Friends, I hope you've all noticed that the news earlier this week on UK inflation has sparked a big upward twist in savings rate offers.
On a one year fix you can now get 5.1% with Secure Trust, and 5.05% with Charter savings bank. The latter will give you 4.98% if you'd like to at least get the interest monthly.
On instant access HSBC went up a full half% point to 4% (albeit it's capped at £10k and you have to have a current account.)
Secure Trust offer 3.8%. Others are bound to react.
If you want to stay on top of all this you deffo want to stop by the MoneySavingExpert forum that has nicked the title of this thread
And this now should give the older/more cautious investor pause for thought. If you stay in equity markets, rathter than take up one of those fixed rate deals, it means that you are confident that this time next year the FTSE250 will be above 20,100. A fair bit above it, in order to justify the risk. Do you believe that? Well do yer, punk? You feelin' lucky? I'm not feeling very lucky right now. I'd like a quieter life on that front. But then again, I'm a grumpy old git.
@PragueAddick . I'm not sure if this quite right. I think you forgotten bothe dividend yield and tax. I haven' got access to it right now but I think div yield is currently 3% ish. For Uk taxpayers at least it is becoming hard to avoid tax on interest earned. For anyone in higher tax bracket of 40%, there is no personal savings allowance and so even 5% interest becomes 3% net. However investing in a FTSE fund, the dividend is effectively rolled up into the fund and then potetially liable to CGT upon realisation. CGT taxation is much more flexible and easier to avoid. On this basis FTSE levels only need stay at current levels to be equal. Any growth giving a gain.
Does certainly vary on individual circumstances.
Please correct me if I have made wrong assumptions here.
CGT might be more flexible but come next tax year it wont be easy to avoid. In case you missed it in the Autumn Budget the Allowance has been cut to £6k for this tax year and then just £3k from 2024/25 onwards.
3 GRAND
You cant mitigate much with that !!
Investment Bonds coming back into fashion because of it.
Firstly, may I just wish you all the best health-wise!
You are absolutely right to question the thrust my post. I'm afraid I have a bad habit of forgetting about dividends, even though nowadays I go searching for them as part of my drive for steady income.Duh! So yes, even with rates topping 5% (I've now locked up a chunk for 2 years at 5.18% paid monthly) I guess there's a good chance that mainstream equities should beat that.
Actually I wonder whether the better target for my grumpiness should be bonds. Basically why bother with government bonds if you can put money away safely in a small bank with zero transaction fees, backed by the government. I've just knocked up this graph from my H-L SIPP holding. It shows the last six months for the notorious Vanguard Life Strategy 20% fund; the Waverton Global Strategic Bond fund suggested by my IFA; and a bog standard UK Money Market fund. I pulled money out of that Vanguard fund into both of these, but right now it looks like the one that will pay off better over the year is the Money Market fund. But even that will not outpace a 5% plus bank account, because H-L take their platform fee as a % of all holdings.
Firstly, may I just wish you all the best health-wise!
You are absolutely right to question the thrust my post. I'm afraid I have a bad habit of forgetting about dividends, even though nowadays I go searching for them as part of my drive for steady income.Duh! So yes, even with rates topping 5% (I've now locked up a chunk for 2 years at 5.18% paid monthly) I guess there's a good chance that mainstream equities should beat that.
Actually I wonder whether the better target for my grumpiness should be bonds. Basically why bother with government bonds if you can put money away safely in a small bank with zero transaction fees, backed by the government. I've just knocked up this graph from my H-L SIPP holding. It shows the last six months for the notorious Vanguard Life Strategy 20% fund; the Waverton Global Strategic Bond fund suggested by my IFA; and a bog standard UK Money Market fund. I pulled money out of that Vanguard fund into both of these, but right now it looks like the one that will pay off better over the year is the Money Market fund. But even that will not outpace a 5% plus bank account, because H-L take their platform fee as a % of all holdings.
Firstly, may I just wish you all the best health-wise!
You are absolutely right to question the thrust my post. I'm afraid I have a bad habit of forgetting about dividends, even though nowadays I go searching for them as part of my drive for steady income.Duh! So yes, even with rates topping 5% (I've now locked up a chunk for 2 years at 5.18% paid monthly) I guess there's a good chance that mainstream equities should beat that.
