Where to put money
Discussion
Hi all
Long time member but set up new ID just for this post.
I am after some thoughts on where to put savings which are currently sitting doing nothing. We have around £400k in “free” cash, so where to put it?
Some additional facts
- we have no mortgage and own our current house
- NSI already at the max
- I no longer work but have not yet reached 55 to take pensions
- am quite risk averse with my capital
I could afford to tie a chunk of it up for a while, but with the current interest rate regime it seems to me that locking anything into a longer term product, say 3 years plus, carries a significant risk of interest rates overtaking the product.
We have some ideas ourselves but wondered what others thought.
Thanks
Long time member but set up new ID just for this post.
I am after some thoughts on where to put savings which are currently sitting doing nothing. We have around £400k in “free” cash, so where to put it?
Some additional facts
- we have no mortgage and own our current house
- NSI already at the max
- I no longer work but have not yet reached 55 to take pensions
- am quite risk averse with my capital
I could afford to tie a chunk of it up for a while, but with the current interest rate regime it seems to me that locking anything into a longer term product, say 3 years plus, carries a significant risk of interest rates overtaking the product.
We have some ideas ourselves but wondered what others thought.
Thanks
Much more info required, like what your pension situation would be when you hit 55 (if you’ve got an amazing final salary pension such that this 400k is essentially just money for toys, that’s different to if you need this 400k to work for you in retirement).
Personally I’d just whack it in index funds with an appropriate bond mix to suit my risk appetite but I’m boring. But what you’ve written seems to indicate that you don’t want any risk of capital loss. In which case, that’d be inappropriate and you’d just need to accept low returns and the opportunity cost that rates might go up.
Or if I had kids, I’d be thinking of how if I massively help them get on property ladder etc.
Or just buy a new car!
Personally I’d just whack it in index funds with an appropriate bond mix to suit my risk appetite but I’m boring. But what you’ve written seems to indicate that you don’t want any risk of capital loss. In which case, that’d be inappropriate and you’d just need to accept low returns and the opportunity cost that rates might go up.
Or if I had kids, I’d be thinking of how if I massively help them get on property ladder etc.
Or just buy a new car!
Thanks.
No kids just the wife and I.
Premium bonds already at the max.
2 final salary pension in place from previous jobs plus a non final salary pension and looking at the projections then they will be fine for us. I just feel that the savings should be doing better.
Perhaps the answer is to buy another property and BTL or airBnB.
No kids just the wife and I.
Premium bonds already at the max.
2 final salary pension in place from previous jobs plus a non final salary pension and looking at the projections then they will be fine for us. I just feel that the savings should be doing better.
Perhaps the answer is to buy another property and BTL or airBnB.
Risk averse.....that's a good thing.
Now identify risk, being in Sterling for more than two years might be it for some.
Entering the stock market when all is rosy, with indexes at or around highs. that can be worse, because it will tarnish your view of equities for a long time.
But you have to accept the reality of inflation, not the tabloid version which quotes the price of bread and milk, but the buying power of your current pot.
Value preservation, many options, some of them come with quite large spreads diamonds, gold, expensive items like watches, and Murphy's Law guarantees the bid offer will not be in your favour when it's time to sell.
The markets provide protection from long term inflation and are liquid.
Basically, cash, you are putting your future in the hands of politicians.
The Market makes you a backer of business.
But you have to be smart, following the herd is not the way.
Now identify risk, being in Sterling for more than two years might be it for some.
Entering the stock market when all is rosy, with indexes at or around highs. that can be worse, because it will tarnish your view of equities for a long time.
But you have to accept the reality of inflation, not the tabloid version which quotes the price of bread and milk, but the buying power of your current pot.
Value preservation, many options, some of them come with quite large spreads diamonds, gold, expensive items like watches, and Murphy's Law guarantees the bid offer will not be in your favour when it's time to sell.
The markets provide protection from long term inflation and are liquid.
Basically, cash, you are putting your future in the hands of politicians.
The Market makes you a backer of business.
But you have to be smart, following the herd is not the way.
NDA said:
hairy v said:
Index tracker
I have often thought of doing this - but haven't a clue where to start and who to throw the money at. It is confusing for total novices.https://monevator.com/vanguard-direct-uk/
https://monevator.com/why-a-total-world-equity-ind...
https://monevator.com/dont-wait-to-open-your-stock...
The usual rule of thumb with equity investing is do it with money you're unlikely to need for at least 5 years, so if the market does go down, it has enough time to have a decent chance of going back up again.
Simpo Two said:
bad company said:
Simpo Two said:
Buy a boat!
And watch your savings sink.
