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Savings and Investments thread

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  • I was always told as a lad that if it sounds too good to be true then it probably is!
  • Rob7Lee said:
    Looks very much like/carbon copy of London Capital Finance......... be prepared to lose all your money!
    Oh dear.  No money with Basset and Gold!  FCA registered but not covered by FSCS.  Reading their Risk Advisory looks like the bonds are based on a form of peer-2-peer lending without actually saying that... think I'll steer clear.
  • What is it with people wanting to chase unrealistic returns with unknown providers  or returns no one else is offering ?? If it was that good then the high street banks & other financial institutions would be offering them.

    Do yourself a favour a speak to a professional. Not saying it has to be me - look up an IFA in your local area & see what they say. As I said above- there are various way you can invest that are safe & secure and which are paying c5% -6%. 
  • edited April 2019
    What is it with people wanting to chase unrealistic returns with unknown providers  or returns no one else is offering ?? If it was that good then the high street banks & other financial institutions would be offering them.

    Do yourself a favour a speak to a professional. Not saying it has to be me - look up an IFA in your local area & see what they say. As I said above- there are various way you can invest that are safe & secure and which are paying c5% -6%. 
    Not me.  The figures on the Basset and Gold website seemed ridiculously high and I was asking if anyone knew of them.  I've nothing against IFAs and worked with a few several years ago on a contract with Aviva.  I just like to make all my own decisions and aim at medium risk investments.  I have a reasonably large portfolio split across UK and international equities, ISAs, premium bonds, cash savings accounts, some cryptos (disaster), and an HL SIPP consisting of 12-13 funds mainly suggested by you, @PragueAddick and @Rob7Lee .

  • cafc-west said:
    What is it with people wanting to chase unrealistic returns with unknown providers  or returns no one else is offering ?? If it was that good then the high street banks & other financial institutions would be offering them.

    Do yourself a favour a speak to a professional. Not saying it has to be me - look up an IFA in your local area & see what they say. As I said above- there are various way you can invest that are safe & secure and which are paying c5% -6%. 
    Not me.  The figures on the Basset and Gold website seemed ridiculously high and I was asking if anyone knew of them.  I've nothing against IFAs and worked with a few several years ago on a contract with Aviva.  I just like to make all my own decisions and aim at medium risk investments.  I have a reasonably large portfolio split across UK and international equities, ISAs, premium bonds, cash savings accounts, some cryptos (disaster), and an HL SIPP consisting of 12-13 funds mainly suggested by you, @PragueAddick and @Rob7Lee .

    I’ve also followed some of the suggestions from @PragueAddick. No pressure Prague!
  • Really interesting recco. @golfaddick re with-profit bonds. They seem to give as good as or better returns than P2P but with less risk.

    Since as an IFA you've had to bear the brunt of criticism of your sector on here, respect to you for still being prepared to offer suggestions like this (I was careful not to say "advice").

  • Really interesting recco. @golfaddick re with-profit bonds. They seem to give as good as or better returns than P2P but with less risk.

    Since as an IFA you've had to bear the brunt of criticism of your sector on here, respect to you for still being prepared to offer suggestions like this (I was careful not to say "advice").

    Have a problem with with-profits. All it does is smooth the returns the manager actually receives.

    Performance is a function of how much your account is being boosted by returns held back from previous years.  It is always looking backwards and will show outperformance of the market when market is falling and under-performance when markets are rising.

    The other problem is that it's impossible to determine how much you are paying in charges as you get a share of profits after deducting whatever costs they think they can get away with and still look competitive enough to attract new punters.

    If a with profit fund wants to attract new money it distributes more of its profits to boost performance, which might actually have been modest to poor.  Once tied in you are completely exposed to the whim of the insurance company as to how much will be distributed.  It need bear no relationship to actual performance.  If performance is spectacular it can retain a bigger profit and give a return big enough to match competitors. 

    They may have guaranteed bonuses and non-guaranteed reversionary bonuses and looking at performance including reversionary bonuses is misleading.  The reversionary bonus can fall to zero if there a sudden market fall.

    The more you dig into with-profits the less you find of substance to anchor your faith in them.  I always make the analogy of a religion - the only thing that justifies your allegiance is faith.
  • Really interesting recco. @golfaddick re with-profit bonds. They seem to give as good as or better returns than P2P but with less risk.