Actually I wonder whether the better target for my grumpiness should be bonds. Basically why bother with government bonds if you can put money away safely in a small bank with zero transaction fees, backed by the government. I've just knocked up this graph from my H-L SIPP holding. It shows the last six months for the notorious Vanguard Life Strategy 20% fund; the Waverton Global Strategic Bond fund suggested by my IFA; and a bog standard UK Money Market fund. I pulled money out of that Vanguard fund into both of these, but right now it looks like the one that will pay off better over the year is the Money Market fund. But even that will not outpace a 5% plus bank account, because H-L take their platform fee as a % of all holdings.
Thoughts, all?
Are there any structured products still available? They may suit you better.
I took out a couple 3 years ago, one kicked out last year (8% PA) the other this month paying about 6%. The second capital wasn’t at risk.
As we are just a few weeks away from the end of the half year FTSE 100 prediction competition I thought I'd post up as at close of play yesterday, quite close at the top with 5 people less than 1% out.
Had a Wealthify ISA for two and a half years, currently -£183 and has been in the red for some time now. Over £5k in there but wondering whether to persevere or look at other options. Any advice welcome.
Had a Wealthify ISA for two and a half years, currently -£183 and has been in the red for some time now. Over £5k in there but wondering whether to persevere or look at other options. Any advice welcome.
Really all depends on what funds you are invested in.
Best to keep it invested in an ISA but maybe need a change of funds.
On the lookout for some one year fixed rate options with monthly interest, but think I’ll bide my time for the next little rate nudge up.
I doubt they'll move much, don't forget to factor in lost interest by waiting every month (i.e. assume where it's sitting isn't 5+% already).
We’ve just moved, so waiting on updated address verification documents to turn up. I would’ve done it by now otherwise, but if it means they go up even ever so slightly it’s another couple of quid in the bank once we’re able to proceed. 👍🏻
Investec offering 5.67% on a three year fix via the HL platform. It doesnt seem to be available on Investec's own website. Interest paid on maturity.
Missed out on this one thanks to raisin taking at least three working days to return cash from an 'easy access' account. Zopa, Investec and Atom manage it in minutes. I appreciate raisin is a broker, but still. Not too bothered as rates will likely bump up this week, but I'll be surprised if there's a better three year rate than that in the near term.
Investec offering 5.67% on a three year fix via the HL platform. It doesnt seem to be available on Investec's own website. Interest paid on maturity.
Missed out on this one thanks to raisin taking at least three working days to return cash from an 'easy access' account. Zopa, Investec and Atom manage it in minutes. I appreciate raisin is a broker, but still. Not too bothered as rates will likely bump up this week, but I'll be surprised if there's a better three year rate than that in the near term.
I agree with you. I've used it, but am not a huge fan.
On the subject of cautious investors tempted into such deals (rather than equity markets), this FT article tends to suggest that currently we are not such mugs.
I moved some holdings in US equity funds into a money market fund this weekend. It's because I took on board a string of articles showing how the S&P 500 is dominated in weighting by 6-7 companies -mainly the usual Big Tech boys - and it is they who have driven the index performance up. The other companies in the index are actually not generally doing well at all, it turns out (its a similar but different phenomenon to the FTSE100 situation, the index dominated by Big Legacy Energy, and thus not a measure of how British business more generally is doing).
I also moved some pension money from US to European funds recently to rebalance, time will tell if that was sensible. I think there's still some time before putting a bit more into bond funds makes sense.
BTW, Raisin are now offering the 3 year Investec bond at 5.67% as are HL, difference being that in the HL version the interest compounds annually even though not paid until maturity whereas the Raisin version doesn't. Suspect there may be an admin error somewhere, as it works out about £100 different at the end of the three years, and I've seen basic errors in savings apps recently. For example Zopa treated my 7 day notice deposit as a 31 day notice deposit even though it states 7 days' notice clearly in the app. Not important to me at the moment, but irritating they cant get this stuff right.
Just had an email through regarding a Deposit-based Structured Product & has the usual £85k protection. Based on the level of the FTSE in 5 years time it pays 40% (8%pa) if the FTSE is at least level with its starting point or 35% (7%pa) if the FTSE is at least 90% of its starting point. 2nd option seems very tempting - but obviously these are taxable in line with usual savings accounts, although are ISA-able so can put £20k for tax-free returns.
