# Investing a significant amount of money?



## SiGainey

Any recommendations for investiging a significant amount of money (£200k+). Obviously, I'll speak to an IFA, but wondered if anyone had any tips that worked well for you...


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## GeeJay

If you buy 200,000 different lottery tickets, you'll increase your chances of winning to 1:69.91908


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## APK

Potentially now is a good time to invest, just when everyone else is running away! be aware whatever you do, it will fall in the short term, so ensure you spread the funds across different types of investment. 

If you have the nerve to invest now, and can accept the volatility, then the rewards could be massive in the long term.


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## -ROM-

What's your investment goal? To make a lot of money or to simply put your money somewhere safe but with smaller returns?

Personaslly if i were looking to make money i'd be investing in cheap property, maybe two £100k houses, rent them out so you get some immediate return and sell them when they reach a market price you are happy with.


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## APK

Have you considered property? BTL's are now showing good potential.


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## SiGainey

It's a 1-2 year goal to be sure that I make the most of the £££ but also certainly not lose any of it...


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## SiGainey

APK said:


> Have you considered property? BTL's are now showing good potential.


Nice idea, but it's as I'm moving house, I'll have the money till I find the *right* next place


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## Nickos

I'd go:

70,000 GOLD/SILVER
50,000 CASH
50,000 SHARES
30,000 PREMIUM BONDS


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## ryanuk

property is the way.


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## bigdw

5 months ago i brought gold at £14.70 a gram, now its worth £19.72 a gram. happy days. i use bullionvault.com very easy to use


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## APK

If you are looking short term, then you should not be considering anything stock-market linked, unless you can find a short term structered product. Returns currently are negligible, so you may as well put as much as poss to premium bonds for the potential (and a bit of fun each month when the post comes) Personally I would avoid gold etc as costs can be high, and prices very volatile, short term I'm afraid cash rules.


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## Jakedoodles

You'd be hard pressed to do wrong with 30k in premium bonds, as Nickos says. If you are deffo going to be renting for min 6 months then you could spred it (35k in each, so it's protected by the FSA) across some high interest savings accounts with 3-6 month lock ins. Keep some of it back as liquid though, in case of emergency. 

To look at it from the other side of the coin however, now is the time to buy property, because the market is showing indication of price increase as the year goes on. There's a notion that prices will be going up by summer, and mortgage deals will be coming more available. So, if you are hanging on for the right place, you may want to look at either changing your brief to fit what's on the market presently, or looking elsewhere because waiting runs the risk of prices going up and you effectively losing a chunk of that 200k.


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## organgrinder

These are entirely my own personal opinions for which I assume no responsibility.

With such a large amount of money you need to spread your risk although how far you spread the risk is partly down to how much you can afford to lose, how much you are prepared to gamble and how important this money is for your future financial security.

If you feel that property prices are near the bottom, BTL might not be a bad idea but be prepared to do the arithmetic. For example a £100,000 flat rented out at £400 a month gives, on the face of it a 4% return. However after letting agents costs, repairs, legal fees etc the return is unlikely to be more than 3% (and that's if you don't have void periods). If you put your money in a high interest account you would be able to get about 4% at present. BTL is also far from trouble free with tenants damaging flats, failing to pay rent and causing trouble over minor repairs. Where the property scores is if it increases in value, then the returns are greatly increased but when this will happen is anyone's guess.

The stock market is very difficult at the moment although I am actively buying at the moment on a monthly basis - in this way I am not exposed to large falls (nor unfortunately large increases) but I get in to the market at a time when I think there is some decent value.

I moved the bulk of my pension into cash about 9 months ago and that is where it is staying in the short term. I expect to see a further fall in the market once the full impact of the downturn in trade is felt and the results start to filter through: at that time I will then put the bulk of my pension back into the market. 

I am a great believer that stock market investments should be through diversified funds so that I am not exposed to bad performance from one company. As a result I invest in funds which cover sectors of the market or geographical areas, such as pharmaceuticals and Japan and in this way I get decent returns and a wide spread.

If I had £200,000 at the moment I would pay off my mortgage or I would take about £50,000 and place it in carefully selected funds (use an IFA if you don't know yourself) and I would put the rest on deposit, ensuring that I had maximised the ISA allowances for both my wife and I. When I felt the markets were at or close to the bottom, I would then move another £100,000 into a variety of funds with differing risk profiles. I would always keep £50,000 in cash, in an ISA account (maxed every year) for uncertain times or emergencies.


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## Nickos

bigdw said:


> 5 months ago i brought gold at £14.70 a gram, now its worth £19.72 a gram. happy days. i use bullionvault.com very easy to use


when i bought some it was £400 an oz, happy days indeed!! when the pound is totally washed up, i est £1k an ounce.... (if i didn't **** my money up the wall at the time i would have got more!)

of coarse, for the countries sake and my own, i hope i am wrong.


