Options for £250k for five years

choi

What are my options on saving or investing £250k for a five year period
My main aim is protection against the ravages of inflation tax and financial calamity
I am ultra cautious 
I should not need access to the money

eskbanker

You could save, with capital protection, at about 1.5% per annum in one or more fixed term accounts, or you could invest, with some risk of capital loss, but better chances of returns that would at least keep pace with inflation, although five years is right at the lower end of what's generally considered a sensible timeframe over which to invest....

choi

Thanks
I'd be prepared to see some loss due to inflation
However if inflation rises I'm assuming interests would rise
However if I'm locked in a long term savings account on fixed interest I would not be able to take advantage
Any solution to this

george4064

Why the 5 year time frame? Do you have a need for all the cash for a specific purchase or something else?

eskbanker

choi said:

Thanks
I'd be prepared to see some loss due to inflation
However if inflation rises I'm assuming interests would rise
However if I'm locked in a long term savings account on fixed interest I would not be able to take advantage
Any solution to this

You can't have your cake and eat it, so need to decide on whether to fix or not, it's always a gamble as to whether this is the optimal approach.

Having said that, there are notice accounts that pay a bit better than easy access but without locking you in for a lengthy term, so they could be seen as some sort of halfway house.

dunstonh

What are my options on saving or investing £250k for a five year period

Why five years?  Are you spending the whole £250k in five years time?

My main aim is protection against the ravages of inflation tax and financial calamity
I am ultra cautious 

Something is going to have to give as you cant have all of those covered.

However if inflation rises I'm assuming interests would rise

Don't assume that will happen or will happen within a 5 year period.    Inflation has been a method used in the past by both the US and UK to reduce government debt in real terms.  They may decide to pursue a similar method this time around.   Even if they don't, interest rates are a way to cool the consequences of a booming economy.   We have a long way before we see a boom again let alone the need to cool it.

Every option has risks.    £500k will have the spending power of around £335k in 10 years time.   So, if you fail to cover inflation, you will see a considerable loss in real terms.   If you go too cautious, you increase the risk of real terms losses.    This doesn't mean you need to jump right in at the deep end and go 100% equities either.  Or go fully risk based investments with the amount either.

Your plans for the £500k will have a lot to do with it.  A lot of people that put timescales on the money have no intention of spending that money in or after that timescale.  They just think in 5 year blocks but in reality, the money could be there for decades.  So, this is why you are being asked the 5 year period and if its going to be spent at that time.

Albermarle

I remember the OP from previous agonising over his pension.
He is ultra cautious to an almost irrational degree , so it is difficult to make any sensible suggestions , if I remember correctly. 

steampowered

While you might be "ultra cautious", it is important to understand that there is no such thing as "risk free". 

If you invest in shares, you take "investment risk" - the risk that the shares might be worth less in future than they are today.

If you keep your money in cash, you take "inflation risk" - the risk that inflation will erode the value of your capital.

You need to accept that those risks exist and balance them. Cash comes with inflation risk. Investments come with investment risk. The longer you hold an investment - the more inflation risk you will have, but the less investment risk you will have.

There is no way of guaranteeing to beat inflation. If you want to do that you have to take a (small) amount of investment risk. That might mean a conservative investment fund - such as a fund with a heavy weighting in bonds. That sort of investment will drop if there is a market crash, but not as much as the stock market.

If you do not need access to the money then why are you being "ultra cautious"????  You should instead be realistic and sensible. 

Sailtheworld

If inflation risk is the only risk that's allowable and someone describes themselves as ultra cautious the brief is pretty tight.

Premium bonds with instant access cash and a ladder of fixed term accounts with an expectation that purchasing power won't be maintained.

It's doubtful that the whole £250k will be spent on 03/11/2025 and I'd guess there are no real plans to spend any of it ever. In which case some of it could be invested - if the OP has kittens at the thought there's just no point pushing it.

csgohan4

I lost almost 10% some of my satellite funds, didn't wet the bed, slept quite well. Investing is for the long term, I have probably 30 + years to ride out the storms. If you constantly wait to invest at the 'right' time, your never going to invest and lose out. 

If you don't want risk, stick it in a savings account and accept inflation will erode your money, you can't have your cake and eat it in investing. 

choi

Hi 
Last year I obtained an investment report from an IFA which was very comprehensive
I am currently trying to decide whether to go the Savings Route or the Investment Route
As one of the responders has said I am ultra cautious

I suffer from extreme anxiety and I also have serious health issues
The five year period reflects this
But I guess I should be more optimistic and go for ten years
To sum up I'd rather lose 100k plus to inflation on the Savings Route than lose a lot more by the Investment Route in what looks like an awful time for investing Plus the fees for a Financial Advisor
I'm hoping that one of you will give me useful advice on which I can make my final judgement