Just had an email through regarding a Deposit-based Structured Product & has the usual £85k protection. Based on the level of the FTSE in 5 years time it pays 40% (8%pa) if the FTSE is at least level with its starting point or 35% (7%pa) if the FTSE is at least 90% of its starting point. 2nd option seems very tempting - but obviously these are taxable in line with usual savings accounts, although are ISA-able so can put £20k for tax-free returns.
How does it work if FTSE was lower than 90%? Capital protected but no return or does it taper down from there?
Just had an email through regarding a Deposit-based Structured Product & has the usual £85k protection. Based on the level of the FTSE in 5 years time it pays 40% (8%pa) if the FTSE is at least level with its starting point or 35% (7%pa) if the FTSE is at least 90% of its starting point. 2nd option seems very tempting - but obviously these are taxable in line with usual savings accounts, although are ISA-able so can put £20k for tax-free returns.
How does it work if FTSE was lower than 90%? Capital protected but no return or does it taper down from there?
Just the return of your initial capital. No losses even if the FTSE tanks. Thats why I like the 90% version. The FTSE can lose 10% of its value & you still make a 35% return over the 5 years.
Just had an email through regarding a Deposit-based Structured Product & has the usual £85k protection. Based on the level of the FTSE in 5 years time it pays 40% (8%pa) if the FTSE is at least level with its starting point or 35% (7%pa) if the FTSE is at least 90% of its starting point. 2nd option seems very tempting - but obviously these are taxable in line with usual savings accounts, although are ISA-able so can put £20k for tax-free returns.
So you are just 'risking' not getting additional upside if the FTSE does better than 8% per annum?
Just had an email through regarding a Deposit-based Structured Product & has the usual £85k protection. Based on the level of the FTSE in 5 years time it pays 40% (8%pa) if the FTSE is at least level with its starting point or 35% (7%pa) if the FTSE is at least 90% of its starting point. 2nd option seems very tempting - but obviously these are taxable in line with usual savings accounts, although are ISA-able so can put £20k for tax-free returns.
So you are just 'risking' not getting additional upside if the FTSE does better than 8% per annum?
Yep.... thats about the long & short of it.
Obviously there are other implications such as tax (income tax in a Deposit based SP structure) compared to CGT if you invest in the FTSE directly and also the fixed time frames involved
Just thought it was worth pointing out to those trying to get a good return on their cash deposits.
Ps
Obviously this is not a solicitation to buy or a financial promotion advertisement.
Just had an email through regarding a Deposit-based Structured Product & has the usual £85k protection. Based on the level of the FTSE in 5 years time it pays 40% (8%pa) if the FTSE is at least level with its starting point or 35% (7%pa) if the FTSE is at least 90% of its starting point. 2nd option seems very tempting - but obviously these are taxable in line with usual savings accounts, although are ISA-able so can put £20k for tax-free returns.
So you are just 'risking' not getting additional upside if the FTSE does better than 8% per annum?
Yep.... thats about the long & short of it.
Obviously there are other implications such as tax (income tax in a Deposit based SP structure) compared to CGT if you invest in the FTSE directly and also the fixed time frames involved
Just thought it was worth pointing out to those trying to get a good return on their cash deposits.
Ps
Obviously this is not a solicitation to buy or a financial promotion advertisement.
I'm interested. I have been meaning to ask about "structured products" since @Rob7Lee mentioned them to me the other day when I was moaning about bonds. I'd be interested if people who know about these products in general have more comments. Also is this one based on FTSE100? If so I'd probably shy away, but I suppose there must be others based on FTSEAllWorld or similar?
Just had an email through regarding a Deposit-based Structured Product & has the usual £85k protection. Based on the level of the FTSE in 5 years time it pays 40% (8%pa) if the FTSE is at least level with its starting point or 35% (7%pa) if the FTSE is at least 90% of its starting point. 2nd option seems very tempting - but obviously these are taxable in line with usual savings accounts, although are ISA-able so can put £20k for tax-free returns.
So you are just 'risking' not getting additional upside if the FTSE does better than 8% per annum?
Yep.... thats about the long & short of it.
Obviously there are other implications such as tax (income tax in a Deposit based SP structure) compared to CGT if you invest in the FTSE directly and also the fixed time frames involved
Just thought it was worth pointing out to those trying to get a good return on their cash deposits.