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## 1animal1

obviously speak to your IFA, ask him about Investment grade bonds, these are tipped as the next fliers of 2009 *tip* (if your IFA does fairly in depth reviews on funds he will know what they are) and not to be confused with government bonds.... obviously a spread is the best thing, although looking over the short term of 1-2 years is not a good thing when looking at anything other than cash.

Property is almost the same risk profile as equities - IFA community has only come to realise this recently due to the slump, extra risk is you havent got as much access to your capital as you have with most other investments due to lack of liquidity.

Its all about risk your prepared to take, ideal scenario is we all make a fortune with no risk, it just doesnt happen....and there is no miracle investment

Gold flew last year but the last quarter saw it drop off as everyone started back on other invests, although a recent seminar i attended was for the top performing gold fund in the UK Black rock Gold and General fund, they say that if you get a tennis court and cube it then reduce it by about a meter, that is whats left in the world in terms of un-mind gold....theory sayd it will fly over time, but how much time is the question

hope i havent bored you too much - nuts and bolts of it is that with 1-2 years and no risk either cash or liquidity funds are your only option realistically

although this is my opinion obviously and should not be seen as advice


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## alan_mcc

how about you buy 2020 washmitts from the 99p store.
you could use a new one for every foot of the car!

haha


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## Star2

I really would steer clear of property especially for the very short term. If you are interested, and indeed anyone else for that matter I'd tend to do a lot of searching for proper research on the state of the property market. All the indicators with one or two exceptions show that on the next 12 months prices are likely to fall. At the very best they may not go any lower.If they drop another 10%, can you realistically afford to lose £20k before costs?

Any half decent FA will suggest a large proportion of that money heads straight into fairly boring fixed term bonds ISAs and assorted savings accounts.

For the amount of money that you have and the time-scale, I would strongly advice against trying too hard to get wonderful returns, and taking large risks.


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## bilt-hamber kid

There's a lot of cleverer people on here than me so I'll keep this brief, but bear in mind with even good Bonds that although the income might be high, what will the price be when it comes to selling them? Capital values could fall especially as Gilt becomes more realistic. If you want good short income, and if you want to speculate.. then they might be fine. If you're after a long term safe investment, then there have been one of two recently aired (National Grid/GE Capital etc) which might be worth a look if you're after more than a tracker/basket. 

Bear in mind the differential between income and growth too - a Bond might offer decent income for a bit, but crap long term growth - does buying it fit in with your long term picture? Also, consider your tax position. Investment bonds enjoy taxation advantages over other investments and income paid out by the bond is deemed to be paid net of basic rate income tax (the basic rate tax payer has no further tax to pay). But if you pay no income tax anyway (retired/low earner/in non wage earning wife's name etc) you might be dissadvantaging yourself. Remember higher rate taxpayer snags too.

Some property funds don't derive income from the bricks and mortar, but directly from the tenant. There are some out there which are linked to student/nurses accom etc and given the g'ment's stated aim of putting more kids through Uni to study Golf Course design etc, the outlook looks bright. These private, low key funds have proved to be excellent long term bets, returning 10% or so, net of tax for the past 10 years. One has suffered a glitch in the past few weeks but that had little to do with the viability of the proposal. All property funds aren't the same, so take hardcore specialist independent advice.


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## APK

SiGainey said:


> It's a 1-2 year goal to be sure that I make the most of the £££ but also certainly not lose any of it...


I think everyone is losing track of SIgainey's objectives here, for 1-2 years with the "certainty" of not losing ANY of it, it has to be cash or premium bonds, boring i'm afraid but thats how it is, any sort of investment will incur charges so will need to grow probably by 2-3% pa to stand still, also has the funds will be used again at an indeterminate time, they need to be kept liquid, to be able to be returned within a few weeks.

Sorry but anything else will carry too much risk, I know there are always stories of how so and so made 100% in 6 months, but they would have taken a high risk (here speaks someone who has seen his wife's sharesaves plunge from £70k to £4k in 2 years !)

Take care, only "invest" what you can afford to lose.


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## 1animal1

yup i agree with the cash statement, the best option.... rate chase the banks, you have your guarantees which will covwer most of the investment, you will just need to set 4 accounts up with seperate banks whilst making sure they arent linked, ie if you go for 50k with Halifax and 50k with bank of scotland, you would only get one guarantee from the government because they both fall under the same remit, whereas if you go for natwest and RBS, you would have 2 guarantees (just how their accounting works) - another option, which is the safest bank in the UK? Northern Rock...you wont get the best rate, but its the only one backed by the UK government with full protection.... id leave premium bonds unless you want risk and also most other government backed securities as they are not worth hardly anything...you need to get at least what inflation is to make your money stand still and not lose its worth!!

