40k to invest for 2-4 years, opinions please

usman330

Hi all,


Partner has 40k to invest, and im thinking wrapping it in a s&s isa as she hasnt got any isas at the moment and could pay it in for this tax year and next which is soon approaching.


As inexperienced investors I dont think position trading our own share purchases/disposals is a good idea hence a fund may suit better. I/she has never used a fund so we are unsure of whether active or passive is better suited.

Risk profile is low/medium, hoping to get around 5%-8%

Looking to invest for around 2-4 years as will be used for a house purchase, cant do help to buy isa as already been a homeowner in the past though not currently.

Would some sort of s&s isa fund be a consideration? I know 2 years is a bit at the low end to balance out any dips but I cant think of any other options that can offer a decent reward.

Thanks for any input.

Wildsound

For that kind of time period, I really wouldn't be considering stocks and shares. These are usually considered for at a bare minimum 5+ years, usually 10+. Any shorter than that, and you're gambling on the market being in your favour over a too short a period of time.

You should probably be looking to max out current accounts/regular savers etc... with the balances being placed in fixed term savings accounts of 2-4 years (the links at the top will help you).

An annual return of 5-8% for a risk profile of low/medium is too ambitious and highly unlikely. A total return though for that time period is more likely, but then again, so is a -5 to -8% return if it's stocks and shares.

xylophone

You can't afford capital loss if you have this money earmarked for house purchase?

Interest rates are indeed low but as a couple you might consider (assuming you haven't had before) a sole each and a joint Nationwide Flex direct account - this would give you 5% on a total of £7500 for a year.

You might also take advantage of a Regular monthly saver each.

You might also open a TSB Classic Plus account each and a joint which would give 5% on a total of £4,500.

Do you live near a Virgin store? You might look at a branch regular saver each.

Other savings rates here

https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

Edi81

At this point in time that could work amazingly well if you had a high risk appetite or could be amazingly bad.

2-4 years is essentially a gamble on the markets - you may as well nip down the casino and put it all on black.

Thrugelmir

usman330 wrote: »

Risk profile is low/medium, hoping to get around 5%-8%

What level of loss could you stomach? Taking a risk is double edged.

Alexland

Your time period is too short for even a low/medium risk S&S investment and your return expectations are too high for the likely medium term outcome. Stick to cash products.

aroominyork

The alternative is peer to peer, which gives you better rates than savings so long as you understand the risks https://www.4thway.co.uk/guides/five-key-risks-peer-peer-lending/

Thrugelmir

aroominyork wrote: »

The alternative is peer to peer, which gives you better rates than savings so long as you understand the risks https://www.4thway.co.uk/guides/five-key-risks-peer-peer-lending/

Given the money is for house purchase. I suspect that the OP is not expecting to lose any money.

AnotherJoe

What Alexland said. Stick to savings products.

aroominyork

AnotherJoe wrote: »

What Alexland said. Stick to savings products.

Yes, that’s what most people would do, but if the OP is looking for 5% and has a low/medium risk tolerance, p2p is an alternative s/he could consider and make an informed decision about. The two issues are 1) whether anything with the word ‘medium’ in the tolerance is appropriate for a planned house purchase in just a few years, and 2) whether p2p is low/medium risk or a tad higher.

AnotherJoe

aroominyork wrote: »

Yes, that’s what most people would do, but if the OP is looking for 5% and has a low/medium risk tolerance, p2p is an alternative s/he could consider and make an informed decision about. The two issues are 1) whether anything with the word ‘medium’ in the tolerance is appropriate for a planned house purchase in just a few years, and 2) whether p2p is low/medium risk or a tad higher.

The OP might be looking for 5% but seems to be blissfully unaware that "medium risk" means you could lose money. Instead OP seems to have the complete misunderstanding that low risk means low returns rather than, there's still a chance you might lose some money. And with a house purchase coming thats wholly inappropriate (as you have hinted).



OP, the whole reason for long timescales with investments is to allow time to recover from losses, rather than just have a long time growing. You dont have that luxury when you have a timescale you wish to buy a house.