Lowest risk 3% investment?

Clive_Woody

lesshaste wrote: »

Thanks. I should have said 20k.

Over what time period are you looking to invest and how urgently might you need the money?

lesshaste

Clive_Woody wrote: »

Over what time period are you looking to invest and how urgently might you need the money?

That's a good question. I am happy to invest for 12+ months but wouldn't want it locked away for longer than that.

Reaper

It sounds like you are after a savings account (even though you use the word "invest")

To quote the Government's Money Advice web site

There’s no sure way to protect your money from the effects of inflation.

The only rule is that cash savings accounts are generally the worst places to put your money long term – the interest is almost always lower than inflation, so you’re constantly losing money.

Clive_Woody

lesshaste wrote: »

That's a good question. I am happy to invest for 12+ months but wouldn't want it locked away for longer than that.

I am far from an expert, having only recently dipped my toe into the world of investment with Vanguard, but my plans are for 15 years plus. I think the general guidance is that for investments you should be looking 5 -10 years minimum to allow for ups and downs (excuse the technical terms).

It might be a bit of a faff but it sounds like the route of multiple savings accounts would be best for you.

capital0ne

lesshaste wrote: »

That's a good point but seems like quite a pain.

Oh well, if you can't be bothered to put a tiny little bit of effort into it, just stick it under the mattress and lose 2.9%

Even at 3% your only 0.1% over inflation

assuming inflation is 2.9%

atush

ColdIron wrote: »

Reminds me of the project management triangle. You can do it quick, cheap or right, pick any two

As long as right is one of the 2

eskbanker

ColdIron wrote: »

Reminds me of the project management triangle. You can do it quick, cheap or right, pick any two

Or pick none of the above if you're Sabadell, who must have been aiming for the Bermuda triangle....

lesshaste

capital0ne wrote: »

Oh well, if you can't be bothered to put a tiny little bit of effort into it, just stick it under the mattress and lose 2.9%

Even at 3% your only 0.1% over inflation

assuming inflation is 2.9%

I was trying to work out how this would work. The current accounts normally require you to, for example, pay in at least £750 and pay at least three Direct Debits each statement month. The Tesco one pays 3% interest up to 3000 pounds.

So, you want to keep 3000 pounds in the account at all times. Any more will not be getting much interest and any less is a wasted opportunity.

How on earth do you do this? I can see you could set up a 750 pound standing order from your main account to the Tesco account. And you could set up three direct debits, which by their nature often take a variable amount per month (e.g. gas, electricity). So I could pay in enough every month to cover the direct debits assuming they are fairly stable. But to pay in 750 a month I would need to also set up a standing order *from* the Tesco account back to my main account. One concern is that this starts to look a little like money laundering (moving money back and forth between two accounts automatically).

Now if I want to save 20k, I would need 6+ different current accounts paying 3%, assuming those exist, and I would need to pay ~750 into each every month and have a total of 18+ different direct debits set up. How do people manage this?

s88

lesshaste wrote: »

I was trying to work out how this would work. The current accounts normally require you to, for example, pay in at least £750 and pay at least three Direct Debits each statement month. The Tesco one pays 3% interest up to 3000 pounds.

So, you want to keep 3000 pounds in the account at all times. Any more will not be getting much interest and any less is a wasted opportunity.

How on earth do you do this? I can see you could set up a 750 pound standing order from your main account to the Tesco account. And you could set up three direct debits, which by their nature often take a variable amount per month (e.g. gas, electricity). So I could pay in enough every month to cover the direct debits assuming they are fairly stable. But to pay in 750 a month I would need to also set up a standing order *from* the Tesco account back to my main account. One concern is that this starts to look a little like money laundering (moving money back and forth between two accounts automatically).

Now if I want to save 20k, I would need 6+ different current accounts paying 3%, assuming those exist, and I would need to pay ~750 into each every month and have a total of 18+ different direct debits set up. How do people manage this?

It's not money laundering if your own money that has already been taxed is circulating through bank accounts to take advantage of interest. Money laundering would involve an illegitimate income being made 'legit' in the eyes of HMRC.

Not all accounts require DD's ... I have a TSB Classic account paying 5% on £1500, & Nationwide Flex paying 5% on £2500, albeit this will only be for a 12 months, which suit your needs. I realise this only makes a £4k sum, but it's essentially two you can utilize immediatly.

The next bit is tricky as you need DD's.
2% on £5000 with Club Lloyds with two DD's,
3% on £3000 with Tesco with three DD's.

That's £12k tied up so far with only five DD's in total. I know many on here will likely scoff at the suggestion, but I still personally see use with Santander's 123 current account, as they offer 1.5% up to £20k, with cashback benefits from utility bills & mortgage, although comes with a £5 fee p.m. I still use it for the time being as I get cashback from my mortgage, council tax, internet & phone bills.

I'm in no way a financial guru, but make-do with what I have at my disposal. Unfortunately I don't have many DD's, so the Tesco, Club Lloyds and Vantage accounts are no use to me.

Recycling the cash is easy, I just set up standing orders on each account to send £1000 in a chain through each of the accounts on the same day.

If worried abount variable gas & electricity bills, then pay in an amount that will cover it safely, although I do find it strange that you aren't on a fixed rate. I thought they worked out better, but maybe I am wrong and need to peruse the forums more thoroughly.

It's not easy to gain maximum interest on your balance, something has to give. The easy way is usually the poorest paying, and the more organised tends to yield better returns. Investing is at the very minimum five years, and even then, they are never guaranteed returns. There are other ways of making decent returns which I havn't mentioned, including P2P lending & overpaying mortgage. I do realise you're after safe, decent returns, but within your paramaters, then it's quite difficult, something has to give.


Edit: Realised you're after 3%+ , so my post is probably redundant.

RG2015

lesshaste wrote: »

How on earth do you do this?

Many people do.