Bilt hamber- im not one to shoot down mate

I think your confusing the types of bonds....there are several types, income bonds, investment grade bonds, government bonds and corporate bonds....then you have gilts which the government arent currently issuing, because of this it has increased the buying price on the markets for gilts.... however if you havent already bought your gonna be paying a premium for them which would make them a pointless option currently. Then you have bond vehicles where you can hold pretty much most funds under a bond wrapper, this is when you are allowed to take 5% pa tax deferred until final/partial encashment (an option but not required) - point is you dont have to take an income from bonds at all, infact the only true income comes from income bonds, this can be reinvsted in most cases


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## APK

Personally I would still consider premium bonds, interest being so low, the loss is there are no winnings will be minimal, but with 2 x £30k (if joint names) then could be a bit of fun, with some potential, I know the chances are the return will be minimal as well, but what if?.........................


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## bilt-hamber kid

1animal1 said:


> Bilt hamber- im not one to shoot down mate
> 
> I think your confusing the types of bonds....there are several types, income bonds, investment grade bonds, government bonds and corporate bonds....then you have gilts which the government arent currently issuing, because of this it has increased the buying price on the markets for gilts.... however if you havent already bought your gonna be paying a premium for them which would make them a pointless option currently. Then you have bond vehicles where you can hold pretty much most funds under a bond wrapper, this is when you are allowed to take 5% pa tax deferred until final/partial encashment (an option but not required) - point is you dont have to take an income from bonds at all, infact the only true income comes from income bonds, this can be reinvsted in most cases


Thanks 1animal1. Not at all mate - always good to get perspective :thumb:.

I'm happy enough I guess, with the principle of Bonds and the types, and I'm happy with the concept of taking drawing 5% pa although you'd be mad to do so at present. Many pensioners are stuffed at the moment because they have paid tax needlessly on bond income, or used that withdrawl option and now, they're finding that their already depleted funds are being decimated anyway, as a result of the current malaise. My point remains extant - Bonds are suitable if one's tax position allows it, if one is aware that current high income rates might obscure the fact that capital values might suffer and if one is considering a short term position. Further, if you don't want Bonds for income anyway, then the long term view becomes more important. As the market in Bonds starts to move, so too will prices ease - not good for the saver wanting Bonds for growth and not income.

The g'ment measures to bolster the High Street clearing banks is based on raising via Gilt, so we can expect more auctions soon and although the prices will ease, they are still reckoned to be attractive. If current interest rates drop further, then so will cash, making the yield on Gilt more attractive and nudge the price up. The recent DMO over-subscriptions and bullish prices anyway would tend to support the view that Gilt, although costly and possibly in a bubble is going to be quite good for a short time yet. Many believe that the big Gilt sell off will come on the cusp of the economy turning, and more less juicy looking Bonds will start becoming popular. Again, timing will be key in capitalising. Don't forget - pension funds too, are still swapping equity for Gilt (see Winterthur/SL etc). The Bonds which I favour at present, are Jupiter Corp, Invesco Perp and there are many attractive looking Structured Products

If you want to do your own thing, Bonds like this are attractive, but I guess thats where you guys earn your money, offering advice.

http://www.nationalgrid.com/corporate/Investor+Relations/Debt/Debt+information/Individualbondinfo/

Interestingly, it was that issue which made the news last week, for other reasons.

http://www.telegraph.co.uk/finance/...nts-prompted-by-National-Grid-bond-issue.html


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## Nickos

After watching the great depression program last night, i'm contemplating closing my small isa and shifting into bullion before we end up at the IMF doors. It was like watching today, only 80 years ago.


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## 1animal1

bilt-hamber kid said:


> Thanks 1animal1. Not at all mate - always good to get perspective :thumb:.
> 
> I'm happy enough I guess, with the principle of Bonds and the types, and I'm happy with the concept of taking drawing 5% pa although you'd be mad to do so at present. Many pensioners are stuffed at the moment because they have paid tax needlessly on bond income, or used that withdrawl option and now, they're finding that their already depleted funds are being decimated anyway, as a result of the current malaise. My point remains extant - Bonds are suitable if one's tax position allows it, if one is aware that current high income rates might obscure the fact that capital values might suffer and if one is considering a short term position. Further, if you don't want Bonds for income anyway, then the long term view becomes more important. As the market in Bonds starts to move, so too will prices ease - not good for the saver wanting Bonds for growth and not income.
> 
> The g'ment measures to bolster the High Street clearing banks is based on raising via Gilt, so we can expect more auctions soon and although the prices will ease, they are still reckoned to be attractive. If current interest rates drop further, then so will cash, making the yield on Gilt more attractive and nudge the price up. The recent DMO over-subscriptions and bullish prices anyway would tend to support the view that Gilt, although costly and possibly in a bubble is going to be quite good for a short time yet. Many believe that the big Gilt sell off will come on the cusp of the economy turning, and more less juicy looking Bonds will start becoming popular. Again, timing will be key in capitalising. Don't forget - pension funds too, are still swapping equity for Gilt (see Winterthur/SL etc). The Bonds which I favour at present, are Jupiter Corp, Invesco Perp and there are many attractive looking Structured Products
> 
> If you want to do your own thing, Bonds like this are attractive, but I guess thats where you guys earn your money, offering advice.
> 
> http://www.nationalgrid.com/corporate/Investor+Relations/Debt/Debt+information/Individualbondinfo/
> 
> Interestingly, it was that issue which made the news last week, for other reasons.
> 
> http://www.telegraph.co.uk/finance/...nts-prompted-by-National-Grid-bond-issue.html


