Investment or Savings

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82187177#Comment_82187177

I believe @clairbear_3 had regular savers in mind. Of course you can't, as @QrizB puts it, stick £50k in one of those. Some people do seemingly manage to put rather a lot into them - it just requires work.

masonic

https://forums.moneysavingexpert.com/discussion/comment/82187201#Comment_82187201

Indeed. These are loss leader accounts, but some of us have built a merry-go-round of them to keep mid-5-figure sums earning at those rates. However, they are an easily exhausted resource.

I would consider myself first and foremost an investor, but a risk-free 7 or 8% is worth having, even after tax, to the extent I can get it.

Famau

https://forums.moneysavingexpert.com/discussion/comment/82187182#Comment_82187182

Perhaps the closest non-ISA equivalent to cash is a short-dated gilt. TN28, for example, on which capital gains tax is not paid, delivers around 4.3% net which equates to over 7% as a higher rate taxpayer. It pays out in Jan 28 so is akin to a 15 month fixed rate cash account. May not beat the stock market, but does provide a degree of certainty re the return.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82187182#Comment_82187182

I have seen an ad on Facebook offering just that, and it even had a video clip of Martin Lewis and Elon Musk recommending it !

clairbear_3

https://forums.moneysavingexpert.com/discussion/comment/82187177#Comment_82187177

these accounts are easily found on mse naturally takes a bit of effort you can also borrow tens of thousands(based on your earnings at 1% and earn 5%+ (free 4% stoozing) effectively earning 9%+

jimjames

I am no analyst but the global outlook does seem to hold more risk than 5 or 10 years ago).

10 years ago Brexit and Covid were on the horizon. Do you really think the current outlook is worse?

calculavalorhoy

A useful way to frame it is by timescale: money you may need within five years usually suits savings, while money you can leave invested longer has more time to ride out dips. Keeping an emergency fund separate first also makes the risk decision much clearer.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82189440#Comment_82189440

That is pretty much the guidance given out on these forums on a daily basis.

Short term ( <5 years) cash or equivalent

Medium term ( 5 to 10/12 years) Mix of medium risk investments and cash ( getting more aggressive at the longer end )

Longer term - Mainly high equity investments. As long as you have the stomach to ride out big drops. If not probably best to stick with the middle option.

OldScientist

https://forums.moneysavingexpert.com/discussion/comment/82187182#Comment_82187182

Just out of curiosity, there are 16 regular savers currently listed on MSE which (if my calculations are correct) allow £4100 per month to be saved with a weighted interest rate of 6.28%. So someone with £50k could almost save it all by the end of a year. While waiting to save it the cash will, presumably, sit in the best easy access account at 4.5%. After a very quick and dirty calculation in excel, putting £4100 per month into the 16 regular savers the £50k would grow to £52718 (i.e., 5.43% interest rate), while leaving it in the EA would get £52250 (i.e., 4.5%). As an alternative, using the best 1-year fixed rate account would get £52585 at 5.17%.

In other words, for someone with a large lump sum the returns are somewhat lower than the headline rates of 6-8%. Whether the work involved to get just under 1 percentage point extra over an EA account is worth it will depend on the individual.

PixelPound

https://forums.moneysavingexpert.com/discussion/comment/82189527#Comment_82189527

Agreed, yet it's often not correctly understood. You do see some who want to buy a house in under 5 years querying about investing because it'll make more than savings.

I would also add that if you have fixed date commitments then funds may need to move from one bucket to another, eg if wanting to clear the mortgage in 20 years, invest but then derisk gradually from about 10 years depending on market conditions.