    Since as an IFA you've had to bear the brunt of criticism of your sector on here, respect to you for still being prepared to offer suggestions like this (I was careful not to say "advice").

    Have a problem with with-profits. All it does is smooth the returns the manager actually receives.

    Performance is a function of how much your account is being boosted by returns held back from previous years.  It is always looking backwards and will show outperformance of the market when market is falling and under-performance when markets are rising.

    The other problem is that it's impossible to determine how much you are paying in charges as you get a share of profits after deducting whatever costs they think they can get away with and still look competitive enough to attract new punters.

    If a with profit fund wants to attract new money it distributes more of its profits to boost performance, which might actually have been modest to poor.  Once tied in you are completely exposed to the whim of the insurance company as to how much will be distributed.  It need bear no relationship to actual performance.  If performance is spectacular it can retain a bigger profit and give a return big enough to match competitors. 

    They may have guaranteed bonuses and non-guaranteed reversionary bonuses and looking at performance including reversionary bonuses is misleading.  The reversionary bonus can fall to zero if there a sudden market fall.

    The more you dig into with-profits the less you find of substance to anchor your faith in them.  I always make the analogy of a religion - the only thing that justifies your allegiance is faith.
    Good job you're not a financial advisor then as you're way too much over thinking things. For the cautious investor they are ideal. They give better returns than cash, are tax efficient for basic rate taxpayers, and see steady (if not spectacular) growth. 

    There are many people put there who get frightened when they get an annual statement showing that their plan/account has gone down in value. Over the past 6 months I've held numerous annual reviews with clients & have had to talk them through whys & wherefores of their various investments & why they are showing a loss.

    One such client was having a bit of a panic as her newly advised (by me) ISA and Pension investments were showing a small loss of around 2.5% - 3%. She was re-assured when I showed her that her Prudential Investment Bond (in a cautious 20-45% equity w/p fund) had increased in value over the same term (less than 9 months) by around 2.5%.

    They are not for everyone.......but for a cautious investor who is not looking for double digit returns but for slow & steady growth that will outperform deposit accounts & inflation they are a decent bet.


  • 60% equity, 35% bonds, 5% commodities. Have 1/3 of the equities outside your region and keep the bond maturities A-rated or higher and spread out on the yield curve. Use indexes to keep expenses low. Works wonders. Almost stupid-proof. About 1/2 the volatility and still generates about 70% the annual return over the last 100 years.
  • Morning, @Dippenhall. I found your words of caution re with-profits bonds very useful, and such sceptical reasoned posts help to make this a very high quality thread, even if Golfie didn't much appreciate it, naturally.

    But on this occasion, doesn't Golfie have a point in terms of whom they might be useful for? To me the attraction is that I have a fair bit of cash after inheritance, but only a modest SIPP to boost my one and a half state pensions. And the max one can get in a cash account is 1.5%. So I've turned to P2P, but my recent experience with Funding Circle makes me wary and ready to pull back on that sector. I've got 16% of my cash in P2P, and now think that's too high. But where to put it? Look at us all desperately waiting for the second day in the month when Ernie bestows £25 on us! :-), and anyway I am on the limit there. The only downside I see compared with P2P is that you really have to lock it away over 5 years, but since I'm looking for something like that it seems attractive. Providing of course - and this is a big proviso - I choose the right provider.

    Would appreciate your thoughts on that scenario.
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  • And the max one can get in a cash account is 1.5%.

    On cash, yes 1.5% is about the best instant access, do you not tie up some cash (if that's what you want to hold) for 2/3/4/5 years and get up to 2.7%? Even a 2 year fix pays towards 2.3%. My daughter having turned 18 and having lost her high interest children's accounts at 18 and a half I spread her cash between 1/2/4/5 year fixes (with Atom a day before they reduced their rates, pure luck I might add!) and then filtering it into a LISA each year (Nutmeg) to make use of the 25% government bonus.
  • Morning, @Dippenhall. I found your words of caution re with-profits bonds very useful, and such sceptical reasoned posts help to make this a very high quality thread, even if Golfie didn't much appreciate it, naturally.