Ps
Obviously this is not a solicitation to buy or a financial promotion advertisement.
Just had an email through regarding a Deposit-based Structured Product & has the usual £85k protection. Based on the level of the FTSE in 5 years time it pays 40% (8%pa) if the FTSE is at least level with its starting point or 35% (7%pa) if the FTSE is at least 90% of its starting point. 2nd option seems very tempting - but obviously these are taxable in line with usual savings accounts, although are ISA-able so can put £20k for tax-free returns.
So you are just 'risking' not getting additional upside if the FTSE does better than 8% per annum?
Yep.... thats about the long & short of it.
Obviously there are other implications such as tax (income tax in a Deposit based SP structure) compared to CGT if you invest in the FTSE directly and also the fixed time frames involved
Just thought it was worth pointing out to those trying to get a good return on their cash deposits.
Ps
Obviously this is not a solicitation to buy or a financial promotion advertisement.
I'm interested. I have been meaning to ask about "structured products" since @Rob7Lee mentioned them to me the other day when I was moaning about bonds. I'd be interested if people who know about these products in general have more comments. Also is this one based on FTSE100? If so I'd probably shy away, but I suppose there must be others based on FTSEAllWorld or similar?
As I said your effectively betting on the FTSE, some have up and downside, some protect capital.
when I took mine 3 years ago I did two, one with the risk of losing capital, one without. The last matures on Thursday so short of the FTSE going below 6244 I’m safe!!
at the time I did with Investec via Golfie, most were FTSE100 but there were others like S&P500 etc.
Investec no longer sell structured products, I could be wrong but generally you have to go through an advisor, I’d say that we’re wise anyway.
Just had an email through regarding a Deposit-based Structured Product & has the usual £85k protection. Based on the level of the FTSE in 5 years time it pays 40% (8%pa) if the FTSE is at least level with its starting point or 35% (7%pa) if the FTSE is at least 90% of its starting point. 2nd option seems very tempting - but obviously these are taxable in line with usual savings accounts, although are ISA-able so can put £20k for tax-free returns.
So you are just 'risking' not getting additional upside if the FTSE does better than 8% per annum?
Yep.... thats about the long & short of it.
Obviously there are other implications such as tax (income tax in a Deposit based SP structure) compared to CGT if you invest in the FTSE directly and also the fixed time frames involved
Just thought it was worth pointing out to those trying to get a good return on their cash deposits.
Ps
Obviously this is not a solicitation to buy or a financial promotion advertisement.
Thanks - what is the product to learn some more?
Its called a "Structured Product" and as @Rob7Lee says its really just a bet against an Index. Generally for UK investors the Indices used are the FTSE100, S&P500 and the EuroStox50. There are 2 types of Structured products; Deposit and Investment. Deposit ones are usually Capital Protected (up to the £85k FSCS limit) and means that your initial investment is safe & returned on maturity. Investment based ones are not protected & you can lose your initial capital (usually after a certain barrier has been breached so will give you some protection (usually 40%) ). The main other difference between the 2 is that Deposit ones are taxed as income whereas Investment based ones use CGT. Over the past 15 years I've generally advised Investment based ones as my clients are mostly higher rate taxpayers & so paying 40% tax on returns wasn't worth it. Also, most clients don't use their annual CGT allowance so this was a good way of mitigating any tax that would become due.
However, with the reduction in the CGT allowance I find the Investment based SP's are now almost redundant, and with the rising interest rate Deposit based ones are having to fight with Banks for peoples' money and (as can be seen) are producing some decent returns.
So currently the one I mentioned closes on July 21st. A reading of the FTSE100 is then taken and that is the Initial Level which the returns are measured against. Option 1 will pay 40% (8%pa over the 5 year term) should the FTSE100's level on 21st July 2028 be at least 1 point higher than the Initial level (so lets say 7600 points now - it has to be 7601 in 5 years time). If that is the case you will get back your initial investment plus 40%. Option 2 will pay 35% as long as the FTSE100 is more than 90% from its Initial Level - so 7600x90%=6840. If the FTSE100 is at 6841 in 5 years time you'll get back your initial investment plus 35%.
In essence, the FTSE100 falls 10% over the next 5 years & you get a 35% gain. If it falls 11% over that time period you only get your money back.
