If you had £3k to invest now for 2 years, what would you do with it? 11 November 2022 at 4:30PM in Savings & investments 17 replies 1.6K views

Squeezie

I've had about £3k in a stocks and shares ISA for the past couple of years, which has made nothing! I really want to use to grow this amount as much as I can over the next two years and then potentially use it to pay off some of my mortgage. My mortgage is fixed at 1.58% and due to expire in Nov 24.  
It seems to make sense to me to try to make the most of the rising interest rates and increase my £3k, rather than use it to make an overpayment now...but I'm happy to be corrected on that!
I'm looking at putting it into a short term fixed rate savings account, for 6-9 months, in the hope that interest rates will rise again in that time and then move it to another account and basically rinse and repeat until Nov 24 and use it as an overpayment when I need to re-mortgage.
Is that a daft idea? What else could I do with this £3k now? I have other savings put aside in easy access accounts in case of a rainy day, so this can be locked away if needed. 

Albermarle

Two years is too short a time for investing. If this was your timescale then you should have not invested it in the first place. Investing should be for an absolute minimum period of 5 years, preferably more than 10. So if you can leave it where its then that is probably the best thing to do.

george4064

What is your £3k currently invested in?

If your time horizon is 10years plus you’d be daft to keep that money in a savings account rather than investing, however if your time horizon was 2years you’d be daft investing that money.

grahamgoo

Personally I'd probably just stick it in a 2yr fix at around 5%.  Yes rates may increase further but on £3K we're not talking huge amounts of interest, around £150/year so I don't think it would be worth the faff of trying to squeeze for a few quid more interest when you could just as well end up with a few quid less overall.

Beddie

It's not a huge amount of money, so taking a risk on it will not matter so much in terms of the investment term.

Perhaps a 2 year fixed savings account as others have said. Or for more "fun" - S&P 500 tracker or a global growth fund? Or leave it where it is, if the funds you are in still feel relevant. Just my thoughts, not advice...

sevenhills

I you don't invest your £3K then you could lose 15% to inflation. If you put it in a savings account, you could still lose 5/10%
I personally like shares and if you say that 5/10 years is the correct time span, you would never do it.

biscan25

Outside of money markets, I've been banging on about the FTSE250, which is always massively oversold at the first sign of crisis.
That horse is now mostly bolted.

I still like the look of private equity funds, like HVPE, APEO, which appear to be seriously good value given the discount against NAV.

george4064

biscan25 said:

Outside of money markets, I've been banging on about the FTSE250, which is always massively oversold at the first sign of crisis.
That horse is now mostly bolted.

I still like the look of private equity funds, like HVPE, APEO, which appear to be seriously good value given the discount against NAV.

Just wanted to check that you’re aware that the NAVs for PE funds/trusts are in most cases stale? So they will appear to be trading at a large discount to NAV as the NAV can be several months old vs the share price which is up to date.

El_Torro

Since you're planning to use the money to pay into the mortgage in 2 years time the question is: Will the stock market increase faster than about 5% a year between now and then? Since the stock markets have already taken a hit this year it wouldn't be a surprise if they recovered within the next 2 years.

Do you "have to" put the money into your mortgage? If not then I would be tempted to keep it invested, at least for now. Assuming it's currently invested in a sensible place.

sharpe106

As it is only £3000 I would just put it in a 5% saving account. To beat that in an investment in only 2 years you would need to be exceptionally good at picking stocks or invest in some risky stocks. At 5% you will get £150 a year no effort. 

sevenhills

El_Torro said:

Since you're planning to use the money to pay into the mortgage in 2 years time the question is: Will the stock market increase faster than about 5% a year between now and then? Since the stock markets have already taken a hit this year it wouldn't be a surprise if they recovered within the next 2 years.

There is also the dividends to consider, some are low and some can be as much as 10%