FTSE GLOBAL ALL CAP VS NS&I Growth Bond (5 Year savings window) 21 February at 9:41PM in Savings & investments 13 replies 825 views

AsifM068

Good Evening Forum,

I have for the last 18 months or so been invested in the Vanguard FTSE Global All Cap fund and have another 5-6 years to go before wanting to cash in however I am considering selling the Vanguard fund and purchasing a 1 Year NS&I Growth Bond currently offering 4% with the option I believe to re-invest after it's maturity; in view of only a 5-6 year investment window, is this a viable option please?

Many thanks

Linton

In my view moving out of equity into cash 5 years before the money is needed is a sensible cautious option especially at 4% interest provided the final lump sum is sufficient for your needs.

El_Torro

Why not just put your money in a 5 year fixed rate at 4.5%?

If you are cashing in all the money in 5 years time (and spending it) I would think about moving it to cash at some point. Maybe you can do it in stages, or at least move the investment to something that isn’t 100% equities. 

It’s likely that a global tracker will do better than 4.5% annually for the next 5 years, though it’s also possible that it won’t. Since you are currently already invested I don’t think you need to do anything too urgent, though since interest rates are likely to start going down later this year maybe now is a good time to move to cash.

dunstonh

Why did you invest in the fund in the first place?   its a higher risk fund with a 10-15+ year timescale ideally suited.   Yet you are now considering taking it out after 18 months (and a poor 18 months at that).   And you say you plan to spend the money in 5-6 years.   So, derisking now makes some sense.  Although statistically, its more likely that the fund will beat cash over 5-6 years.

sevenhills

dunstonh said:

 Although statistically, its more likely that the fund will beat cash over 5-6 years.

Then surely you would go with what the stastics say?

Prism

sevenhills said:

dunstonh said:

 Although statistically, its more likely that the fund will beat cash over 5-6 years.

Then surely you would go with what the stastics say?

That would depend if someone was willing to risk the chance that it doesn't beat cash or is even negative after 5 years.

dunstonh

sevenhills said:

dunstonh said:

 Although statistically, its more likely that the fund will beat cash over 5-6 years.

Then surely you would go with what the stastics say?

No.  You would go with what is best to achieve your objective. (which may lead to having some of it at investment risk)

Beddie

Do what you feel most comfortable with. One is a risk and one isn't - if you're happy with the returns on a fixed rate then go for it. You won't know which was the better option until it reaches maturity, so just take the choice that feels right to you.

Or.... move half into fixed rate and keep the rest invested, if you want to sit on the fence of uncertainty!

eskbanker

Beddie said:

One is a risk and one isn't...

Both are risks, just different ones!

sevenhills

Prism said:

sevenhills said:

dunstonh said:

 Although statistically, its more likely that the fund will beat cash over 5-6 years.

Then surely you would go with what the stastics say?

That would depend if someone was willing to risk the chance that it doesn't beat cash or is even negative after 5 years.

The OP would have his money invested in shares for just over seven years, so that means his chances of beating 3/4% very high.

AsifM068

Thank you all - seems like a 50/50 split...ish; as to the way to go, I will check out 5 year bond interest rates (5% may swing it for me) for my Vanguard fund, as mentioned, is really a long term investment - 10 or more years to my mind; 2022 hurt badly however as it's an accumulation fund, dividends will have been reinvested at a cheaper unit price; think that is correct.....?