Bilt, are you a closet broker per chance:thumb:

I think you have made some good points there, although there is a lotmore to the gilt side of things, as you'll most likely know....in summary i think the message is leave these things alone unless you know what your doing... same goes for the different types of bonds, unless you know all about your alpha's beta's etc etc,the market place will be a complete and utter mine field, you will most likely fall flat on your face....suprising how many IFA's don't understand the differences with many opting for funds without knowing their make up..... best bet is cash if you want no risk otherwise you'll put the onus on someones advice, in which case you need either a discretionary manager or a good fund allocator.... and in both cases they would most probably push you away due to your timescales

on the other point, yep people have been silly to take their 5% income however the 5% income will already have been subject to internal taxation negating a tax charge on income taken(deferred tax charge if client is higher rate on partial/full encashment), most pensioners are BR tax payers and so the taxation has no effect on them at all. Obviously investment return plays a big part and if their investment is negging out then they will have capital errosion. There are still a few deposit funds out there that have made a decent sum on the floating rate notes etc, obviously not counting the recent Standard Life hiccup ....... your not getting your bond wrappers mixed up with your collectives are you


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## Rich @ PB

SiGainey said:


> Any recommendations for investiging a significant amount of money (£200k+). Obviously, I'll speak to an IFA, but wondered if anyone had any tips that worked well for you...


If it's for the long-term, then maybe a balanced permanent portfolio approach would be worth considering. I've been chewing this over for a while, trying to learn more about my options, and I have found this blog to be a useful entry point to understanding more about safer, less volatile long term strategies...

http://crawlingroad.com/blog/


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## 1animal1

There are loads of risk strategies out there, several questions appear time and time agin though, what level of risk? what depth of asset allocation as this too could affect your risk? which funds/assets?.... id still go for advice regardless due to the modelling tools that just aren't available to the general public

a good view ive found is that of Warren Buffett one of the worlds richest people http://www.nytimes.com/2008/10/17/o...r=2&scp=2&sq=warren buffet&st=cse&oref=slogin


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## rich-hill

Correct me if i'm wrong. If it went into premium bonds, and you didn't win much. Then you will loose the rate of inflation on the money, there for making a loss?


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## APK

rich-hill said:


> Correct me if i'm wrong. If it went into premium bonds, and you didn't win much. Then you will loose the rate of inflation on the money, there for making a loss?


But given negilgible rates of interest currently on offer, less tax, then the loss is minimal.


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## 1animal1

rich-hill said:


> Correct me if i'm wrong. If it went into premium bonds, and you didn't win much. Then you will loose the rate of inflation on the money, there for making a loss?


In summary yes, if inflation is at 4% (depends also if your using CPI ie without mortgage payments included or RPI ie with mort payments) then you would have to make 4% on an investment before you got an effective positive return....



APK said:


> But given negilgible rates of interest currently on offer, less tax, then the loss is minimal.


not sure if this makes sense.... the loss on low rates plus tax off makes the situation worse especially when in high inflation which we are in now (when benchmarked against say last year).... if going into premium bonds and you win nothing, you have lost the inflation over a given period - so in effect if inflation between nov 08 and nov 09 is 5% and you make nothing, you effectively have a 5% negative real growth rate


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## APK

My point is that if you receive say 4% (ING instant access- including bonus) less tax at basic rate = 3.2% or 2.4% if a higher rate tax payer, so the most you would receive in 12 months if the full £60,000 was invested would be £1920, assuming you won nothing, then effectively this is the cost of chosing bonds over cash. This of course assumes the rate will stay at 4% (unlikely when base is 1.5%)

Personally given the small potential loss I would buy some bonds (my 11yr old who has £3000 has won £50 in december and January, but regularly wins a couple of times a year)

Realistically I suspect the official inflation rate over the next 12 months will be about 2.5%, so, not likely to have a major effect.