However (2) - these are not for everyone and really only for people who annually use their ISA allowance, have "spare" money and are prepared to lock their money up for 3,4,5 or 6 years.
Oh.........and as @Rob7Lee also says - you generally have to go through an IFA to invest in one, certainly if its your first "dabble" in them.
Oh well, I am not going to bother with structured products. It now looks even more likely there will be simple 1 year fixes with well respected names, 5% at least until year end. If as @IdleHans does you invest in tranches over time you have the flexibility to put some money back in to equities also over time as we get a clearer idea of how the world economy is going to develop.
Works for me. But I’m in the game of protecting what I have, due to my life stage.
Seems to me there will be wider implications for equity and bond markets and the industry around them.
Oh well, I am not going to bother with structured products. It now looks even more likely there will be simple 1 year fixes with well respected names, 5% at least until year end. If as @IdleHans does you invest in tranches over time you have the flexibility to put some money back in to equities also over time as we get a clearer idea of how the world economy is going to develop.
Works for me. But I’m in the game of protecting what I have, due to my life stage.
Seems to me there will be wider implications for equity and bond markets and the industry around them.
I hope you are also in the game of spending some/most/all of it!
Oh well, I am not going to bother with structured products. It now looks even more likely there will be simple 1 year fixes with well respected names, 5% at least until year end. If as @IdleHans does you invest in tranches over time you have the flexibility to put some money back in to equities also over time as we get a clearer idea of how the world economy is going to develop.
Works for me. But I’m in the game of protecting what I have, due to my life stage.
Seems to me there will be wider implications for equity and bond markets and the industry around them.
I hope you are also in the game of spending some/most/all of it!
Oh sure. “Capital projects” in the last year on the house,the cottage, and a new car. There would be more if only there were the people to do it. Labour shortages a big issue here in many areas. I became a small time political donor last year too. Not to mention regularly rolling around central Europe on trains and staying in decent hotels along the way ( living the dream😂)
All that said, though, i have to bear in mind that I’m not blessed with external pensions. Just the UK State standard plus something from the Czech state which is about half the UK one. That’s why I’ve belatedly become focused on generating income.
Oh well, I am not going to bother with structured products. It now looks even more likely there will be simple 1 year fixes with well respected names, 5% at least until year end. If as @IdleHans does you invest in tranches over time you have the flexibility to put some money back in to equities also over time as we get a clearer idea of how the world economy is going to develop.
Works for me. But I’m in the game of protecting what I have, due to my life stage.
Seems to me there will be wider implications for equity and bond markets and the industry around them.
I hope you are also in the game of spending some/most/all of it!
Oh sure. “Capital projects” in the last year on the house,the cottage, and a new car. There would be more if only there were the people to do it. Labour shortages a big issue here in many areas. I became a small time political donor last year too. Not to mention regularly rolling around central Europe on trains and staying in decent hotels along the way ( living the dream😂)
All that said, though, i have to bear in mind that I’m not blessed with external pensions. Just the UK State standard plus something from the Czech state which is about half the UK one. That’s why I’ve belatedly become focused on generating income.
Good stuff, whilst income is great, capital can be (moderately) spent. I intend to spend all/most of mine before I pop my clogs. The kids can have the house.
Comments
3 GRAND
You cant mitigate much with that !!
Investment Bonds coming back into fashion because of it.
Firstly, may I just wish you all the best health-wise!
You are absolutely right to question the thrust my post. I'm afraid I have a bad habit of forgetting about dividends, even though nowadays I go searching for them as part of my drive for steady income.Duh! So yes, even with rates topping 5% (I've now locked up a chunk for 2 years at 5.18% paid monthly) I guess there's a good chance that mainstream equities should beat that.
Actually I wonder whether the better target for my grumpiness should be bonds. Basically why bother with government bonds if you can put money away safely in a small bank with zero transaction fees, backed by the government. I've just knocked up this graph from my H-L SIPP holding. It shows the last six months for the notorious Vanguard Life Strategy 20% fund; the Waverton Global Strategic Bond fund suggested by my IFA; and a bog standard UK Money Market fund. I pulled money out of that Vanguard fund into both of these, but right now it looks like the one that will pay off better over the year is the Money Market fund. But even that will not outpace a 5% plus bank account, because H-L take their platform fee as
Thoughts, all?
