Cautious yet greedy man seeks investment advice

[Purves Grundy]

Right, so we're trying to sell our flat and since slashing the price are getting a fair bit of interest. We've managed to pay off nearly all the mortgage and it's gone up in value a great deal since we bought it. We had been intending to go straight out and buy somewhere else, but I'm now thinking that it might be wiser to sit tight in rental accommodation for a year or so while things stabilise (i.e. prices fall) and then decide what to do, since the excess of rental property on the market means we'd be paying almost the same amount to rent as to buy, while property prices would be falling around us.

Now, if we were to do that we would be left with a significant amount of money on our hands (potentially well over 250,000 quid). What is the best place to invest it (let's say for 1 or two years) where we'd see a good return but also know that the entire lot was guaranteed? I wouldn't be thrilled to discover that the pile had vanished through a bank going under or something.

[Evariste Euler Gauss]

Cautious yet greedy man seeks investment advice

National Savings Bank Investment Account is a deposit account operated through post offices with a pass book; one month's notice of withdrawal is required; withdrawals without notice are allowed, but a penalty is charged; generally pays competitive rates of interest which is variable and which increases once holdings exceed £500; minimum investment £20, maximum £100,000 plus accumulated interest (for either individual or joint holding).

Edit: and spread the rest around a number of different banks/building societies.

[Guest]

Cautious yet greedy man seeks investment advice

MoneySavingExpert will know about regular savings, although it's generally aimed at people with a bit less than a quarter of a million pounds sloshing about. Toff.

[linus]

Cautious yet greedy man seeks investment advice

Diversify your currency risk. The Pound's prospects for the short to med term are poor. Buy US and Canadian $-denominated assets, or treasuries.

[Guest]

Cautious yet greedy man seeks investment advice

As it's not my money I can make bold suggestions, by Oil, Platinum and Lottery Tickets.

If it was my money I'd probably just stick the money into a bank or building society on the high st. The goverment have shown that their not going to let the main banks go under. If you want to be super safe spread it around so that the protected limit per account keeps you safe (is it something like 90k per account?)

[caja-dglh]

Cautious yet greedy man seeks investment advice

linus wrote:

Diversify your currency risk. The Pound's prospects for the short to med term are poor. Buy US and Canadian $-denominated assets, or treasuries.

If he has pounds, and only intends to spend pounds in future, why on earth would he want to diversify currency risk?

[ursus arctos]

Cautious yet greedy man seeks investment advice

Does the UK operate any program similar to Treasury Direct in the US, whereby individuals can buy government bonds at no commission? A gilt would seem to be a reasonable suggestion given the criteria, though I don't know what current rates are on one year paper.

[Rogin the Armchair fan]

Cautious yet greedy man seeks investment advice

What is the best place to invest it (let's say for 1 or two years) where we'd see a good return but also know that the entire lot was guaranteed?

Absolutely guaranteed?

Nowhere.

A mate of mine did something similar a few years back, however, and put a sizeable amount into premium bonds. They're as safe as anything can be, being backed by the Treasury, and the "return" you get on them depends if your numbers come up in the monthly draws. This means you can get nothing, of course, but he reckoned that by the time you had about £25,000 invested, all the occasional £50 and £100 prizes he was winning made for quite a tidy overall rate of return, compared to bank interest rates. Plus, of course, there's always the tantalising possibility that just one of your bonds wins a really big prize - £100k, or even £1m. It's not like putting the same amount into the lottery, because you don't "lose" your original investment even if your numbers never do come up. Apparently you can monitor your account on-line, as well, you don't have to check through 25,000 tickets yourself every month or anything like that.

[Mumpo]

Cautious yet greedy man seeks investment advice

If a tidy 24% return sounds tempting, I can stick it in an Iranian bank for you.

[Mumpo]

Cautious yet greedy man seeks investment advice

There might be one or two attendant risks, of course.

[Ginger Yellow]

Cautious yet greedy man seeks investment advice

If you're going to need it again in a year to buy a new place, and you don't want to risk your principal, you're probably best off spreading most of it around a few savings accounts to ensure you keep below the protected limit - you can get 6%+ from some internet based accounts. There are some principal protected investments for retail investors, but the returns don't tend to be good.

[hobbes]

Cautious yet greedy man seeks investment advice

since the excess of rental property on the market means we'd be paying almost the same amount to rent as to buy, while property prices would be falling around us.

Are you sure about this? Rents are generally going up quickly. The lack of volatility in the market (especially for first time buyers) means that demand for rental properties has increased.

[evilC]

Cautious yet greedy man seeks investment advice

hobbes wrote:

since the excess of rental property on the market means we'd be paying almost the same amount to rent as to buy, while property prices would be falling around us.

Are you sure about this? Rents are generally going up quickly. The lack of volatility in the market (especially for first time buyers) means that demand for rental properties has increased.

As a slight aside, from next month(?) homeowners will no longer need planning permission to build extensions on the rear of their houses. This could present opportunities for building little annexes to rent out. This may not answer your question directly, Purves, but it's something that could help pay off mortgages for some people. It is front-page news on today's Telegraph. (We get that paper at work, that's all!)

[Bill Poster]

Cautious yet greedy man seeks investment advice

This means you can get nothing, of course, but he reckoned that by the time you had about £25,000 invested, all the occasional £50 and £100 prizes he was winning made for quite a tidy overall rate of return, compared to bank interest rates.

No, no, no, no, no, no, NO!! The "rate of return" is much less than savings accounts. Check out the annoying bloke on the Moneysavingexpert website. I can't remember what the exact percentage return is but it's at least a few percentage points lower. Of course you have the "opportunity" to win a bigger prize and some people think this is a good reason to offset the lower rate of return. It's your call.

[WOM]

Cautious yet greedy man seeks investment advice

(We get that paper at work, that's all!)

As a librarian, don't you get all papers at work?

[caja-dglh]

Cautious yet greedy man seeks investment advice

If you wait another few days, you might be able to buy your own investment bank.

Might involve a little bit more than losing it all for a while, mind.