How to invest £3,000 per month?

mitzilein

We'll be in the lucky position to have repaid our mortgage early by the beginning of next year. For the last couple of years I never had to think about investing/saving as all our free money went into repaying the mortgage as saving on the mortgage interest was the best savings strategy. From beginning of next year we'll suddenly have £3,000 per month available that I need to figure out what to do.
We're possibly emigrating in 2-3 years time or if not buying a bigger house so don't want to invest long-time but still need to do something with the money for those 2-3 years. Any regular saving accounts that I can find only allow you to invest a couple of hundred pounds a month.
I'd appreciate any thoughts of what I can usefully do on a monthly basis with the extra cash we'll have available!

Bravepants

Three years is a bit short a time for investing in stocks and shares. You could look at some of the fixed term savings accounts available that provide around 2.5% interest. There are three years ones available. There is a list available on the front page of this site.

aroominyork

You could look at peer to peer. That would give you 5+% pa but you need to understand the two risks: increased defaults if a recession comes along; platform risk, ie what happens to the p2p companies if they come under stress has not yet been tested.

Bravepants

I have £1000 locked up in 4 loans due to failure of the companies involved, been that way for nearly a year now and still waiting for the legals to go through to recover as much as they can. Luckily I got the rest of my funds out before falling foul of this.


P2P lending is sub-prime lending, similar to the cause of the 2008 financial crisis.


P2P has recently been likened to the act of picking up pennies in front of a steam-roller.


Just saying!

Primrose

Fixed term bonds for a couple of years?
Or if you fancy a punt with no risk you can each out up to £50k in premium bonds

kidmugsy

Primrose wrote: »

Fixed term bonds for a couple of years?
Or if you fancy a punt with no risk you can each out up to £50k in premium bonds

That's my thought too. Put £1,500 each into PBs late in each month. Direct the winnings into more PBs. Dead easy, tax-free, and the money will be available whenever you want.

OR: if you live in East Anglia look at the regular saver from the Ipswich B.S. (2.85% AER). You can put in £1,000 p.m. as Mr & Mrs mitzilein, and another £1,000 pm. as Mrs and Mr mitzilein. You are allowed two withdrawals from each in each anniversary year, and you can reduce the monthly contributions to £10 if it suits.

Each use up another £250 p.m. by opening the Nationwide Regular Saver that pays 5% AER. You could also each fill up a Nationwide FlexDirect current account (paying 5% AER for its first year). You could also open a joint one.

There are also attractive regular savers at Lloyds, First Direct, M&S, HSBC, Virgin, and Santander, but check whether they have enough flexibility to suit you.

If you are prepared to take on the TSB IT system, you could open three of their current accounts that pay 5%AER on up to £1,500 per account. I wouldn't if I were you.

veryintrigued

As noted above investing in this timescale is probably too short.

Part of my saving / investing strategy is utilising the Regular savers out there. With a bit of research and using the very useful RS thread it enables me to save multiples of what you're looking to deposit each month.

You'll need to be organised though.

https://forums.moneysavingexpert.com/discussion/5776240/regular-saver-thread-new-and-restarted

aroominyork

Bravepants wrote: »

I have £1000 locked up in 4 loans due to failure of the companies involved, been that way for nearly a year now and still waiting for the legals to go through to recover as much as they can. Luckily I got the rest of my funds out before falling foul of this.


P2P lending is sub-prime lending, similar to the cause of the 2008 financial crisis.


P2P has recently been likened to the act of picking up pennies in front of a steam-roller.


Just saying!

Many types of investment have been likened to pennies in front of a steamroller. You can add p2p to the list if you like.

How much did you have invested when you faced £1000 in bad debts, and did you select those investments or were they auto-selected by the platform? When platforms do the latter they diversify, eg allocating a maximum of 0.5% of your investment to any one loan. Some of those will go bad; the loss is built into your expected return.

You can choose whether or not to be aware of the bad loans. If you do not want to know the first thing about them, firms such as Ratesetter and Assetz Capital will keep you oblivious and your 'losses' will be covered by the Provision Fund (the inverted commas are because you do not actually lose any money). If you want to see your losses and have each bad loan affect your return, platforms like Funding Circle work that way.

Bad loans on p2p do not worry me. This forum, every day, warns new investors to be prepared for a 50% loss on their equities. If the stock market falls 50%, I am confident that less than 50% of p2p loans will be defaulted - and you also have the initial buffer of the Provision Fund before it runs out of cash. So long as you can access your p2p funds you might see that as an opportunity to withdraw your p2p funds and buy cheap equities.

So that comes to what I see as the real risk: the strength of the platforms and ability to withdraw your money. The latter might be dependent on other people wanting to take over your loans and, if there is a p2p rush for the doors, that might not happen.

So, if you eyes are open, I maintain p2p is a good option for i) diversifying your portfolio, and ii) short-term investing when bank rates are low and the horizon is too short for equities.

FatherAbraham

aroominyork wrote: »

You could look at peer to peer. That would give you 5+% pa but you need to understand the two risks: increased defaults if a recession comes along; platform risk, ie what happens to the p2p companies if they come under stress has not yet been tested.

You haven't even mentioned the risk of not being able to liquidate loans when capital is required.

I don't think peer-to-peer lending is at all appropriate for the original poster's needs, because of the illiquid nature of P2P.

The OP would do better to invest in real-estate-derived equities trade on public stock markets.

aroominyork

FatherAbraham wrote: »

You haven't even mentioned the risk of not being able to liquidate loans when capital is required.

I did.

aroominyork wrote: »

So that comes to what I see as the real risk: the strength of the platforms and ability to withdraw your money. The latter might be dependent on other people wanting to take over your loans and, if there is a p2p rush for the doors, that might not happen.

It's an option. You might not like it, OP might not like it - I might not opt for it in OP's situation - but it's a credible option.