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## 1animal1

ah sorry mate, wasnt sure if i was reading right. Yeah it is 'chance' against a crap return. Cpi is currently 3.1% and Rpi is 0.9% so relative to the rates out there, ive seen a few reports speculating a sub 1% Cpi figure within 12 months - so won't really be as much of a problem, plus they can cash the bonds in when they like - still utilise cash ISA's as normal though


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## Exotica

Good summary here

The great sell is ‘the lottery effect,' the chance of winning a dream, and there is of course the chance of winning a million. Equally you could be the next space-walking astronaut, and you’re odds probably aren’t that dissimilar! Your chance of winning the jackpot per £1 spent on the lottery is one in 14 million, far out-stripping the one in 19 billion chance of becoming a millionaire through the Premium Bond draw.

The fact the payouts are commonly referred to as a ‘win’ rather than an ‘interest payment’ is psychologically devious. Comments like, “my friend wins £50 every few months” mislead; on clinical evaluation, someone with £10,000 of Bonds should ‘win’ £180 a year; that’s roughly £50 every three months; yet the same cash in a savings account would ‘win’ over £50 every month or £600 a year.

Worse still, compare the Premium Bond interest to retail price index inflation (RPI), the nearest estimate to the rate at which prices rise. It’s currently 4.2%, significantly higher than the Premium Bond interest rate, so any cash you have in bonds is increasing more slowly than the prices of everyday goods. This means by holding bonds the real amount of money you have is decreasing. 


Are they ever worth it?



Put £100 in Premium Bonds, calculate the probability and 97% of people won't win a penny over a year, but one in 30 will win £50 or more! And if you're that lucky person, this is a great return.


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## matt strike

Definitely see an IFA, if you don't have one you can find one on www.unbiased.co.uk. It's an independent site IFA's can register on, allowing you to choose one that's right for you.

Def. stay away from property, imo it won't be increasing much if at all over that timeframe, even if you do make money after all the costs of buying & selling property (stamp duty, legal fees, estate agents etc) it would be a miracle if you made any money, and you'd still have capital gains tax to pay on any profit you did make.


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## chrisc

be carefull of the ifa people my dad trusted one and lost quite a bit of cash.took 4 years going through fo to get some back


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## matt strike

chrisc said:


> be carefull of the ifa people my dad trusted one and lost quite a bit of cash.took 4 years going through fo to get some back


The vast majority of IFA's are good, unfortunately a few bad advisers can give the whole indusrty a bad name. Can't beat a personal recommendation so speak to friends & family etc if they have ever used one.


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## APK

Exotica said:


> Good summary here
> 
> The fact the payouts are commonly referred to as a 'win' rather than an 'interest payment' is psychologically devious. Comments like, "my friend wins £50 every few months" mislead; on clinical evaluation, someone with £10,000 of Bonds should 'win' £180 a year; that's roughly £50 every three months; yet the same cash in a savings account would 'win' over £50 every month or £600 a year.


Can you tell me where you can get 6% net (7.5% gross for a basic rate tax payer)

The op wants to put away the funds for 1-2 years, with no risk to the capital, therefore it has to be cash (or "near cash") no IFA would consider doing anything else, if you find one run a mile, anything else is too high a risk.


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## 1animal1

APK said:


> Can you tell me where you can get 6% net (7.5% gross for a basic rate tax payer)
> 
> The op wants to put away the funds for 1-2 years, with no risk to the capital, therefore it has to be cash (or "near cash") no IFA would consider doing anything else, if you find one run a mile, anything else is too high a risk.


6%net??  you will be extremely lucky at the moment..... even offshore accounts are rolling out just over 4%gross!!

you should vet an IFA to see if hes trust worthy, its a long term thing rather than meet up and splay your entire load of cash on his advice..... the FSA is tightening a lot of things up in the foreseeable future, advice is very stringent as it is but i can see a lot of the old skool advisers eaving the market due to a higher level of education being required by 2010ish....

in summary an IFA has access to a lot more than you do including corporate discounts etc.... and in the end its your decision to take the advice from an FA that you have vetted

just my 2p


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## APK

All this talk about IFA's is irrelevant, an IFA will not have access to short term guaranteed products, they are interested in loger term "investments" Sigainey is not looking to "invest" as such as he simply wants a "safe" home for 1-2 years. Yes an IFA can scour the market for deposits, but only in the same way as you, they will not find anything miraculous, and any fee will likely more than wipe out any gain.

1animal1 what are "corporate discounts " do you mean corporate bonds ? if so these are certainly not secure.


