Best yield (over 5.6%) with minimum risk?

rjgb

Hi all,

My wife and I have a lump sum of £35k in savings, and can save a further £2,500 pcm. We're looking for the best place to put our money for 3 years, to let it grow. We live in London at the moment, but would like the flexibility to move further out in three years' time. So the money has to be available in our hands in 3 years' time.

As I've mentioned in another thread (here: http://forums.moneysavingexpert.com/showthread.html?t=965381), it seems that simple savings (e.g. fixed rate bond) provide a far better yield than getting a Buy-to-let property. There are also buying and selling costs associated with getting a Buy-to-Let, which further reduces its attractiveness.

We've considered buying a property to live in (obviously with a mortgage) in London. We'd be able to get a 20-year £243k repayment mortgage for a £270k property. However, for the first few years of the mortgage, you mainly pay interest, so the final amount outstanding after 3 years is still likely to be close to £230k (anyone know an online calculator to work this out??). Plus there are again buying and selling costs, which eat up further money.

We've considered buying a mobile home for about £40k (in a couple of months' time) and renting it out. However, when you take into account depreciation, you may never turn a profit let alone get a yield of 5.6% to match saving the cash.

Looking at bricks-and-mortar holiday homes, we can't find any in the UK for £125k or less. Incidentally, we are able to go into partnership with someone who could give us £70k in cash. Any ideas as to holiday home locations for this type of price?

Anyone got any other ideas to improve on the possible 5.6% yield achiveable with a Bradford & Bingley fixed rate bond?

Thanks,
rjgb

isofa

7.01% with IceSave 1 year fixed bond (that's 5.61% net).

And others listed at MoneyFacts

tradetime

Might want to consider this one as well depending on how you think inflation will go.
http://www.leedsbuildingsociety.co.uk/savings/inflation_buster_bond.html
Not quite the yield you are looking for yet, but.......

rjgb

Thank you isofa, that is a very helpful link!

R

rjgb

Any other ideas out there?

CLAPTON

if you are to need the money in three years time then avoid any sort of investment (no BTL or caravan) just put it in the best savings a/c you can find.

purch

Best yield (over 5.6%) with minimum risk?

Zero Risk....

Buy the EIB 5.5 % Bond maturing 7 Dec 2011 at about 98.80 (closing price) which will give you a redemption yield of 5.80 %

....and if you re-invest the annual coupon payments with compound interest you'll get a slightly higher return

Minimum Risk.....

Marks and Sparks & Allied Domeq both have Bonds maturing in 2011, which currently yield in the region of 7.6 to 7.8 %

They pay the coupon bi-annually so the compounding effect will be higher....


'Safe as Houses' :rotfl:

mr_fishbulb

isofa wrote: »

7.01% with IceSave 1 year fixed bond (that's 5.61% net).

And others listed at MoneyFacts

If they can save £2500 a month it's possible that they will be higher rate tax payers.

Baldur

3-year fixed-rate bonds?:

Yorkshire BS - 7% until 31/07/2010
Bradford & Bingley - 7% 3 Year Fixed Rate Bond Issue 2
First Save - 7.01% 3 Year Bond

dunstonh

Quite a lot of the UK Other Bonds funds have yields around 7-10% at the moment. Some look attractive whilst others have that yield for a reason. However, as said above, 3 years it not investment territory. Its savings accounts.

rjgb

"purch" >> can you send me a link to info about the M&S and Allied Domeq bonds?

"dunstonh" >> can you provide examples of the other bonds that have yields of 7-10%?

"mr_fishbulb" >> what difference does it make if we are higher rate tax payers? Is it an advantage or (I presume) a disadvantage?

Thanks all!