Where to temporarily put funds
Discussion
Chaps, Lady F and I have £200k coming in for the deposit on a house, pulled from other places. A significant chunk of that sum has interest payable on it, as it is an equity release from another property.
Where is the best place to park it for a few months until we are ready to buy? Savings accounts tend to be limited to max amountyou can save.
Or is there some sort of rare Ferrari/Porsche I can buy and turn around at the end of the summer for upside. Seriously.
Although she'll probably kill me, this may be the way to go! ;-)
Where is the best place to park it for a few months until we are ready to buy? Savings accounts tend to be limited to max amountyou can save.
Or is there some sort of rare Ferrari/Porsche I can buy and turn around at the end of the summer for upside. Seriously.
Although she'll probably kill me, this may be the way to go! ;-)
Harry, the classic/rare/super-car market is on fire at the moment owing to a combination of a total lack of yield available anywhere and frothy markets.
I don't really invest top-down (from the overall market perspective) but rather bottom-up on an individual stock perspective.
However, a few things to consider:
- The summer often sucks for the stock market.
- The SXXP (biggest 600 stocks in Europe) are up nearly 20% YTD.
- The VIX (volatility / complacency index) is pretty low.
- I am finding cheap stocks increasingly hard to find and much of the recent rise is purely multiple driven not EPS upgrades.
ALL of these point to a risk of a decent pull-back/pause in the overall market.
IF that happens, the confidence of those spanking £200k on a toy will be somewhat shaken.
Money will still be cheap and yield non-existent but the "greater fool" theory (which is what you are relying on when speculating on a single asset bet) is going to have a tough time making you money if those fools are worse off in 6 months than they are now.
At the same time, you WILL have to pay:
- Dealer margin x2.
- Servicing.
- Insurance.
So I would say that while you might not lose too much money - the odds feel stacked against you making much.
The other issue is the risk.
Do you need all £200k or can you get away with just £150k?
How much can you afford to lose?
Because if it isn't much (say only £10-20k) then I think you are crazy to put it in a car.
You would be potentially losing your dream house on 6 months of blatting around in a car that is only marginally better than your existing stable.
Remember that at the £200k level liquidity is low.
You may not be able to find a buyer very quickly.
You may have to take a big discount for a fast sale.
I was in a similar situation with a large sum (large to me but smaller than you are talking about) that I owed the tax man and I am afraid I just put it in an offset mortgage account.
Lastly - how are you finding the V8V?
I don't really invest top-down (from the overall market perspective) but rather bottom-up on an individual stock perspective.
However, a few things to consider:
- The summer often sucks for the stock market.
- The SXXP (biggest 600 stocks in Europe) are up nearly 20% YTD.
- The VIX (volatility / complacency index) is pretty low.
- I am finding cheap stocks increasingly hard to find and much of the recent rise is purely multiple driven not EPS upgrades.
ALL of these point to a risk of a decent pull-back/pause in the overall market.
IF that happens, the confidence of those spanking £200k on a toy will be somewhat shaken.
Money will still be cheap and yield non-existent but the "greater fool" theory (which is what you are relying on when speculating on a single asset bet) is going to have a tough time making you money if those fools are worse off in 6 months than they are now.
At the same time, you WILL have to pay:
- Dealer margin x2.
- Servicing.
- Insurance.
So I would say that while you might not lose too much money - the odds feel stacked against you making much.
The other issue is the risk.
Do you need all £200k or can you get away with just £150k?
How much can you afford to lose?
Because if it isn't much (say only £10-20k) then I think you are crazy to put it in a car.
You would be potentially losing your dream house on 6 months of blatting around in a car that is only marginally better than your existing stable.
Remember that at the £200k level liquidity is low.
You may not be able to find a buyer very quickly.
You may have to take a big discount for a fast sale.
I was in a similar situation with a large sum (large to me but smaller than you are talking about) that I owed the tax man and I am afraid I just put it in an offset mortgage account.
Lastly - how are you finding the V8V?
Heh - Your thoughts are pretty much spot on, and unless something like aa 288 GTO were available for 200k, I wouldn't do it. If you look at prices on things like 997 GT3s at the moment, they are barking mad - these are not classic cars. And we saw a car market crash shortly after a stock market correction in the late 90s.
One thing though - the crisis in 2008-10 did not seem to do much to the super-rare car market. I guess low interest rates mean that people hunt for yield.
And also, Lady F would have my balls.
I ask because I have been offered a mint, perfect spec (except for the factit's auto) Aston V8 Oscar India (1980s). And I cannot find any data whatsoever on what these things are worth - none whatsoever. And am wondering if their values could ever get on the coattails of the earlier DB cars.
Stock market is a no-no for the many reasons you cite. I've actually stopped putting in, waiting for a correction in which to buy. Although I'm more into US securities than UK anyway, due to my job being about US securities, and thus having aslightly better understanding of that market.
Hmpf.
V8V is objectively the best car I have ever owned. Subjectively, it's a bit unexciting, to be honest.
One thing though - the crisis in 2008-10 did not seem to do much to the super-rare car market. I guess low interest rates mean that people hunt for yield.
And also, Lady F would have my balls.
I ask because I have been offered a mint, perfect spec (except for the factit's auto) Aston V8 Oscar India (1980s). And I cannot find any data whatsoever on what these things are worth - none whatsoever. And am wondering if their values could ever get on the coattails of the earlier DB cars.
Stock market is a no-no for the many reasons you cite. I've actually stopped putting in, waiting for a correction in which to buy. Although I'm more into US securities than UK anyway, due to my job being about US securities, and thus having aslightly better understanding of that market.
Hmpf.
V8V is objectively the best car I have ever owned. Subjectively, it's a bit unexciting, to be honest.
Edited by Harry Flashman on Wednesday 20th May 17:03
[quote=Harry Flashman
I ask because I have been offered a mint, perfect spec (except for the factit's auto) Aston V8 Oscar India (1980s). And I cannot find any data whatsoever on what these things are worth - none whatsoever.
[/quote]
OK - that sounds harder to price than a CDO-squared issued by Goldman working on behalf of people who want to short it.
And you want to put your HOUSE DEPOSIT in it!!?
No data on price means HIGHLY ILLIQUID, by definition.
I don't give a crap what your heart says - you KNOW the right answer here.
I ask because I have been offered a mint, perfect spec (except for the factit's auto) Aston V8 Oscar India (1980s). And I cannot find any data whatsoever on what these things are worth - none whatsoever.
[/quote]
OK - that sounds harder to price than a CDO-squared issued by Goldman working on behalf of people who want to short it.
And you want to put your HOUSE DEPOSIT in it!!?
No data on price means HIGHLY ILLIQUID, by definition.
I don't give a crap what your heart says - you KNOW the right answer here.
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