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## 1animal1

APK, i making ref to the negative comments above from people saying all ifa's do is lose people money - if you want a certain risk lev el you have to be prepared to suffer the consequences

With what you have said, corporate discounts relates to how IFA's operate, they may be tied to networks or service providers that are offered discounts from insurance/investment companies etc etc because of the sheer amount of business they put through (nothing to do with corp bonds!!)..... and i would totally disagree, IFA has more access to structured products than you can imagine, a good percentage on the market cannot be offered without advice!! and if you want me to go more in depth check what 'your' structured products are secured against, most of them will offer their guarantee based upon repayment of floating rate notes which arent 100% guaranteed (read the small print)

And in a lot of circumstances they could have access to better cash rates, best rates are offshore, however if you go offshore to get these you will be taxed as per a UK bank account unless you go through other means..therefore you then get the benefit of gross roll up which gives you tax free growth until you bring the money back...this is one instance, i can point to others - all depends what you want to do, given the situation above and the 1-2 year term i would go to the high street if he doesnt want any risk at all as the IFA will not make money on deposit alone and so will request a fee which will most likely weed out the benefits of the better rates as you mentioned above - if he had half a million id suggest advice - point being an IFA is much better placed than you are and is rarely only able to access what you can


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## APK

1animal1 said:


> , given the situation above and the 1-2 year term i would go to the high street if he doesnt want any risk at all as the IFA will not make money on deposit alone and so will request a fee which will most likely weed out the benefits of the better rates as you mentioned aboveQUOTE]
> 
> Precisely my point, Sigainey wants 1-2 year with no risk! I agree entirely if he were happy to take "some" risk and tie up for 5 years then yes an IFA would be the best bet.


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## 1animal1

APK said:


> 1animal1 said:
> 
> 
> 
> , given the situation above and the 1-2 year term i would go to the high street if he doesnt want any risk at all as the IFA will not make money on deposit alone and so will request a fee which will most likely weed out the benefits of the better rates as you mentioned aboveQUOTE]
> 
> Precisely my point, Sigainey wants 1-2 year with no risk! I agree entirely if he were happy to take "some" risk and tie up for 5 years then yes an IFA would be the best bet.
> 
> 
> 
> :thumb:
Click to expand...


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## matt strike

Many IFA's I know are currently offering an information service for a small fee rather than full advice and larger fee given the points previously raised by 1animal1 and APK.

Could be worth considering as in theory they will get a greater return with the same risk as if you did it yourself, which should more than offset the fee.


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## bilt-hamber kid

1animal1 said:


> .. on the other point, yep people have been silly to take their 5% income however the 5% income will already have been subject to internal taxation negating a tax charge on income taken(deferred tax charge if client is higher rate on partial/full encashment), most pensioners are BR tax payers and so the taxation has no effect on them at all. Obviously investment return plays a big part and if their investment is negging out then they will have capital errosion. There are still a few deposit funds out there that have made a decent sum on the floating rate notes etc, obviously not counting the recent Standard Life hiccup ....... your not getting your bond wrappers mixed up with your collectives are you


They'd have capital erosion anyway - the 5% comes out of your capital invested sum, and not out of the accrued amount. Bonds are also a lot less tax efficient these days. Yes, CGT rules last year imposed a flat rate of 18% but that has made them less attractive compared to Unit Trusts. Bonds also lack an IHT edge as they are liable for income tax. A beneficiary could end up paying 20% income tax, plus 40% IHT. A Unit Trust, as you'll know, is free of CGT on death.

The right property fund is still worth its weight in gold if you get the property and the market right :thumb: and there are still some great property funds available - lets not forget woodland deals.

http://www.fimltd.co.uk/

I guess the lesson is, as ever, beware of target fixation and analysis paralysis in equal measure.


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## ALANSHR

Property would be the one for me, at least this is generally managed by demand so to an extent by the public at large rather than relying on some unscrupulous banking or investment mob who haven't exactly covered themselves in glory recently.

You could look at a split between property and investment and maintain a widespread portfolio so that you would never be wiped out by a slump in one area, the downside of this strategy is that it wont make a fortune quickly. It is possibly worth looking at some of the banks and buying shares, RBS was at 11p last week from a high of around £7, although it is likely that it will take a long time to recover, it is also very likely that it will even with the investment from the government which will have to be repaid.


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## APK

but not in the 1-2 yr timescale Sigainey wanted!


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## ALANSHR

APK said:


> but not in the 1-2 yr timescale Sigainey wanted!


ah, sorry missed that


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## ALANSHR

try the 3.30 at kempton tomorrow then:thumb:


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## Ronnie

property is dead for the next few years so short term is out. stocks are great now but you need balls to dump that amount into it. basically only invest what you could afford to burn. ie if u cant cover a £200k loss then don't do it! also what is you mental strength like can u hold out when loosing money hoping for it to pick up or not if yes then high risk is the way to go gold etc is good but like all markets it is pretty volatile now. I would speak to an IFA. bonds etc are good also playing small amounts on stock as well. I have some houses if u are intreseded in long term high rental. Im am poaching businesses in financial hardship at the moment as there is money to be had there but it is very hit and miss TBH. sometimes there is more money to be made doing simple things so check your options... I have a friend who made his million starting off collecting broken pallets and cutting them up into fire lighters and selling them...