    But on this occasion, doesn't Golfie have a point in terms of whom they might be useful for? To me the attraction is that I have a fair bit of cash after inheritance, but only a modest SIPP to boost my one and a half state pensions. And the max one can get in a cash account is 1.5%. So I've turned to P2P, but my recent experience with Funding Circle makes me wary and ready to pull back on that sector. I've got 16% of my cash in P2P, and now think that's too high. But where to put it? Look at us all desperately waiting for the second day in the month when Ernie bestows £25 on us! :-), and anyway I am on the limit there. The only downside I see compared with P2P is that you really have to lock it away over 5 years, but since I'm looking for something like that it seems attractive. Providing of course - and this is a big proviso - I choose the right provider.

    Would appreciate your thoughts on that scenario.
    There is no fundamental reason for with-profits to outperform any other diversified portfolio with the same asset allocations.  

    You could mirror exactly a with-profit fund's asset allocations and the only reason returns would be different is because the with-profits does not release the full yield when markets out-perform market benchmarks and instead releases the reserves when the yield from the current investments fall below market benchmarks.

    So it theoretically gives exactly the same return over a long term period except with less volatility.  So with-profits are fine if you are risk averse to market volatility, but you are not avoiding market risk, it is just being hidden from view and smoothed, and for long term investing no one can show me why they will produce superior investment returns. 

    So I don't accept Golfies argument about different returns, except in the context of short term experience because in the long run the accumulated short term returns will reflect its long term returns, less what is held back in reserves that you do not benefit from.

    By definition, a with-profit fund is always holding assets which are not reflected in the value of your holding, and you have no way of knowing how much of the returns held back are going to be released.  They are in theory allocated in proportion to the returns made when you were invested, but you have no way of knowing what returns they made from investment performance. It is open to manipulation if the insurance company wants to massage performance for any one year to achieve a higher ranking in performance tables.  In short it is opaque and not easy to identify attributions to performance

    So will cede they are arguably appropriate if volatility is the risk to be managed or for a nervous investor, but discard any notion they have merit in terms of long term performance.  For short term performance the only certainty is they will never reflect what has happened to the underlying assets while you are invested and in a falling market you will be hit significantly if you disinvest. 
  • Rob7Lee said:
    And the max one can get in a cash account is 1.5%.

    On cash, yes 1.5% is about the best instant access, do you not tie up some cash (if that's what you want to hold) for 2/3/4/5 years and get up to 2.7%? Even a 2 year fix pays towards 2.3%. My daughter having turned 18 and having lost her high interest children's accounts at 18 and a half I spread her cash between 1/2/4/5 year fixes (with Atom a day before they reduced their rates, pure luck I might add!) and then filtering it into a LISA each year (Nutmeg) to make use of the 25% government bonus.
    On your dilemma in terms of where to invest in, join the club.  I hear presentations all the time from large institutions running discretionary portfolios charged with providing long term growth with minimal risk.  There is no obvious value anywhere, they all just spread their bets use, more and more hedging and reduce exposure to dogs, like the UK. That doesn't mean expectations are the same in every market, but the price to access the exposure may not add up when the potential volatility is priced. 

    Investors have been lured away from the traditional idea that you invest either for income or speculate for capital growth, we expect both and in addition, no risk to capital, and no volatility in total returns.  In short we have unrealistic expectations and think there must be a way of always bucking the markets.  This is reinforced by the markets behaviour over the last ten years or so in an artificially created world of low interest rates, low inflation and over-priced assets.

    The problem you describe is entirely the "problem" of artificially low interest rates.  To get 2% above inflation 50 years ago with no risk to capital would have been seen as normal expectations, today we can't get 2% above inflation without risking capital. Low interest rates and over-inflated asset prices give the impression that 10% returns above inflation come with a free lunch when they should come with swallowing rusty razor blades.  Safe capital is getting eroded by inflation.

    To get a higher return will always come with capital risk and that's where you need to understand the balance between the risk and reward, and not just the more natural one dimensional focus on reward. Today it is increasingly difficult to use diversification to spread risk because different asset classes are now so much more inter-connected and correlated than they used to be in a less high tech age.  But diversification is what you must do if you want to optimise efficiency between risk and reward, preserving capital and increasing value.  

    That's where Golfies of this World should, be able to interpret your risk profile to an appropriate diversification. between capital protected and growth assets - but with-profits ???
  • Dippenhall knows what he is talking about. 
  • Rob7Lee said:
    And the max one can get in a cash account is 1.5%.

