Small investment/savings advice sought

Badam12

Hi


I'm having a bit of trouble finding out what my best options are, for protecting a bit of cash from inflation (just £10K) and keeping it steadily growing.


Here's the situation:
I put aside a certain amount of cash in £ sterling (a few hundred) each month into an account that earns NO interest. I'm worried about inflationary losses and the exchange rate of the £ vs other currencies. I occasionally dip into this fund for hobby reasons. I don't need £10K of it and I want to lock it up somewhere safe for 12 months.


My attitude to risk:
1) I'm a man of very little faith, I am sceptical of success stories, etc. as I've seen it all and heard it all. In short I am cautious and I don't like these new investment opportunities (investing in startups, nursing homes, small businesses, timeshares, etc.) because they carry a real risk of losing money.

2) I don't like seeing my numbers go down AT ALL. Steady increase, even if small, is preferred over day-to-day fluctuations.


What I've tried in the past:
1) Modern managed investments (a Fidelity UK ISA wrapper based mostly around some cautious growth-based ETFs and mutual funds) and a robo-investment ISA (Wealthsimple). I was dissatisfied with both. The Fidelity ISA took a serious downturn and only one fund was making money (Finsbury Growth and Income), so I quit it at a small loss. Much more recently, I tried Wealthsimple, which lost money right off the bat, so I quickly exited that too.

2) In the very distant past, savings accounts pre-2008, when interest rates were pretty good. I would be happy to find one of those these days, but I haven't found a reasonable interest rate.


My ideal scenario:
Finding a savings account (12-month locked) that I can open with £10K and keep chucking in more periodically, which has a decent interest rate. Alternatively, finding a sound investment purchase (some commodity or land) which will steadily increase over time.



My problem:
I don't like the interest rates offered these days (2% at the most, if you're lucky) because it's almost the same as keeping it in cash, inflation indicators may say one thing but real-world buying power of money is something else, there is also the currency issue of the £ falling and reaching parity with other countries' currencies, which wouldn't matter except we don't have the industry or trade balance to benefit from this devaluation, etc. Commodities are a bad idea because of VAT, and land isn't really a good investment choice at this price point.



Any ideas?

cattie

When you held S&S investments how long did you hold them for? Only you do need to be prepared for loses with this type of investment. If you hold your nerve in downturns, then you should see a decent upturn as long as you are commited to investing for a min of 7-10yrs & are prepared to keep an eye on funds & switch out only when you truly believe there's no hope of recovery in that timeframe.

Currently 2% fixed interest on savings is pretty good, though a couple of weeks ago you could have got 2.25% or a bit more for 1yr fixed, you just need to be quick when you see such an opportunity to get a bit more than the average leading rate. Such fixed accounts often don't allow you to add addtional monies into though.

It's quite strange that you complain about the low interest rates these days yet are happy to leave money in an account earning no interest, surely any interest is better than none. I don't think you'll find any inflation proof secure savings offering, but you could maybe consider putting a portion of your savings into premium bonds, no interest, but the possibility of a win now & again.

DrSyn

You do not like seeing your money and it's buying power go down.

No one else does either.

You do not want to take any risk with your money so that rules out investing.

All that's left is a savings account with interest rates you do not like. Your in the same boat as many others.

They only rays of light for you are these:-

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

https://www.moneysavingexpert.com/banking/compare-best-bank-accounts/


Of course if you do think of taking some risk you might look at this
https://www.kroijer.com/

Badam12

Sorry if I didn't make it clear.

I am looking for investment avenues I haven't yet considered, not a commentary on whether my attitudes to risk (or anything else) are reasonable. I had a Fidelity ISA wrapper for a few ETFs and funds for several years. In the beginning, it made reasonable gains across the board. Later, they changed the system and it became harder to see whether it was up or down from the day before. They started presenting interest figures over the entire course of the investment held, rather than the % increase from day to day. They also increased their fees, substantially. As a result, I got about 1 or 2 lousy glossy PDFs in that time with some meaningless graphs presented by guys in suits. When the investments started losing money all Fidelity investors were invited to a champagne reception. That's when I realised, in essence, these guys were all like clergymen. Experts in nothing, lots of fine jargon and creative with graphs and numbers to obfuscate the fact that they didn't have a clue about anything (as proved by being outperformed by tracker funds, or their handpicked funds making 30% one year and losing 40% the next), but they were the only real people benefiting from my faith, and their position was secure.