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## APK

Once again Sigainey is looking short term and wants no risk, we all accept there is money to be made from investment, but this should be long term, having said that my dad who is the most risk-averse person I know bought some Barclays shares a week or so back at 51p, the next day they did an open letter saying they still expect to do over £5bn profit, and they have plenty of capital, and the shares soared, he sold them 3 days later at £1.09 more than doubling his money!

There are bargains to be had at the moment, whether its cars (see recent thread mondeo madness) houses, or stocks, if you can buy low, and have a market to sell high, then you will make a lot of money.


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## 1animal1

bilt-hamber kid said:


> They'd have capital erosion anyway - the 5% comes out of your capital invested sum, and not out of the accrued amount. Bonds are also a lot less tax efficient these days. Yes, CGT rules last year imposed a flat rate of 18% but that has made them less attractive compared to Unit Trusts. Bonds also lack an IHT edge as they are liable for income tax. A beneficiary could end up paying 20% income tax, plus 40% IHT. A Unit Trust, as you'll know, is free of CGT on death.
> 
> The right property fund is still worth its weight in gold if you get the property and the market right :thumb: and there are still some great property funds available - lets not forget woodland deals.
> 
> http://www.fimltd.co.uk/
> 
> I guess the lesson is, as ever, beware of target fixation and analysis paralysis in equal measure.


Hmmmm yes and no..... technically they wouldnt have capital errosion IF their funds were performing more than 5%, yes the 5% comes out of the accrued amount but this is really irrelevant unless taking 5% for more than 20 years.....yes bonds are less tax efficient if held onshore, hold one offshore in a trustee investment plan and your sailing, plus the benefits of using an integral trust....yes OEICS/UT's etc have become more beneficial, however you cant place them within a trust easily as the trust would have to be drawn up specifically which isnt cheap, generic ones that apply to bonds cannot be used for collectives as the manageability cannot be contained everytime a chargeable event occurs.... also if you switch funds before the main trustee dies (which is extremely likely)then your completely stuck AND you WILL have a tax charge....this is why TIPPS are far more useable in trusts than UT/OEICs etc and you will find that most of the trust market place will be going in this direction......so whilst you are correct that onshore bonds arent as favourable, the flexibility and use of trusts are actually their saviour...offshore bonds are the bond of choice if you are looking at over the 100k mark (charges tend to benefit the bigger sums) regardless of being in a trust or not because they are far easier to manage and have access to offshore deposit accounts that arent taxed as an individual offshore bank account - as per the governments amnesty last year

erm, property is a good diversifier, although putting your money into property funds when most of the larger funds have just imposed an 'upto' 6 month withdrawal restriction isnt something that would make me go in yet even though they will be cheap, the lack of liquidity isnt a 'turn on'....actual residential property? yep in the long term it would be a good investment but your funds are totally NOT liquid at all and the risk currently isnt small when compared to equities (obviously depending which equity) based on the fact that the market is rebalancing, we dont know what houses should be priced at because they have been so overpriced for so long now... fuelled by various reasons

put it this way, if i had 100k now i wouldnt be putting it all into a building unless i knew for certain i wouldnt need it for 10 years plus...just my opinion of course and irrelevant to the original thread


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## 1animal1

bilt-hamber kid said:


> Thanks mate, wow.. what a detailed answer! :thumb:
> 
> You may have mistaken what I was saying. When I refer to property, I wasn't referring to residential property - I was thinking more of the institutional property funds (Brandeaux etc) which are backed by the g'ment's drive to build _x_,000 new accom quarters for students and nurses. Have a look at the Coral Student Portfolio or the Beech Student Accom Fund maybe?
> 
> Won't 5% taken off the capital still erode values though? 100% of 95% is still not as good as 100% of 100% of the capital. Maybe I have missunderstood you?


No probs fella

To be entirely honest I wasn't sure what your point was hence the long answer, some comments were quite broad.... I see your point regarding erosion, however, and as im sure you'll know the returns are supposed to offset the income which 'should' create a non capital erosion situation. I think what your referring to is the 100% of capital that can be taken tax deferred....

