Where to invest £100k today?

wmb194

https://forums.moneysavingexpert.com/discussion/comment/82062187#Comment_82062187

Capital gains on gilts are tax free so look at low coupon ones like TG30 Newbie John suggested. The return should be better than 4.9% - 40% tax.

https://giltsyield.com/bond/

itsme999

https://forums.moneysavingexpert.com/discussion/comment/82061572#Comment_82061572

I have always taken medium risks with the banks investments.

itsme999

I have come across this:

"Treasury 6% 07/12/2028 (TR28) Gilt

Sell:£104.17Buy:£104.47No change"

Key metrics

Open£104.42Previous close£104.42Daily high-Daily low-Year high£107.30Year low£103.71CurrencyGBPModified duration - Running yield5.75%"

Q. This is from HL. 6% but Running yield 5.75%, why the change and what does it mean?

Thank you

wmb194

https://forums.moneysavingexpert.com/discussion/comment/82062237#Comment_82062237

Running yield = 6p / 104.3p

It’s because it’s trading above par. When it matures and is redeemed at par (£100 or 100p) you’ll make a capital loss as well.

Coupons paid by gilts are taxed as interest so, as mentioned, if you’re a higher rate taxpayer you might do better to look at the low coupon gilts and make most of your return as tax free capital gains at maturity.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82062209#Comment_82062209

But you say you're only getting a little more than cash? Medium risk has performed significantly better than cash. Cautious risk has been much closer to cash over the last eight years but historically tends to do only a little better than cash

As a high-rate tax payer with investment properties, if you were looking at comparable levels of risk, then you probably should be moderate to adventurous rather than moderate if you want to compare on a like-for-like basis.

itsme999

https://forums.moneysavingexpert.com/discussion/comment/82062307#Comment_82062307

I will give you 2 examples of my med risk bank investments and you let me know of I am doing wrong calculation:

1. Invested stocks ISA £7k in 2000 and today is worth £18.5k
2. Invested stocks ISA £20k in 2022 and today is worth £24.8k

none of them give dividend or interest,

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82062339#Comment_82062339

The growth for '2' is about in line with a medium/low risk multi asset fund with 40% equity. So a bit ahead of what you could have got in cash interest, which is roughly what you would expect for this type of investment as a long term average. Bank managed funds tend to be expensive so that might be weighing down on the returns.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82062339#Comment_82062339

Most medium-risk investments would have dividends and interest on them. If you have income units, you would see them. If you have accumulation units, you wouldn't.

In respect of 2020, there was a major drop between February and March due to coronavirus. If you invested after the drop, then it would suggest you are a very cautious investor with around 20% equities. If you invested before the drop in 2020, then you would closer to what 30 to 40% equities would have given. For reference, medium risk would be around 60 equities and looking at you investing before the drop in 2020, Medium risk would give you about 30,300 now, medium to adventurous with around 80% equities would give you about 35,500 now and 100% equities would be giving you £41,200 now.

So your figure of 24.8k either suggests not very good performance or closer to 30-40% equities. It could be that your non-equities portion of your investments was heavy in gilts. Gilts suffered their worst period in over 100 years from November 2021 to October 2023.

Looking at the 2000 investment, taking the sector average:

20-35% equities, you would have about £17,900.

50-60% equites would have about £19,590

60-85% equities would have about £23,700.

100% equities would have about £33,500.

Those are the averages, so nowhere near the top performers.

as you invested with a bank, your returns would be expected to be lower. banks historically have been a really poor place to invest. their products and funds are typically more expensive, and typically you end up in managed options which generally underperform the average.

itsme999

https://forums.moneysavingexpert.com/discussion/comment/82062468#Comment_82062468

As I said I don't need the cash for another 5 or even 10 years, is it wise to divide them into 3 different investments and which ones are recommended?

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82062659#Comment_82062659

I'm regulated, so I can't say. I'm limited to generic comment and discussion to stay within FCA and board rules. Others who are not regulated will no doubt be along shortly to offer opinions.