I took out a couple 3 years ago, one kicked out last year (8% PA) the other this month paying about 6%. The second capital wasn’t at risk.
Best to keep it invested in an ISA but maybe need a change of funds.
Not too bothered as rates will likely bump up this week, but I'll be surprised if there's a better three year rate than that in the near term.
On the subject of cautious investors tempted into such deals (rather than equity markets), this FT article tends to suggest that currently we are not such mugs.
Rate rises erode investors’ incentive to hold US companies’ shares; Three-month Treasuries to yield as much as bonds and equities over the next year, analysts predict.
I moved some holdings in US equity funds into a money market fund this weekend. It's because I took on board a string of articles showing how the S&P 500 is dominated in weighting by 6-7 companies -mainly the usual Big Tech boys - and it is they who have driven the index performance up. The other companies in the index are actually not generally doing well at all, it turns out (its a similar but different phenomenon to the FTSE100 situation, the index dominated by Big Legacy Energy, and thus not a measure of how British business more generally is doing).
How does it work if FTSE was lower than 90%? Capital protected but no return or does it taper down from there?
Obviously there are other implications such as tax (income tax in a Deposit based SP structure) compared to CGT if you invest in the FTSE directly and also the fixed time frames involved
Just thought it was worth pointing out to those trying to get a good return on their cash deposits.
Ps
Obviously this is not a solicitation to buy or a financial promotion advertisement.
when I took mine 3 years ago I did two, one with the risk of losing capital, one without. The last matures on Thursday so short of the FTSE going below 6244 I’m safe!!
at the time I did with Investec via Golfie, most were FTSE100 but there were others like S&P500 etc.
Investec no longer sell structured products, I could be wrong but generally you have to go through an advisor, I’d say that we’re wise anyway.
However, with the reduction in the CGT allowance I find the Investment based SP's are now almost redundant, and with the rising interest rate Deposit based ones are having to fight with Banks for peoples' money and (as can be seen) are producing some decent returns.
So currently the one I mentioned closes on July 21st. A reading of the FTSE100 is then taken and that is the Initial Level which the returns are measured against. Option 1 will pay 40% (8%pa over the 5 year term) should the FTSE100's level on 21st July 2028 be at least 1 point higher than the Initial level (so lets say 7600 points now - it has to be 7601 in 5 years time). If that is the case you will get back your initial investment plus 40%. Option 2 will pay 35% as long as the FTSE100 is more than 90% from its Initial Level - so 7600x90%=6840. If the FTSE100 is at 6841 in 5 years time you'll get back your initial investment plus 35%.
In essence, the FTSE100 falls 10% over the next 5 years & you get a 35% gain. If it falls 11% over that time period you only get your money back.
However (2) - these are not for everyone and really only for people who annually use their ISA allowance, have "spare" money and are prepared to lock their money up for 3,4,5 or 6 years.
Oh.........and as @Rob7Lee also says - you generally have to go through an IFA to invest in one, certainly if its your first "dabble" in them.
https://nsandi-corporate.com/news-research/news/summer-boost-savers-nsi-increases-premium-bonds-prize-fund-rate-and-junior-isa
Current and new Premium Bonds prize fund rate and odds
Current prize fund rate
Current odds
New prize fund rate (from July 2023)
Odds from July 2023 (no change)
3.30% tax-free
24,000 to 1
3.70% tax-free
24,000 to 1
Number and value of Premium Bonds prizes
Value of prizes in June 2023
Number of prizes in June 2023
Value of prizes in July 2023 (estimated)
Number of prizes in July 2023 (estimated)
£1,000,000
2
£1,000,000
2
£100,000
63
£100,000
71
£50,000
125
£50,000
141
£25,000
252
£25,000
284
£10,000
627
£10,000
707
£5,000
1,257
£5,000
1,417
£1,000
13,361
£1,000
14,960
£500
40,083
£500
44,880
£100
1,421,012
£100
1,744,226
£50
1,421,012
£50
1,744,226
£25
2,163,534
£25
1,503,501
Total
£334,047,650
Total
5,061,328
Total
£374,026,425
Total
5,054,415
Works for me. But I’m in the game of protecting what I have, due to my life stage.
Seems to me there will be wider implications for equity and bond markets and the industry around them.