£30k investment options
Discussion
I know this sort of thing gets asked a lot so apologies if I'm asking people to go over old ground.
My mother in law has £30k sat in a normal bank account. Her husband manages all of the other finances that they have as a couple. Unfortunately they have bit of an odd relationship where they don't really like each other very much and as such she won't ask his advice on where to put this money. So I've been asked for advice....
The difficulty is that they're both retired and as such I don't think she really afford to risk the capital to any great extent as she won't have the luxury of time waiting for it to recover if the market crashes.
Clearly a standard bank account is a bit pointless. Is there such a thing as a relatively risk free income fund? I guess not or bank accounts would pay a higher interest rate.
Any ideas?
My mother in law has £30k sat in a normal bank account. Her husband manages all of the other finances that they have as a couple. Unfortunately they have bit of an odd relationship where they don't really like each other very much and as such she won't ask his advice on where to put this money. So I've been asked for advice....
The difficulty is that they're both retired and as such I don't think she really afford to risk the capital to any great extent as she won't have the luxury of time waiting for it to recover if the market crashes.
Clearly a standard bank account is a bit pointless. Is there such a thing as a relatively risk free income fund? I guess not or bank accounts would pay a higher interest rate.
Any ideas?
PeteinSQ said:
My mother in law has £30k sat in a normal bank account...
...I don't think she really afford to risk the capital to any great extent as she won't have the luxury of time waiting for it to recover if the market crashes.
The only slight gotcha is that with inflation due to hit 4%, she'll be losing capital, at least buying power, anyway. £30,000 now, £28,800 next year, sort of. But it's a risk-free loss, you know it's going to happen ...I don't think she really afford to risk the capital to any great extent as she won't have the luxury of time waiting for it to recover if the market crashes.
Simpo Two said:
PeteinSQ said:
My mother in law has £30k sat in a normal bank account...
...I don't think she really afford to risk the capital to any great extent as she won't have the luxury of time waiting for it to recover if the market crashes.
The only slight gotcha is that with inflation due to hit 4%, she'll be losing capital, at least buying power, anyway. £30,000 now, £28,800 next year, sort of. But it's a risk-free loss, you know it's going to happen ...I don't think she really afford to risk the capital to any great extent as she won't have the luxury of time waiting for it to recover if the market crashes.
mike9009 said:
If inflation does kick in, interest rates could well increase. And quite soon too.....
A graph of interest rates and inflation would be interesting. IIRC companies allow a good lag period in which to fill their boots before grudgingly changing anything to benefit Harry Punter.b
hstewie said:
hstewie said: Something I've mentioned before that may be worth thinking about is whilst she could put the lot into something that should be relatively low volatility an idea might be to put an amount like 10% into something with full market exposure.
Bottom line though is no risk no reward.
No risk no reward-exactly. It amazes me the number of people who want a good return 'risk free'. Which brings up the term 'risk'. If you're the type who thinks stocks are a con and you'll lose your shirt, stick to a Govt Bond or bank deposit. Risk is far more than moving prices. You could be the risk. The risk that you watch the price every day and dump it at the first hurdle. Duration (time), age of the investee, how critical the money is. what you invest in. There are many stocks where the risk reward would make buying them a no brainer but you have to take many factors into account.Bottom line though is no risk no reward.
I kinda have the same thing with grandparents & mother, what’s there’s is theirs & were sticking head in the sand with high 5 figure current accounts
I managed to convince all to take premium bonds, for me it ticked the safe & accessible elements & also removed the risk of some scammer getting money from them over the phone. On £30k there would most probably be a prize most months which generates a bit of excitement!
Also maxed out ISA allowances split in cash & a medium rusk fund to give some exposure to growth.
I managed to convince all to take premium bonds, for me it ticked the safe & accessible elements & also removed the risk of some scammer getting money from them over the phone. On £30k there would most probably be a prize most months which generates a bit of excitement!
Also maxed out ISA allowances split in cash & a medium rusk fund to give some exposure to growth.
Edited by AndyAudi on Tuesday 19th October 20:57
AndyAudi said:
I kinda have the same thing with grandparents & mother, what’s there’s is there’s & were sticking head in the sand with high 5 figure current accounts
I managed to convince all to take premium bonds, for me it ticked the safe & accessible elements & also removed the risk of some scammer getting money from them over the phone. On £30k there would most probably be a prize most months which generates a bit of excitement!
Also maxed out ISA allowances split in cash & a medium rusk fund to give some exposure to growth.
Curious, what fund do you think is medium risk. I managed to convince all to take premium bonds, for me it ticked the safe & accessible elements & also removed the risk of some scammer getting money from them over the phone. On £30k there would most probably be a prize most months which generates a bit of excitement!
Also maxed out ISA allowances split in cash & a medium rusk fund to give some exposure to growth.
Do they have any plans for what they want to do with this £30k?
If they expect to spend it in the next 2-3 years then something like premium bonds might be the way to go.
The regular savings trick could also get them a higher rate of interest for some of the £30k.
If they expect to hold it for longer but don't want to take much risk, then something like the Vanguard life strategy 20% equity/ 80% bonds might work.
If they are holding it to pass it on as an inheritance, then they might want to think about giving some or all of it as gifts now. This would be particularly important if IHT is an issue and if it helps someone paying a high interest rate, such as someone paying off credit cards.
