Cash alternative safest investment

coyrls

bowlhead99 wrote: »

Well, here's a list on the UK debt management office website of all the index linked gilts in which a fund - or you yourself - could invest.

http://www.dmo.gov.uk/reportView.aspx?rptCode=D1D&rptName=46726854&reportpage=D1D

Take a look at all the ones which mature in, say, the next 3 years i.e. before end of August 2019. Do you think it's worth setting up an exchange traded fund with the sole objective of investing in that portfolio?

"Hey guys, come and put your money in my fund. Only half a percent management fee plus all the operating and listing costs. What do you mean it seems like a sham!?! You get great exposure to the entire universe of qualifying assets within this collective scheme - it's tracking our custom index of all UK index-linked gilts maturing in the next three years! And internal rebalancing costs between all the gilts are negligible. How can we say that? Well, because the whole index is one gilt."

The link doesn't work but I guess, from what you say, that there is only one index linked gilt issue that matures in the next 3 years. Although short term is probably up to 5 years, I take your point that if there's hardly any index-linked gilts that meet the criterion, there ain't going to be a tracker fund or an ETF.

nxdmsandkaskdjaqd

mvarrier wrote: »

If you want something like bonds, with better returns than cash, P2P is worth investigating

I am looking into P2P at the moment. Anyone care to comment of where P2P fits in the invetsment risk scale? For example, is it above cash but below gilts?

bigadaj

nxdmsandkaskdjaqd wrote: »

I am looking into P2P at the moment. Anyone care to comment of where P2P fits in the invetsment risk scale? For example, is it above cash but below gilts?

It's higher risk than both cash and gilts.

Some people may compare it with corporate bonds and it is in that ballpark. Probably at the higher risk end of corporate bonds but they have a wide risk range, and some corporate bonds will be higher risk than some p2p offerings.

The key thing is diversification, much like corporate bonds and equities when you think about it, as there will be failures but so long as you have a spread then teh overall returns may well exceed the defaults to give a decent return.

There is a wide spectrum within p2p, what lowers their risk on some platforms is the fact that lending is secured, unlike equities and corporate bonds. So even a default is highly unlikely to see a total loss, there will be a delay whilst the security is sold, but losses are likely to be limited, so maybe only a 50% loss as a worst case dependent on the exact scenario.

EdGasket

bowlhead99 wrote: »

Well, here's a list on the UK debt management office website of all the index linked gilts in which a fund - or you yourself - could invest.

(here)

The redemption yields are all showing negative?? Why would anyone invest to lose money?

bigadaj

EdGasket wrote: »

The redemption yields are all showing negative?? Why would anyone invest to lose money?

Because it's secure and gives certainty.

Carrieanne

kidmugsy wrote: »

Good grief; at least buy a bit of gold and silver.

:rotfl: You must have read remarks by those know nothing multi-billionaires Jacob Rothschild, Bill Gross and Carl Icahn these past few weeks who suggested now might be the time to preserve wealth via precious metals rather than trying to build it chasing miniscule yields.

bigadaj

Just looking at the vanguard inflation linked gilt fund, can't seem to find figures on yield to redemption, or the equivalent relative to inflation rather than absolutely. The average duration to redemption is over twenty years though.

I don't have linkers and am interested in inflation linked bonds or similar but assume they are also very expensive currently.

Safe assets are expensive in any form currently but wonder what others are doing for the water part of their portfolio.

enthusiasticsaver

I should say that a balanced portfolio at an appropriate risk level would be a better option than sticking it all in gilts and bonds. Also if you have 95% equities and then are looking at government gilts that sounds like one extreme to another. What is your investment strategy?

Are you keeping this money in something like gilts for something specific or is it to offset the 95% equity holdings? Do you need access to it and will you be holding cash in current accounts or other instant access savings?

I prefer multi asset funds ( a mix of equities, bonds and sometimes commodities and corporate property) and just invest in the one at my level of risk. At the moment it is Vanguard Lifestrategy 60.

Glen_Clark

EdGasket wrote: »

The redemption yields are all showing negative?? Why would anyone invest to lose money?

Because Equities, Property etc will lose more if the political climate turns against QE?

EdGasket

Glen_Clark wrote: »

Because Equities, Property etc will lose more if the political climate turns against QE?

No you and bigadaj miss my point. Why not just keep cash rather than buy gilts with a negative yield to maturity? Cash at least wouldn't lose anything and would be just as safe.