I've started listening to James Shack https://youtu.be/yXl-zVTZxr8 on YouTube and I think watching his videos might make you rethink your risk strategies. Was watching one where he was demonstrating that low risk strategies (cash) can actually be a lot more risky than what seems like higher risk strategies (stocks and bonds). If referencing them against every month in the last 150ish years of past performance.
You could afford to lock some money away on longer term stocks and bonds, if you have a.rainy day fund to tide you over until your pensions can kick in i.e. £150k for very.rainy day and £250k invested longer.term. With your position you can afford to take paid advice, as it may be prudent to max out pensions if you are close to retirement as one of the main drawbacks of not having access to funds is not really an issue providing you have a sizeable rainy day fund. Getting an additional 20% to 40% straightaway has compounding advantages and you don't need out of the markets.straightaway on retirement
You could afford to lock some money away on longer term stocks and bonds, if you have a.rainy day fund to tide you over until your pensions can kick in i.e. £150k for very.rainy day and £250k invested longer.term. With your position you can afford to take paid advice, as it may be prudent to max out pensions if you are close to retirement as one of the main drawbacks of not having access to funds is not really an issue providing you have a sizeable rainy day fund. Getting an additional 20% to 40% straightaway has compounding advantages and you don't need out of the markets.straightaway on retirement
thepeoplespal said:
I've started listening to James Shack https://youtu.be/yXl-zVTZxr8 on YouTube and I think watching his videos might make you rethink your risk strategies. Was watching one where he was demonstrating that low risk strategies (cash) can actually be a lot more risky than what seems like higher risk strategies (stocks and bonds). If referencing them against every month in the last 150ish years of past performance.
You could afford to lock some money away on longer term stocks and bonds, if you have a.rainy day fund to tide you over until your pensions can kick in i.e. £150k for very.rainy day and £250k invested longer.term. With your position you can afford to take paid advice, as it may be prudent to max out pensions if you are close to retirement as one of the main drawbacks of not having access to funds is not really an issue providing you have a sizeable rainy day fund. Getting an additional 20% to 40% straightaway has compounding advantages and you don't need out of the markets.straightaway on retirement
He said he isnt working any more so Pension contributions would be limited (£3600 gross pa).You could afford to lock some money away on longer term stocks and bonds, if you have a.rainy day fund to tide you over until your pensions can kick in i.e. £150k for very.rainy day and £250k invested longer.term. With your position you can afford to take paid advice, as it may be prudent to max out pensions if you are close to retirement as one of the main drawbacks of not having access to funds is not really an issue providing you have a sizeable rainy day fund. Getting an additional 20% to 40% straightaway has compounding advantages and you don't need out of the markets.straightaway on retirement
thepeoplespal said:
I've started listening to James Shack https://youtu.be/yXl-zVTZxr8 on YouTube and I think watching his videos might make you rethink your risk strategies. Was watching one where he was demonstrating that low risk strategies (cash) can actually be a lot more risky than what seems like higher risk strategies (stocks and bonds). If referencing them against every month in the last 150ish years of past performance.
You could afford to lock some money away on longer term stocks and bonds, if you have a.rainy day fund to tide you over until your pensions can kick in i.e. £150k for very.rainy day and £250k invested longer.term. With your position you can afford to take paid advice, as it may be prudent to max out pensions if you are close to retirement as one of the main drawbacks of not having access to funds is not really an issue providing you have a sizeable rainy day fund. Getting an additional 20% to 40% straightaway has compounding advantages and you don't need out of the markets.straightaway on retirement
I think that is where I am going to end up, with a mix of things spread across different time horizons, although fair to say that the return rate differential is marginal at the moment unless I want to put money into something very risky.You could afford to lock some money away on longer term stocks and bonds, if you have a.rainy day fund to tide you over until your pensions can kick in i.e. £150k for very.rainy day and £250k invested longer.term. With your position you can afford to take paid advice, as it may be prudent to max out pensions if you are close to retirement as one of the main drawbacks of not having access to funds is not really an issue providing you have a sizeable rainy day fund. Getting an additional 20% to 40% straightaway has compounding advantages and you don't need out of the markets.straightaway on retirement
My head says I need professional advice, my heart says that charging a % fee based on the principal sum is a bit of a rip off and I should be able to do it myself.
Needsadvice said:
My head says I need professional advice, my heart says that charging a % fee based on the principal sum is a bit of a rip off and I should be able to do it myself.
Have a look at the Intelligent Money thread on here, their setup is based round providing clear information on their range of investments so you can make decisions that suit you needs and taste for risk etc. Gassing Station | Finance | Top of Page | What's New | My Stuff