It's my money, I'm not prepared to lose any. I would rather earn 0% interest than contribute towards investment fund managers who consistently underperform and then require small investors, little people like me, to adjust their attitude to risk or suck it up when they start making losses. Neither do I have any time for snake-oil salesmen peddling investment courses or with some new get-rich-quick (for them) scheme. I'm not in it for 10- or 20- years plus, because even if £10K made 100% over that it's still a piddling amount of money.

Reason being, it's my money and I have 100% discretion over everything.
If you have ideas you want to share, I'm all ears.

Waiting a whole year for less than £200 on £10K can shove it, frankly.

Thrugelmir

Badam12 wrote: »

Waiting a whole year for less than £200 on £10K can shove it, frankly.

Entirely your choice. There's no entitlement for savers to be rewarded for their prudence. Entirely the reverse in fact.

jamei305

You don't get something for nothing. If you want above-inflation gains superior to those offered by savings accounts you need to accept risk e.g. that your notional capital might vary from day to day, and be in it for the long haul.

Speedbird676

Badam12 wrote: »

Sorry if I didn't make it clear.

You seem to be asking for something that doesn't exist and I think previous posts have only replayed what you've said to demonstrate that.

Any kind of investing will come with a risk that you will lose money. Hence, investing should be seen as a long term strategy where over time the ups "should" outweigh the downs. However, you have stated you tolerance for any loss, even in the short term, is zero.

That only leaves you with savings. The best you are going to achieve at the moment is ~2% if you put the £10k away for a year. You could then open a regular saver which could earn you 3-5% for the "few hundred" you can save per month.

Each year when the regular saver matures you can then consolidate that, the £10k from the one year fixed, and all the interest into a new fixed and start the cycle again.

I can't think of anything else that conforms to the constraints you've stated.

scoey8

What about premium bonds? No chance of losing money but possibly get lucky with a nice win...

MaxiRobriguez

Your choices are:

Up to 2% - Savings accounts, no risk.
Up to 4% - Corporate bonds, some volatility risk.
Over 4% - Equities, high volatility risk.

What you're asking for is above inflation, decent gains for no risk. If this existed no one would invest in bonds or equities.

Alexland

The more you understand the better you will be at coping with market volatility as you will develop confidence in the long term prospects of your investments.

Try not to focus on daily price movements - they can be curiously compelling viewing but are not indicative of your final outcome.

You mentioned trackers as something you might have confidence in? Owning a little bit of thousands of global businesses is fairly easy to understand and it seems likely that in future many of them will still be valuable and paying dividends which get reinvested in those and new ones. When blended with fixed income (eg government bonds) the volatility can be reduced.

Ultimately you either need to embrace the uncertainty for the likely prospect of greater long term return or stick to cash products for a low but predictable return.

Alex

steampowered

Badam12 wrote: »

I am looking for investment avenues I haven't yet considered

An investment, by definition, carries risk.

Any sort of investment people could possibly suggest is going to carry higher risk than a conservative portfolio of stocks, shares and bonds.

Commodity or property investments will carry much more risk than a balanced portfolio of stocks and shares.

Waiting a whole year for less than £200 on £10K can shove it, frankly.

Sorry but that is just a natural consequence of your attitude to risk. If you want zero risk you have to accept zero returns (or in fact probably negative returns given inflation).

You have to choose, do you want to accept:

- Short term investment risk, i.e. the fact that investments will fluctuate up and down.
- Long term inflation risk, i.e. the fact that inflation will erode the value of your investment over time.

You can't have it both ways. If you want to have low investment risk, you will have high inflation risk.

By far the most sensible thing you could possibly do, given your long term savings horizon, is put the money into a low cost tracker fund - spread across hundreds of different companies - and just leave it there.

Don't check the daily price levels. The fact that the value of your share has gone up or down is only relevant when you come to sell it. You wouldn't poop a brick just because the value of your house went down as it is frankly irrelevant until you sell it many years later, the same applies to other investments.