Yup im aware of these funds and yes i agree that they are a good safe bet currently, although only IF you went in at the right time..... if you buy in now going against the returns then you will be buying high, there isnt much between these and the commercial property funds that have been 'done well' and gone until another day.... the returns on most commercial funds come from the yield being offset by the value of the property(which are normally conducted monthly unless times are hard).... the same will apply to these funds because they have invested your money in much the same way, the problems caused in commercial property havent been related to the yields stopping, they have related to the value of the underlying assets falling due to the recession/property values and various other things falling - this then causes a waterfall of cash coming out as returns drop which eats up their cash reserves and before you know it they impose a 6 month (max) withdrawal penalty because they cant release your cash quick enough without compromising the remaining investors.....

obviously none of the above constitutes advice and is only my opinion and is only my understanding


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## bilt-hamber kid

In times of recession, student numbers tend to go through the (superbly well engineered and manufactured) roof and consequently, the g'ment has decreed that its going to spend a fortune on education (to keep people off the dole queues as much as anything).

Savills will be releasing a report soon, which although will possibly report a tail off, still rates rental income from stude accom higher than office space in London at the moment. Coral is assesing a return of 10% or so, on its new fund, which although probably on the robust side, is still worth keeping one eye on.

http://www.coralportfolio.com/

http://www.propertyweek.com/story.asp?sectioncode=36&storycode=3132790&c=1

Possibly worth steering clear of geographically challenged shopping centres for a while though?


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## 1animal1

bilt-hamber kid said:


> In times of recession, student numbers tend to go through the (superbly well engineered and manufactured) roof and consequently, the g'ment has decreed that its going to spend a fortune on education (to keep people off the dole queues as much as anything).
> 
> Savills will be releasing a report soon, which although will possibly report a tail off, still rates rental income from stude accom higher than office space in London at the moment. Coral is assesing a return of 10% or so, on its new fund, which although probably on the robust side, is still worth keeping one eye on.
> 
> http://www.coralportfolio.com/
> 
> http://www.propertyweek.com/story.asp?sectioncode=36&storycode=3132790&c=1
> 
> Possibly worth steering clear of geographically challenged shopping centres for a while though?


I hear what your saying fella.... :thumb:

Like i said not a bad bet for diversity, although regardless of what the government is doing the fund will still have to purchase buildings or build them having purchased land, the rents will then be offset the buildings value which in the bigger picture, is as secure as what commercial property was all those months ago.... you see the student numbers doesnt make any difference as most invest portfolios in funds will have long term leases already which guarantees their income stream..... im only trying to be an advocate here , we have heard all this before from a very similar range of funds, in a lot of cases FA's were placing 100% of peoples portfolio's in property..... now property has an increased risk than was presumed previously - i think you have a point given the stats although i wouldnt be ploughing a great deal into this as the difference between the two investment types isnt that 'different' at all


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## bilt-hamber kid

Gadzooks, eggs in one basket aren't my bag. :thumb:


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## 1animal1

bilt-hamber kid said:


> Gadzooks, eggs in one basket aren't my bag. :thumb:


Nothing like a bit of diversity in ya life


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## Crockers

*Bonds*



I hate this word as it covers many differing investment vehicles..

*Insurance Bonds*..or to give them their real titles - single premium non qualifying whole of life insurance policy. These allow you to withdraw 5% over 20 years - deemed return of capital without any further taxation. I think these may be what B-H was referring to.
*Government Bonds*..or called Gilts - these are fixed interest investments issued by a sovereign state. If Bought at issue and held to the redemption date there is NO loss of capital and an income is paid (called a coupon) by the state. They can be traded but the capital value will fluctuate depending on the current interest rates and sentiment on default possibilities.
*Corporate Bonds* These are the aame as Government Bonds in structure but are issued by a Company - they fall into two categories investment grade and sub investment grade. This grading is based on research and the possibility of default. This "credit risk" is reflected in the interest rate that is paid and the value placed on them due to their possible default rate.

Hope this has helped...


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## bilt-hamber kid

I nudged out of Fixed Rate Gilt a few weeks back after a great 6 months, and have started moving into Index Linked Gilt for longer term cover as inflation starts to register in people's minds. Bolstering M&G Strategic Corporate Bond funds the other week will hopefully prove to be a good medium term bet. If the g'ment decides to drop % rates again today, then it will probably start buying back Gilt and Investment Grade bonds to do it.


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## Crockers

Basic thoughts are if you think we heading for deflation go for Govt Gilts....if HIGH inflation then Index Linked Gilts....Before buying Corporates I would want to know how much compensation the manager is getting for taking on credit risk.....

Bear in mind that interest rate movts will affect capital values.....the only way you are 100% secure with Govt Gilts is to buy them at inception and hold them to redemption....

By the way -- the foam arrived - many thanks - have yet to use it -


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## bilt-hamber kid

Hope it worked for you Crockers. I'm using some later today too funnily enough.

The Gilts have done well, but volatility is high now. The fund has legs yet though, and I'm inclined to run with it and will dissinvest a little more into Index Linked gilt when inflation starts to creep. VCTs are absorbing a lot of my attention at the moment.


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