for around the 5 year mark, what sort of options should I be looking at and how would I go about getting them? I'm quite keen to take a look at all the options, but quite low-risk ones.

dunstonh

Is there a site that can give me a list of funds available and their past performance? If there was a fund spread across several sectors then I'd like to take a look

There are around 2000 unit trusts. Past performance. From a consumer point of view, morningstar or citywire have fairly good websites. Trustnet is good on things they cover but they are missing a lot of funds so isnt as comprehensive.

Dont get hooked up on past performance. In fact, where we are in the current cycle is a problem for consumers as most of these free websites only cover the last 5 years and that has largely been constant growth and doesnt include the last crash. If you want to see how the fund behaved in a negative period, you need to look at 10 year performance.

If I opted to invest for around the 5 year mark, what sort of options should I be looking at and how would I go about getting them? I'm quite keen to take a look at all the options, but quite low-risk ones.

A decent portfolio should be structured and built to defined strategy. Otherwise its a bit of hit and hope. The two most talked about strategies on this site are high yield portfolio and sector allocation. With your risk profile, sector allocation would be the most logical as HYP is very much focused in one area. Sector allocation is where you spread the money across funds in different sectors (UK, Europe, Commercial Property, fixed interest etc) with an allocation in each area that averages out to match your risk profile.

IanGC_2

dunstonh wrote: »

In fact, where we are in the current cycle is a problem for consumers as most of these free websites only cover the last 5 years and that has largely been constant growth and doesnt include the last crash. If you want to see how the fund behaved in a negative period, you need to look at 10 year performance.

That's what I'm most interested in, but as you say I can only get the last 5 years at most places so I miss most of the data. I can see a small dip (perhaps ~25%) but I can't see what happened leading up to that. I'll keep searching and see if I can find a free site that lists it, the sites you mentioned gave some good current info though (not that past performance indicates too much though).

Would you suggest investing now in a fund, or wait till this cycle dips and invest once it starts to rise slowly again? (keeping the money in NS&I or high interest accounts until then). If I had more time then it wouldn't be so much of a problem, but 4/5 years is probably how long I'll be waiting.

dunstonh

Someone else may be able to help on the best free sites. I am not much use there as all my sources are paid for and go back upto 20 years.

Would you suggest investing now in a fund

I would never suggest A fund. Investing in a single fund is old fashioned and will lead to lower returns over the long run. It is putting all your eggs in one basket. With most fund supermarkets today, the minimum you can put in a fund is £500-£1000. So, lets say you put £10k into funds, you could put £1000 into 10 funds and spread it over the areas. Modern investment platforms allow you to mix and match providers and funds all on one account.

It may be worth dipping your toes in for a small amount but I am still concerned about your timescale.

IanGC_2

OK I will have to think hard about this then if the timescale is a problem. Is my only real option the NS&I RPI linked trackers?

Thankyou for your help and advice, once I've got some money to invest over a longer time scale I will do as you suggest

Jonbvn

mrx9000 wrote: »

Right where shall I start... I used to be 100% invested in various shares blah blah blah.......

Why are you posting the same thing on every thread?

IanGC_2

IanGC wrote: »

Thankyou for your help and advice, once I've got some money to invest over a longer time scale I will do as you suggest

I'm coming back to this thread now, as I'm going to be making my investments in a few months, and I'm busy researching various unit trusts to invest in.

Is there a place that you would recommend buying the unit trusts with instant online access and good management tools?

purch

£100k to invest for around 3-5 years, ideally to go a long way towards a house in a few years time.

In a few years time you'll be able to buy a 6 bedroomed property anywhere in the U.K. with £100K...........and still have cash spare to furnish it :eek:

Aegis

purch wrote: »

In a few years time you'll be able to buy a 6 bedroomed property anywhere in the U.K. with £100K...........and still have cash spare to furnish it :eek:

I must say that I find this prediction extremely unlikely...

But still!