UKC

mate of mine has got 20k to invest ,get nothing from the banks at the moment ,Santander do a 3% but unable to switch banks due to credit rating issues possibly doesn't want to risk it in shares .so wot would you do with 20k to try and built up his capital ,

In reply to colina:

Does he have any debts? You save more in interest clearing them than you get putting it in savings.

In reply to colina:

Peer-to-peer lending , top flight Burgundy?

In reply to colina:
If he doesn't want to risk it in shares, Peer to Peer hardly seems suitable.

Assorted things, all at different places on the risk reward scale. Decision also impacted by how quickly access to the funds is required.

1. Direct investment in shares unsuitable - volatile, £20k can't be diversified enough, costs etc. It is however pretty immediate to access the cash.
2. Invest in a diversified pooled vehicle. OEIC or Unit Trust. Pick something funky and take higher risk or low risk but lower return. A FTSE tracker would give pretty close to whatever the FTSE returns. Its still shares but instead of having £10k each in 2 companies you get a slice of lots and lots of companies so less single company risk. But you still get market risk (up or down).
3. Invest in a Unit Trust or OEIC that invests in bonds. Generally lower risk than shares but still potentially risky.
Invest in Fixed Term Bonds yourself. Look for the best rate on 1, 2, 3 or 5 year Bond issued by a bank. Money largely tied in for the duration although you can usually get it back at expense of a loss of interest. 5 Year bond might get you 3% gross, less on a net basis. If a non taxpayer you can claim the interest gross. Not a big return but pretty safe and higher than inflation (just). The rates are higher the longer you are willing to commit to but the penalties are also longer... say 30 days interest loss on a 1 year, 60 on a 2, 6 to 9 months on a 5 year (figs off top of head and will vary)... so although you can access your cash, if you decided to get it back in month 2 of a 5 year bond you would get less back than invested.
4. Premium Bonds... safe as houses... yield is I think 1 or 1.5% tax free. But that's average... so you expect to get less but might get more. Not really a way to build capital but if you want safe.... On £20k you would probably average one or two £25 prizes per month but may average a lot less or get nothing or get a decent win. Possibly. Odds are however low on a big win.
5. Commodity funds, property funds etc all possible but tend to have higher fees attached and can be very volatile and subject to big global economic risks. Look at what Oil and Gold prices have done etc. If you get lucky and buy a resources fund at the end of a bust and follow it for a year or two up the recovery you could do very well, but timing that is nigh on impossible to average punter. Most professionals can't do it consistently no matter what they think or say!

In reply to colina:
For a long term investment If he's got a house - then look at getting solar panels - a 3kwH system - typically what will fit on the roof of a small semi - would produce an ROI of around 7-8% totally tax free on an investment of under £8k.

OK it means the cash is tied up, but it pays for itself in under 10 years, adds value to the property, and who knows where energy prices will be in 10 years time - though I guess they wont be lower! Once the system's paid for it's 'cash in the bank' all the way.

In reply to colina:

Shares 'aint as risky as all that, if you properly diversify your portfolio and follow the risk pyramid ( http://www.investopedia.com/articles/basics/03/050203.asp ). Is £20k enough for that - I'd say probably if you went long term (5+ years).

If he doesn't like the idea of trading the market, use it as a deposit on a buy-to-let mortgage in whatever the student area of your town is, make sure the rental covers the mortgage, and sit on it till you have a nice chunk of equity. Beware capital gains tax though.

In reply to colina:

http://www.ukclimbing.com/forums/t.php?n=604890&v=1#x7947210


Just a thought

;-D

In reply to colina:

Short rouble on a spread bet?

If you know what you're doing then classic cars can be good, same shotguns. For example a mate of mine bought a 1968 Merc 280SL convertible for £25k about 10 years ago. Kept it garaged, has enjoyed driving it, turning lots of heads and tinkered with it, now worth over £70k.

Or for £20,000 you can buy a vintage gun from Holland and Holland, Purdy and Boss. Stick in a gun safe and forget about it and I doubt you will go too far wrong,

But seriously, don't write shares off. Go with a decent vanilla fund and leave it. an index tracker is dirt cheap.

In reply to colina:

Having just gone through moving my work pension, the general investment principle for someone wanting a 'balanced portfolio' with not too much risk is to reduce their equity holdings - there's still a lot of problems for businesses that haven't been worked through the system / de-leveraged and as such a cautious investment approach is advised at present. Equities have done well since the big drop of 2008, but now they're back up to where they were with not much hope for further growth. Compound this with the crash in oil and tensions in Russia and the middle east and you can see why equities are falling out of favour. You could put it in a Russian bank and get 17% interest though

In reply to Toerag:

Good enough reason to sit on it wait for the "crash" and then buy buy buy

In reply to colina:

the ideal investment portfolio: shotgun cartridges, tins of baked beans and Krugerrands

In reply to Lord of Starkness:

Our experience was £6000 for 4kWp plus £300 for a router for the generated electricity.

We have had it 9 months and are well on course for 10% direct return and ~3% more from the router.

Otherwise, ETFs - cheap, spread risk and easily liquidated. Make sure the dividends get reinvested though.

In reply to colina:

Depends on circumstance but may be worth living off it and maxing out company pension contributions to the equivalent value - depending on your tax band can be very attractive (assuming you don't need the cash before you retire)

In reply to colina:

some good stuff there.but shares are definatly out .hes just sold a load to get his lump sum as he wants to be safe from collape ,so cant see him buying more.
re paying off the mortgage .owes about 30k ,just seems to be a shame to "give" it all away to a mortgage lender.will have to work that one out ,classic car isn't a bad idea but that could go up and down and what classic car would you buy .I personally had loads of escorts in the 70s and they are going for rediculas sums now ,wonder what cars of today will turn out to be classics? Subaru impretsas maybe I was thinking?.
keep your ideas coming thx for contributing.

In reply to Pewtle:

,wd need to probably borrow another 100k for something half decent.

In reply to colina:

Time for steady nerves but shares in small to medium oil companies might be a good punt - but not just at the moment as I'm not convinced the oil price drop has bottomed out yet - but sometime in the next six months, also there some medium sized operators who are looking very vulnerable to a buy out which should give a share price boost. Borrowed money with a predicted oil price being over $100 their cash flow is being choked off by the oil price drop - Enquest for example borrowed $1.7 billion from BNP Paribas for the Kraken development (though they have hedged for 2015) so they're are looking cheap to me having dropped from GBP140 to now GBP34 per share because of the borrowing exposure, Premier too GBP320 dropped to GBP152 - all hinges on the oil price but they're looking good value at present as well. Wait for the oil price bounce and buy shares like these. DYOR. I'd be interested to see what lowersharpsnose has to say.

In reply to colina:

Put it on Moonbeg Gold at 10/1 in the 2.45 at Newbury. A P McCoy is riding.

In reply to Cú Chullain:

He may have been better with Premium Bonds.

It came 6th.

In reply to DefenderKen:

He was well placed until stumbling at the last fence, ah well, I dont think I will be losing too much sleep over my £5 each way bet.

In reply to Cú Chullain:

That's racing for you.....would have been a nice return for you. Good luck on the next one!

In reply to colina:

if you are thinking cars, a couple of top condition 300tdi defenders would be a damn good investment, as the model is being discontinued one can expect a sharp spike in prices after 2016.

That is providing your mate keeps it a, locked away and b, doesn't drive it (otherwise he'll lose more cash keeping it in one piece). :P

Landrover Defenders. Old style stopping soon.