Lump Sum to Invest and not sure where to go

ilwallace

I have £20K to invest securely. I am prepared to "let it be" for 5 years, and would appreciate any suggestions as to the best package that is currently worth looking at.

dunstonh

If you want it capital guaranteed, your options are limited. Basically savings accounts and National Savings (i.e. not investing). If you want it capital secured, you will have a greater range of options.

Guaranteed basically means that you will get your money back whatever eventuality happens. Secured means that you will get your money back if the investment goes wrong but if the company offering the investment goes under, you may not get your money back. Investing in a capital secured product from high street name would have little concern of going wrong but its not guaranteed.

By saying securely, we are to assume that you want to rule out all cautious investments and above and go with absolute security?

Whats your tax situation? (thats very important and can cause different answers to be given).
What are your goals with this money? (are you looking for security with the potential for growth or are you looking for a interest rate style of return)
Is access going to be required at all? (if possible, then that will reduce the options)

ilwallace

Hi there thanks for the response. Your para 2 I guess is what I am looking for, but when the phrase "not gauranteed" crops up, I begin to wonder if these high street names are in fact secure.

I have looked at the ns&i equity bond iss 10 and that looks ok but think I could do better as regards tax. I earn over 30K so am in higher band.

Also looked at L&G growth plan 2 - for self and wife at £7K each which also seems fine but has the dreaded not gauranteed statement in the fine print.

Am looking for security with growth and access is not required as per both the above ie 5 and 6 yrs.

If you could advise further I would appreciate your comments.

Rgds

EdInvestor

I don't think you can have it both ways really.

"Security and growth" was what they used to claim you got with With profit funds, and then look what happened.:(

Why not divide the money into 3 bits.Put 10k in high interest ISAs, totally safe.

Invest the other 10k half and half in an equity income fund and a property fund, reinvesting the income.

That way you've got 50% of the money no risk, 25% at medium risk, and 25% at higher risk - but the dividend income should be pretty stable on the equity fund. If you can't cope with that much risk, increase the cash proportion 12k-4k-4k, adjust to suit.

So you manage the risk through asset allocation.The market is fairly flat these days - showing moderate rises, but nothing spectacular, not much downside either.

But the best returns are definitely from income shares - and the dividends are precisely what they take with the GEB products to pay for your guarantee.

dunstonh

"Security and growth" was what they used to claim you got with With profit funds, and then look what happened.

The last 3 years performance on unitised with profits with NU and Pru has exceeded most, if not all bank or building society accounts. With Profits is a term which covers a range of investment areas and you shouldnt tarnish the good funds with the bad ones.

Invest the other 10k half and half in an equity income fund and a property fund, reinvesting the income.

That may be something you would do or I would do but not something that ilwallace should do. The clarification has shown ilwallace to be a "secure" individual rather than a "cautious" individual. In these cases you are really limited to NS&I, Cash ISAs and high rate savings accounts.

Although the GEB thread shows that we all think that GEBs are not as good as equity held investments. They are still suitable for someone that craves for that capital security phrase. Even if it does mean that they will not grow as much as an equity investment (it wont do down by as much either if it goes bad and that is what really concerns them).

One of the best cautious investments I ever arranged was a form of GEB which paid out distributions of starting at 6% in year one and finishing at 10% in year 5. As long as the FTSE didnt drop by more than 25% in that 5 year period, the capital was returned. It didn't and I wish I had arranged more of them than I did. (oh for hindight ). So its best not to knock these totally. Even if todays options are not quite as good as those that were available a few years ago.

L&G are one of the top 3 insurance companies in the UK for financial strength so that isnt really a concern. They are not allowed to put guaranteed because on paper there is the possibility that they could fail. The possibility is extremely tiny but it does exist. The L&G option can be beaten by Woolwich and a few others now and there are varients which have lock-ins and/or guaranteed minimum returns with potential on top.

ilwallace

Thanks again for your time and trouble. Regarding your last para am now leaning toward this type of investment. Have looked on the Woolwich site and can find nothing, do you have any info? you also mention others, would you care to comment further please??