Hypothetical question for fun...

j_netprofit

OK, so not sure how this will go down but here goes....

Say you had 40K in an existing fixed rate isa at 5% which is about to mature 

You're not at all risk averse

You don't necessarily need the money 

You're only goal is to balloon that money.

You don't really want to lock it away from any longer than a year.

What would you do?

- - 

For me another year at a guaranteed 5% is tempting however so is putting it all into the S&P500. 

Just taking the numbers from my sipp which only has a very small amount in the S&P500 and for a very short time period too (6 weeks as of today) it has currently increased by 4.6%. And obviously that increase is instant, there's no waiting for maturity. Obviously the above is a sipp but in the example it could easily be a S&S ISA.

- - 

So...what are you doing?

DullGreyGuy

Given you state assuming not being risk adverse at all and don't need the money, put it all on Gardon's La to win the 14:10 rate at Taunton today at 80/1 with PaddyPower and Betfair. 

eskbanker

jay_ftw said:

You don't necessarily need the money 

You're only goal is to balloon that money.

You don't really want to lock it away from any longer than a year.

What would you do if you invested the money and it was significantly lower after a year, or two years, or three years, etc?  It's all very well cherry-picking growth periods from past performance, but it would be very rash to assume that investing is predictable over the short term and that it would be viable to pick something with upside and no downside.

So your hypothetical question can't be answered in a vacuum, it needs the surrounding context, including objectives, timescales, attitude to risk, other assets, etc, etc....

flaneurs_lobster

DullGreyGuy said:

Given you state assuming not being risk adverse at all and don't need the money, put it all on Gardon's La to win the 14:10 rate at Taunton today at 80/1 with PaddyPower and Betfair. 

Really? I'm having £5 e/w on that.

Bostonerimus1

I'd look at my current asset allocation and then put it somewhere sensible. If I didn't have a 6 month emergency fund I'd keep it in an easy access cash account. If I was thinking long term it would go in a pension because of the tax advantages and I'd put it in a low cost global equity index fund. This really isn't "rocket science".

j_netprofit

eskbanker said:

So your hypothetical question can't be answered in a vacuum, it needs the surrounding context, including objectives, timescales, attitude to risk, other assets, etc, etc....

Fair point. 

Anyway what would you do with it given the brief?

j_netprofit

Bostonerimus1 said:

I'd look at my current asset allocation and then put it somewhere sensible. If I didn't have a 6 month emergency fund I'd keep it in an easy access cash account. 

Let's say you do.

Bostonerimus1 said:

If I was thinking long term it would go in a pension because of the tax advantages and I'd put it in a low cost global equity index fund. This really isn't "rocket science".

You don't wanna lock it away for much longer than 12months.

j_netprofit

DullGreyGuy said:

Given you state assuming not being risk adverse at all and don't need the money, put it all on Gardon's La to win the 14:10 rate at Taunton today at 80/1 with PaddyPower and Betfair. 

Just found 100/1 at PlanetSportBet!

400ixl

You don't say whether you would have to pay tax on the interest and at what rate.

You say you are not risk averse, you don't need it but don't want to lock it away either.

Talking about investments in the goldfish bowl of how things have performed so far in 2024 is not necessarily indicative of the next 12 months as shares have done well in that period, but the same period last year you may well have lost money.

If you were investing for 5 years or more then it would be a S&S ISA, for long term it would be a pension. For 1 year at the moment a cash ISA if at 5% wouldn't be a bad bet.

S&S ISA could still be the right answer as you are not locking it away, but it comes with more risk and if you can cope with a potential 20-30% decrease in 12 months then that risk may be worth taking.

S&P500 returns over the last 5 years can be seen at https://ycharts.com/indicators/sp_500_1_year_return#:~:text=Basic Info,holding the S&P 500 index.

As you will see overall the return is good, but last year wasn't.

eskbanker

jay_ftw said:

eskbanker said:

So your hypothetical question can't be answered in a vacuum, it needs the surrounding context, including objectives, timescales, attitude to risk, other assets, etc, etc....

Fair point. 

Anyway what would you do with it given the brief?

I'd do something appropriate for my circumstances....!

LHW99

Premium bonds? You won't lose the capital, you might win the £1m (although probably not) and can be accessed in a reasonably short time if required. Winnings are tax-free I believe.