Low risk investment

EmmieAwards

Hello

a friend has asked me advice on a low risk interest earning on £50,000. They currently have the money in a Santander savings which is doing nothing. 

can anyone recommend products they should perhaps consider? Government bonds are neg interest I believe but I don’t know if that is a good thing or bad thing for the investor (interest rate is low but someone said they pay you for taking one...not sure)

Any help would be great 

thanks guys

respectmymonah

Right now, IMHO NS&I Premium Bonds or Income Bonds - no risk except inflation.
Government bonds currently pay less than the interest on the best savings accounts (which are the two things I've just mentioned above).
So if you want to invest, you're only going to get a worthwhile return from stocks.

Linton

There are two different  things one can do with a lump sum of £50K, savings or investments....

Savings - you get a 100% guarantee of a return and your money back in a given time period.  There is no real risk.  The downside is that the returns are low and may well not match inflation so you lose out in purchasing power terms.  There are a range of different accounts with different interest rates  available and websites that list them, including MSE.  Also you can consider NS&I who offer premium bonds and other accounts with around a 1% return.

Investment - there is some risk in the returns, which can be negative in the short term, and if you hold them for less than say 5 years there is a real possibility that you will end up with less money than you started with.  However over the long term, sa> 10 years, appropriate investments can be expected to provide much better returns than savings and in particular should in general exceed inflation.  Note that the risk is in the returns, the chances of losing all your money are, barring end of the world scenarios, virtually zero unless you do something very foolish.  Of course there is a wide range of risk/returns with investments - the higher the return the greater the risk of losing money at some time.  At one extreme, some like government bonds are 100% guaranteed but provide close to 0% return if you hold them to maturity and you could lose money if you dont.  At the other extreme there are funds that may well return over say 20% in a year, but of course could lose as much the next year.  On average they should do better than safer funds.

If your friend does have a > 5 year time frame and wishes to consider investments people could give more detailed suggestions of the type of funds that are available or he/she could seek professional advice.

xylophone

https://www.nsandi.com/income-bonds
She could pay the interest into 
https://www.nsandi.com/direct-saver
Or consider
https://www.nsandi.com/premium-bonds

Marco_L

EmmieAwards said:

Hello

a friend has asked me advice on a low risk interest earning on £50,000. They currently have the money in a Santander savings which is doing nothing. 

can anyone recommend products they should perhaps consider? Government bonds are neg interest I believe but I don’t know if that is a good thing or bad thing for the investor (interest rate is low but someone said they pay you for taking one...not sure)

Any help would be great 

thanks guys

Hi Emmie,
what do you want to achieve with that money and when? if you let me know I should be able to help
just FYI I am planning to buy a house by Jan 2022 so that's what I am investing / working towards

p00hsticks

Marco_L said:

Hi Emmie,
what do you want to achieve with that money and when? if you let me know I should be able to help
just FYI I am planning to buy a house by Jan 2022 so that's what I am investing / working towards

18 months is far too short a timescale for safe investing - it really should be in savings instead.

dunstonh

Government bonds are neg interest I believe but I don’t know if that is a good thing or bad thing for the investor (interest rate is low but someone said they pay you for taking one...not sure)

The Government issues gilts all the time.  There have been some negative yield issues recently.    However, most investors would not buy gilts directly but hold them within investment funds.  

Gilt funds are not geared to be held in isolation.  They are not really there to provide long term higher returns. They are used to reduce investment volatility for those that cannot handle a 100% equity portfolio.

Albermarle

For premium bonds , if you have average luck and a reasonably large number ( say 20,000 minimum ) then you should get an effective interest rate of around 1.2% + an infinitesimal chance of winning a Million Pounds. Also the money is easy access and tax free. 

grumiofoundation

Marco_L said:

EmmieAwards said:

Hello

a friend has asked me advice on a low risk interest earning on £50,000. They currently have the money in a Santander savings which is doing nothing. 

can anyone recommend products they should perhaps consider? Government bonds are neg interest I believe but I don’t know if that is a good thing or bad thing for the investor (interest rate is low but someone said they pay you for taking one...not sure)

Any help would be great 

thanks guys

Hi Emmie,
what do you want to achieve with that money and when? if you let me know I should be able to help
just FYI I am planning to buy a house by Jan 2022 so that's what I am investing / working towards

As above 18 months is a short time period for 'investing'.

Have you got a lifetime ISA?

https://www.moneysavingexpert.com/savings/lifetime-isas/