If they expect to spend it in the next 2-3 years then something like premium bonds might be the way to go.
The regular savings trick could also get them a higher rate of interest for some of the £30k.
If they expect to hold it for longer but don't want to take much risk, then something like the Vanguard life strategy 20% equity/ 80% bonds might work.
If they are holding it to pass it on as an inheritance, then they might want to think about giving some or all of it as gifts now. This would be particularly important if IHT is an issue and if it helps someone paying a high interest rate, such as someone paying off credit cards.
There are lots of funds marketed as "wealth preservation" and "cautious" but I would consider very strongly how much you want to be on the hook if your family invest in one of them and things unwind which they always can.
Also be really clear on the different between saving and investing.
If you put £30K in and you check back in one month or two years does there need to still be at least £30K there.
If not what sort of drop albeit hopefully temporary would they be comfortable with.
It's probably less than they think if they haven't seen it happen with real money.
Broken record but risk/reward.
Also be really clear on the different between saving and investing.
If you put £30K in and you check back in one month or two years does there need to still be at least £30K there.
If not what sort of drop albeit hopefully temporary would they be comfortable with.
It's probably less than they think if they haven't seen it happen with real money.
Broken record but risk/reward.
AndyAudi said:
Burwood said:
Curious, what fund do you think is medium risk.
I’m no expert, mother went option 3 out of 5 on the RBS platform labelled “medium”
Vanguard would have cost 1/4 overall in fees and outperformed this 'fund' by a long way.
Inigo Montoya said:
Do they have any plans for what they want to do with this £30k?
If they expect to spend it in the next 2-3 years then something like premium bonds might be the way to go.
The regular savings trick could also get them a higher rate of interest for some of the £30k.
If they expect to hold it for longer but don't want to take much risk, then something like the Vanguard life strategy 20% equity/ 80% bonds might work.
If they are holding it to pass it on as an inheritance, then they might want to think about giving some or all of it as gifts now. This would be particularly important if IHT is an issue and if it helps someone paying a high interest rate, such as someone paying off credit cards.
Thanks to everyone that has replied. I don't think she has any particular plans for the money really. One very big issue they have is that their house is a disaster of her husband's making, but he's stubborn and won't fix it or pay to have it fixed and may well go ballistic if she was to do anything. That would (in my mind) be the logical destination for the money if there wasn't the risk of this meltdown. If they expect to spend it in the next 2-3 years then something like premium bonds might be the way to go.
The regular savings trick could also get them a higher rate of interest for some of the £30k.
If they expect to hold it for longer but don't want to take much risk, then something like the Vanguard life strategy 20% equity/ 80% bonds might work.
If they are holding it to pass it on as an inheritance, then they might want to think about giving some or all of it as gifts now. This would be particularly important if IHT is an issue and if it helps someone paying a high interest rate, such as someone paying off credit cards.
Given she's in her 70s I think Premium bonds really does seem like the sensible option because although no risk/no reward is pretty much true, I feel they're too old to be taking too many risks.
My other much riskier alternative thought was Vanguard LS 20.
PeteinSQ said:
Thanks to everyone that has replied. I don't think she has any particular plans for the money really. One very big issue they have is that their house is a disaster of her husband's making, but he's stubborn and won't fix it or pay to have it fixed and may well go ballistic if she was to do anything. That would (in my mind) be the logical destination for the money if there wasn't the risk of this meltdown.
Given she's in her 70s I think Premium bonds really does seem like the sensible option because although no risk/no reward is pretty much true, I feel they're too old to be taking too many risks.
My other much riskier alternative thought was Vanguard LS 20.
Should also add that I don't think inheritance is the plan. This money had actually been loaned (interest free) to my sister in law as part of a deposit for a house, and this loan was paid back about two years ago when my sister in law moved house. From an inheritance tax perspective it would have been better to just leave the money with her daughter and square the will up with my wife when it comes to it. Although actually Im not sure there is enough money for them to have to worry about the IHT threshold. Given she's in her 70s I think Premium bonds really does seem like the sensible option because although no risk/no reward is pretty much true, I feel they're too old to be taking too many risks.
My other much riskier alternative thought was Vanguard LS 20.
Premium Bonds-the greatest con ever 
. Statistically your return will be between 0.5-0.9%. If you need to park money for a short term period it's worth a look but as a long term hold/store of wealth. It's for suckers. Some UK Govt Bonds are yielding twice this rate. Plenty of A rated Corporates yielding 3-4%.
people really need to get some guidance
. Statistically your return will be between 0.5-0.9%. If you need to park money for a short term period it's worth a look but as a long term hold/store of wealth. It's for suckers. Some UK Govt Bonds are yielding twice this rate. Plenty of A rated Corporates yielding 3-4%.people really need to get some guidance
Burwood said:
Hate to say it mate but it's an expensive fund, sorry. 5% initial charge (WTF). So on investing day 1 you are hit £1,500 (of your 30k). when you leave you are charged 3% and annual management fees of 1.2%.
That's outrageous. Nice work if you can get it though.I suppose it's all set in the small print so nothing she can do about it.
PS Simpo Investments Plc only has a 4% initial charge, so you can save 20% instantly by bunging it over here. It can't do much worse!
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