Is it possible to make 4% interest on my savings?

sunnydayinengland_2

I'm trying to find a way of consistently making a minimum 4% yearly interest on my savings and possibly higher.

My wife and I have savings of approx £470k. I am a private renter with a good job, am married with kids. I am paying into a pension and I can also save approx £5k per year from my after tax income after all living expenses are paid.

Our savings are currently invested in a mixture of S&S NISA's, S&S (non NISA), cash, NS&I Index linked certificates, P2P lending etc.

My wife doesn't work so a lot of it is in her name (trust her completely) so she doesn't pay tax on any interest as it is normally well below the threshold.

Is it possible to achieve 4% per year?

HSVX

sunnydayinengland wrote: »

I'm trying to find a way of consistently making a minimum 4% yearly interest on my savings and possibly higher.

My wife and I have savings of approx £470k. I am a private renter with a good job, am married with kids. I am paying into a pension and I can also save approx £5k per year from my after tax income after all living expenses are paid.

Our savings are currently invested in a mixture of S&S NISA's, S&S (non NISA), cash, NS&I Index linked certificates, P2P lending etc.

My wife doesn't work so a lot of it is in her name (trust her completely) so she doesn't pay tax on any interest as it is normally well below the threshold.

Is it possible to achieve 4% per year?

With enough money in S&S ISAs and alternative investments like P2P lending, I'd have thought it would be more than reasonable to achieve 4% a year with moderate-low risk. As you know, interest rates are low so you won't see much return on cash held in savings accounts (2-3% maximum if you use current accounts and long-term fixes), but you can get 5-6% from P2P (although maybe it would be unwise to hold too much in this as it is a relatively new product), and a variable % return from S&S isas depending what you choose to invest in. The right balance of all of these products should see you being able to achieve 4%.

TakeCareOfThePennies_2

HSVX,

P2P is far from being "moderate-low risk". Its high risk, no disputing that fact.

sunnydayinengland,

People round here hate me for saying it, but cash is a perfectly acceptable position. Nothing will ever give you the stability and liquidity of cold hard cash. So you should be looking to keep a minimum of 10-15% of that in cash (or more if you wish to take a more cautious approach). A well managed portfolio will always have a healthy chunk of cash.

Secondly, once cash has been take into account, with all due respect, setting yourself a "consistent" percentage target is stupid and a sure way to encourage imprudent investment behaviour.

You obviously want to stay away from an "aggressive" style of portfolio, you have worked hard to save that money, you want to preserve the capital and get modest growth. So you should really stay away (or minimise) your exposure to alternative investments such as P2P.

What you want to do is construct a balanced and diversified portfolio of investments. If you're not confident or knowledgeable enough to do that, you should really seek out the services of an IFA because £470k is a sufficiently large chunk of money to necessitate a careful hand.

Keep_pedalling

TakeCareOfThePennies wrote: »

HSVX,

P2P is far from being "moderate-low risk". Its high risk, no disputing that fact.

sunnydayinengland,

People round here hate me for saying it, but cash is a perfectly acceptable position. Nothing will ever give you the stability and liquidity of cold hard cash. So you should be looking to keep a minimum of 10-15% of that in cash (or more if you wish to take a more cautious approach). A well managed portfolio will always have a healthy chunk of cash.

Secondly, once cash has been take into account, with all due respect, setting yourself a "consistent" percentage target is stupid and a sure way to encourage imprudent investment behaviour.

You obviously want to stay away from an "aggressive" style of portfolio, you have worked hard to save that money, you want to preserve the capital and get modest growth. So you should really stay away (or minimise) your exposure to alternative investments such as P2P.

What you want to do is construct a balanced and diversified portfolio of investments. If you're not confident or knowledgeable enough to do that, you should really seek out the services of an IFA because £470k is a sufficiently large chunk of money to necessitate a careful hand.

That is a rather sweeping statement, not all p2p is high risk. Something like Ratesetter is pretty low risk and it will return around 5 to 6% for 3 / 5 year lending.

Biggles

If I were a private renter with £470k, the first investment I would make would be to buy myself a house.

The rent saved must equate to a significant percentage.

Broken_Biscuits

TakeCareOfThePennies wrote: »

HSVX,

P2P is far from being "moderate-low risk". Its high risk, no disputing that fact.

sunnydayinengland,

People round here hate me for saying it, but cash is a perfectly acceptable position. Nothing will ever give you the stability and liquidity of cold hard cash. So you should be looking to keep a minimum of 10-15% of that in cash (or more if you wish to take a more cautious approach). A well managed portfolio will always have a healthy chunk of

.

heres something to dispute the "fact" that peer to peer is all high risk.

http://www.4thway.co.uk/

ratesetter to me has a place in a balanced investment plan. 6% returns and the least risky in my opinion.

TakeCareOfThePennies_2

Keep_pedalling wrote: »

That is a rather sweeping statement, not all p2p is high risk. Something like Ratesetter is pretty low risk and it will return around 5 to 6% for 3 / 5 year lending.

Its not a sweeping statement unfortunately.

The rates provided on P2P are reflective of the risk you are taking on.

Yes, Ratesetter may have a "provision fund", but they make it perfectly clear its not a guarantee.

masonic

Broken_Biscuits wrote: »

heres something to dispute the "fact" that peer to peer is all high risk.

http://www.4thway.co.uk/

ratesetter to me has a place in a balanced investment plan. 6% returns and the least risky in my opinion.

That site has them showing as medium-low to me (which is where I'd say they fall). Ratesetter 10/50 (or 2 out of 10), up to 20/50 (or 4 out of 10) for A rated Funding Circle loans (riskier FC loans are available). P2P is in a similar risk bracket to corporate bonds.

Broken_Biscuits

masonic wrote: »

That site has them showing as medium-low to me (which is where I'd say they fall). Ratesetter 10/50 (or 2 out of 10), up to 20/50 (or 4 out of 10) for A rated Funding Circle loans (riskier FC loans are available). P2P is in a similar risk bracket to corporate bonds.

that's how im using ratesetter. As an alternative to bonds in a balanced portfolio.
im mostly equities as i have many working years ahead. But p2p has a place and surely its not all high risk!

jimjames

Do you plan to buy a property?

sunnydayinengland_2

Biggles wrote: »

If I were a private renter with £470k, the first investment I would make would be to buy myself a house.

The rent saved must equate to a significant percentage.

At the moment I am happy to rent. I live in London and for £470k in the area near to my kids school, this would buy a small one or two bedroom flat (leasehold), so I am not prepared to tie up all my money this way for now. The point of this thread is to generate enough interest from savings that covers the rent and a bit more, which at 4% it would easily do. The rent I am currently paying has not been raised in 5 years and is cheap for the area.

I may buy in the future but at the present time I am not prepared to put my life savings in to one investment.