Premium Bonds

eskbanker

dont_use_vistaprint wrote: »

No i want some in zero risk, but this zero risk return is £0 since March!

There's no such thing as zero risk - there are obviously accounts with capital protection, such as all savings accounts and premium bonds, but as these usually won't keep pace with inflation, especially over the long term, then money held in such accounts risks losing value in real terms.

If you're looking to avoid investment risk but are happy with inflation risk then peruse the savings offerings via the quick link articles linked further up the page....

Premium bonds clearly aren't for you if you feel that six months without a prize on an £8K holding is an issue - granted it's only 14% likely to happen but that's not wildly outlandish (1 in 7) and as stated above, you shouldn't expect smooth linear returns.

capital0ne

eskbanker wrote: »

There's no such thing as zero risk - there are obviously accounts with capital protection, such as all savings accounts and premium bonds, but as these usually won't keep pace with inflation, especially over the long term, then money held in such accounts risks losing value in real terms.

Everyone know inflation reduces your spending power so a savings account paying less than the rate of inflation is zero risk. You are not risking anything - you know your losing capital when you venture into the deal.
The only totally risk free investment I know of are NS&I Indexed Linked Savings Certificates - not currently on sale, but if you have any, hang onto them. :T:T:T

eskbanker

capital0ne wrote: »

Everyone know inflation reduces your spending power so a savings account paying less than the rate of inflation is zero risk. You are not risking anything - you know your losing capital when you venture into the deal.

That's a rather odd view of what risk means in this context - knowledge and/or acceptance of inflation risk doesn't magically make it go away, i.e. a risk that's 100% likely to happen doesn't suddenly become zero risk to your money, quite the opposite in fact!

AnotherJoe

eskbanker wrote: »

That's a rather odd view of what risk means in this context - knowledge and/or acceptance of inflation risk doesn't magically make it go away, i.e. a risk that's 100% likely to happen doesn't suddenly become zero risk to your money, quite the opposite in fact!

Agreed. Plus of course, you might know you are losing out to inflation, so a risk is the size of that inflation. Will you be losing 1,2, 5 or perhaps more % a year? Thats the risk.

IanManc

capital0ne wrote: »

Everyone know inflation reduces your spending power so a savings account paying less than the rate of inflation is zero risk. You are not risking anything - you know your losing capital when you venture into the deal.

Using that logic, if I jump off the new 38 storey block of student flats in Manchester city centre I know I'm going to be killed when I hit the pavement - so I'm "not risking anything", as I know I'm going to be killed when I "venture into the deal". Therefore jumping off a 38 storey building is zero risk.

polymaff

AnotherJoe wrote: »

Agreed. Plus of course, you might know you are losing out to inflation, so a risk is the size of that inflation. Will you be losing 1,2, 5 or perhaps more % a year? Thats the risk.

The percentage loss is relative to what you could otherwise achieve - not to inflation.

Alexland

IanManc wrote: »

Using that logic, if I jump off the new 38 storey block of student flats in Manchester city centre I know I'm going to be killed when I hit the pavement - so I'm "not risking anything", as I know I'm going to be killed when I "venture into the deal". Therefore jumping off a 38 storey building is zero risk.

In the world of IT and Construction project management it certainly wouldn't be a risk as the outcome is near certain but it would be an issue, maybe not for yourself, for the people who have to clean you up over whatever radius you spread.

Alex

dont_use_vistaprint

eskbanker wrote: »

That's a rather odd view of what risk means in this context - knowledge and/or acceptance of inflation risk doesn't magically make it go away, i.e. a risk that's 100% likely to happen doesn't suddenly become zero risk to your money, quite the opposite in fact!

That's not the definition of risk though. A risk is something that "might" happen, below inflation growth in a savings account is not a risk, its a known level of performance

eskbanker

dont_use_vistaprint wrote: »

That's not the definition of risk though. A risk is something that "might" happen, below inflation growth in a savings account is not a risk, its a known level of performance

Hence my reference to "what risk means in this context" - there are obviously many ways of defining risk, but the one you're choosing (as with Alexland before you) doesn't relate directly to the matter of risk to your money.

However, if you choose to subscribe to capital0ne's skewed perspective that knowing you'll lose money means zero risk, then go ahead!

IanManc

dont_use_vistaprint wrote: »

That's not the definition of risk though. A risk is something that "might" happen, below inflation growth in a savings account is not a risk, its a known level of performance

The risk isn't that there will be inflation - the risk is that you don't know in advance how high inflation might be, and it might be very high. The risk is the known unknown.