Investment vehicles - not sure which is suitable?

[Landlord]

Hey,

I have to requirements, which I'll list below, but I am at a loss as to which of the many vehicles there are would be most appropriate in each case. I wonder whether the resident sages would help me?

I want;

• To save up approx. £1,000 over the next 35 months (could go to 36 if, as I assume, that's how the product will be structured). I want it to be "totally" safe, best interest rate, paid in/accrued monthly, no need for any access to funds until maturity.
• I want to start saving for my two boys - for whatever reason (i.e. none so far) when they are 18-ish. I want to save separately for each. One four year old and one 2 year old (so looking at 14 and 16 year tenors accordingly). Again, totally safe, best interest rate, accrued monthly, no need for access until maturity.

Thanks in advance!

[cymtriks]

For your first option you could try something fairly obvious like a savings account or ISA

For your second option bung it on the stockmarket spread across several big companies in "safe" areas and leave it alone. Reinvest the dividends.

For the naysayers:

• savings accounts pay 3 percent, inflation is nearly 5, so you lose 2 percent every year in a "savings account".

• the average dividend is circa 4 percent

• the FTSE is currently under 6000, adjusted for inflation the last two peaks were 7200 and 9200

• over fifteen years a 2 percent loss due to inflation/interest every year will compound to a 26 percent loss

The bad news:

• over 26 years over 200 companies have left the 100 index. Assuming that all of these are now worthless (not true!) thats a loss of circa 9 percent. This is your risk.

[jeff m]

Totally safe, put under pillow and don't sell your house.

If you want to give your sons a bit of a start, then you will have to broaden your thinking. In UK you already have inflation, here in the US ours should start soon Our printing presses are rolling.
Growth will be in the developing countries. Many UK and US companies will of course benefit from this. Not everyone can pick them. (and be able to keep picking them)

Global fund with low expense ratio.

[R1 Loon]

At that length of time, then the stock marlet is very appealing. It's low at the moment, has plenty of time to grow and to an extent should moderate inflation out of the equation.

Just go safe(ish) with Blue Chip companies, after all the dividends over that time are worth probably more than the interest in a bank account too if reinvested in more shares.

[2 5HAN]

Talk to an IFA ask about Canada Life Off Shore Bonds

May suit what you are looking for.

I think the problem is Zero Risk normally equates to poor return, a managed portfolio may be more appropriate and helpful for you?

[DonkeyApple]

cymtriks said:

For your first option you could try something fairly obvious like a savings account or ISA

For your second option bung it on the stockmarket spread across several big companies in "safe" areas and leave it alone. Reinvest the dividends.

For the naysayers:

• savings accounts pay 3 percent, inflation is nearly 5, so you lose 2 percent every year in a "savings account".

• the average dividend is circa 4 percent

• the FTSE is currently under 6000, adjusted for inflation the last two peaks were 7200 and 9200

• over fifteen years a 2 percent loss due to inflation/interest every year will compound to a 26 percent loss

The bad news:

• over 26 years over 200 companies have left the 100 index. Assuming that all of these are now worthless (not true!) thats a loss of circa 9 percent. This is your risk.

Equites are absolutely out.

The investment sums are too small and the investment window (monthly) too close. You would lose everything in commission, fees and taxes and that is before you have taken itno account the risk of an undiversified, unmonitored portfolio.


Just in simple terms, you are investing £100 a month into 3 stocks. That's £30 in comm alone. So you have instantly converted your £100 cash into £70.

Suddenly 3% per annum growth looks a little better than 30% loss in 10 minutes.

[allgonepetetong]

You must use your tax free allowances.

So

Cash ISA for you

Child Trust Fund invested in an FTSE index tracker (minimal management fees and tax free) for the boys

HTH

[OneDs]

Problem with a CFT is that you have no control of it, I would set up separate trusts for them on your terms, not on the CFT terms.