Thought I was doing the right thing with my money

brasso

saver861 wrote: »

At the moment, I don't see a better option than the high paying current accounts that allows me to store the money there at 3%+ and, if and when, a better option comes along I can just move it at the push of a button.

If preservation of capital without growth is your requirement, then that is your best option. If you want to grow your savings you have to take some risk -- not necessarily a lot. I've said earlier in this thread what I would personally prefer to do, but I get the impression that I'm less cautious than many.

saver861

brasso wrote: »

If preservation of capital without growth is your requirement, then that is your best option. If you want to grow your savings you have to take some risk -- not necessarily a lot. I've said earlier in this thread what I would personally prefer to do, but I get the impression that I'm less cautious than many.

Well, to be fair, I think everyones requirements is preservation of capital regardless. With high interest accounts maxed out, savings are growing at 3%+. Averaging one or two percent above inflation.

I have other investments with risk - mostly doing ok. However, had you asked me in 2008 or so, then the answer at that time would have been different.

enthusiasticsaver

I think if I were you I would move away from premium bonds but then I have never been a lover of those as I think the odds of winning have decreased in recent years. How long have you had that amount in and what are the earnings you have made? You have a long gap until you reach state pension age as I would imagine if you in early 50s it will not be until 67 or 68 assuming you have made enough NI contributions. I would put whatever you think you may need for new car/boiler etc in high interest current accounts and the rest either in stocks and shares isa or if that is too risky a fixed term cash isa - Coventry BS does a 4 year one for 2.4%.

jimjames

saver861 wrote: »

At the moment, I don't see a better option than the high paying current accounts that allows me to store the money there at 3%+ and, if and when, a better option comes along I can just move it at the push of a button.

The problem I can see with this is there will never be a better time or better option. If everyone is unanimous that shares are the best option then that's normally a sign to get out. The best time to invest in my view is when you have the money.

brasso

saver861 wrote: »

Well, to be fair, I think everyones requirements is preservation of capital regardless. With high interest accounts maxed out, savings are growing at 3%+. Averaging one or two percent above inflation.

I have other investments with risk - mostly doing ok. However, had you asked me in 2008 or so, then the answer at that time would have been different.

I don't know how much you can put in these so-called "high interest" accounts but 3% isn't enough for me, anyway. The RPI is its lowest for years and is 2%. To me, that's 'preservation of capital' territory, and I have to say that this isn't my main requirement, which is to see my investments grow enough to give me financial security post-retirement.

It's not a criticism of your position -- we all have different circumstances.

saver861

brasso wrote: »

I don't know how much you can put in these so-called "high interest" accounts but 3% isn't enough for me, anyway. The RPI is its lowest for years and is 2%. To me, that's 'preservation of capital' territory, and I have to say that this isn't my main requirement, which is to see my investments grow enough to give me financial security post-retirement.

It's not a criticism of your position -- we all have different circumstances.

I understand that.

I think the OP needed to know his best options for his 39k capital while ensuring access to money for unforeseen eventualities, i.e. boiler, hole in roof etc.

I have no idea what your particular circumstances are so would not have a clue to comment. For most, including myself, I spread across a range of options to meet my individual requirements. For the OP though, he has immediate access needs while trying to maximise return. The Premium Bonds are generally not considered but for my own findings, they are ok for a return of around 1.2 or 1.3%.

misty6

Hello again and thanks for all the replies. I've had a quick read through but will need to properly read and understand what's been written as I am a bit slow, having had a stroke last year.

I'm a little bit scared of investments. I don't think I could cope with the stress of potentially losing all my money with stocks and shares as I can't earn any more now to replace it!

I did win 2 prizes of £25 this month on the premium bonds but I have no idea how much of a return I usually get. I think I've won about £200 this last year and writing that down, it doesn't sound like very much. I am still topping up my bonds with a standing order of £50 per month. I'm not sure I would bother with a lottery ticket though.

I think I will have to look into the interest paying current accounts that people have mentioned. I need to be more pro-active. I've had my current bank account for more than 20 years!!

Someone asked about the state pension - I think I opted out of that years ago. Or it might have been the private pension I had at the time. I really can't remember (sorry not very helpful I know).

Thanks to the people who gave the info and link about the tax free savings coming in next April. I didn't know about that and it will definitely affect me.

Thanks

jimjames

misty6 wrote: »

I'm a little bit scared of investments. I don't think I could cope with the stress of potentially losing all my money with stocks and shares as I can't earn any more now to replace it!

Thanks

The only thing I would say is that you need to be comfortable with the risk and understand investments before you take that route.

However with a well constructed fund portfolio the risk of losing all your money is as close to zero as it can be. Depending on the portfolio it could drop 50% but that is purely the value at that point, you haven't actually lost money until you sell and the portfolio still carries on providing income too.

So if your main requirement is income and you ignore what it is worth at any point in time then it may still be right for part of your money - there is no reason to have to have all the £39k in the same place.

For some investment trusts they have increased the income payouts every year for over 40 years, remember all the stock market crises and crashes over that time, yet the income has still risen through all that. As long as you can ignore the capital value then the portfolio should come back in value over time.

brasso

Good post by jimjames.

Investment is one of those things that a lot of people shy away from but these days, it's very easy to do and fairly transparent. No specialist knowledge is needed for decision making, especially when investing in funds, which are (IMO) the best things to start off with.

Just because we feel obliged to recite the mantra about the possibility of losing money, doesn't mean that this is a likely outcome, as long as some rudimentary steps are followed. Tons of info via Google, so no need to reproduce it all here. But if you're not comfortable with the idea, it doesn't matter.

JohnRo

It is important to make people new to investing aware that temporary and sometimes protracted capital losses on collective investments are an important and necessary part of the process though and for that reason nothing to be scared of.

The worst thing anyone could do is panic sell and that's exactly what some obviously do when things head south and red numbers light up their account screen, as they're bound to do from time to time, which is the time when they should be buying more.

That's why drip feeding an investment portfolio is perhaps the better option, psychologically, for those of a nervous disposition with a lump sum to invest.