    On cash, yes 1.5% is about the best instant access, do you not tie up some cash (if that's what you want to hold) for 2/3/4/5 years and get up to 2.7%? Even a 2 year fix pays towards 2.3%. My daughter having turned 18 and having lost her high interest children's accounts at 18 and a half I spread her cash between 1/2/4/5 year fixes (with Atom a day before they reduced their rates, pure luck I might add!) and then filtering it into a LISA each year (Nutmeg) to make use of the 25% government bonus.
    Hello mate, maybe I will have to look at some longer term bonds. However they might be Czech. The State has launched a new bond with a 6 year maturity which pays inflation plus 0.5%. I bought some for my wife, but think I might have some myself. Czech inflation is running at very similar levels to the UK's. Of course you have to be resident here to buy them so that doesn't help people on here, however it leads to a broader question. Why isn't the UK government encouraging cautious savers with a similar bond or account?. I can remember two issued by National Savings in recent years, I had one, but nothing recently. As it is, it is very difficult to be confident that the rates you mention would keep ahead of UK inflation.
  • Rob7Lee said:
    And the max one can get in a cash account is 1.5%.

    On cash, yes 1.5% is about the best instant access, do you not tie up some cash (if that's what you want to hold) for 2/3/4/5 years and get up to 2.7%? Even a 2 year fix pays towards 2.3%. My daughter having turned 18 and having lost her high interest children's accounts at 18 and a half I spread her cash between 1/2/4/5 year fixes (with Atom a day before they reduced their rates, pure luck I might add!) and then filtering it into a LISA each year (Nutmeg) to make use of the 25% government bonus.
    Hello mate, maybe I will have to look at some longer term bonds. However they might be Czech. The State has launched a new bond with a 6 year maturity which pays inflation plus 0.5%. I bought some for my wife, but think I might have some myself. Czech inflation is running at very similar levels to the UK's. Of course you have to be resident here to buy them so that doesn't help people on here, however it leads to a broader question. Why isn't the UK government encouraging cautious savers with a similar bond or account?. I can remember two issued by National Savings in recent years, I had one, but nothing recently. As it is, it is very difficult to be confident that the rates you mention would keep ahead of UK inflation.
    The reason the UK government/National Savings is offering lower rates than previous years, is because they have less need to attract funds, as the annual deficit has reduced significantly.

    The annual deficit, as a percentage of GDP, for the financial year ending March2018, was the lowest since the financial year ending March 2002 when it was 0.4%. In the calendar year 2017, the UK government deficit was £36.2 billion (1.8% of GDP), a decrease of £21.8 billion compared with the calendar year 2016.
  • Anyone considered Regular savings accounts?

    You can get 5% if you have another account with some places. I think First Direct is one of those. I've seen a few of you bank with them.

    The best one which doesn't require another account I know of is Kent Reliance at 3%. Put away between £25 and £500 a month for 12 months. You can withdraw money without penalty if you want but obviously won't earn as much interest if you do.The only downside is that the account has to be opened in a branch (travel down to the Gillingham game early?) but subsequent payments can be made online by bank transfer.

    Might be an option for those wanting to hold cash but earning poor rates.
  • LenGlover said:
    Anyone considered Regular savings accounts?

    You can get 5% if you have another account with some places. I think First Direct is one of those. I've seen a few of you bank with them.

    The best one which doesn't require another account I know of is Kent Reliance at 3%. Put away between £25 and £500 a month for 12 months. You can withdraw money without penalty if you want but obviously won't earn as much interest if you do.The only downside is that the account has to be opened in a branch (travel down to the Gillingham game early?) but subsequent payments can be made online by bank transfer.

    Might be an option for those wanting to hold cash but earning poor rates.
    It’s the restrictive nature of the monthly amount that barely makes it worthwhile. I had one a couple of years back with FD, £300 a month earned £116 interest.
  • Rob7Lee said:
    And the max one can get in a cash account is 1.5%.

    On cash, yes 1.5% is about the best instant access, do you not tie up some cash (if that's what you want to hold) for 2/3/4/5 years and get up to 2.7%? Even a 2 year fix pays towards 2.3%. My daughter having turned 18 and having lost her high interest children's accounts at 18 and a half I spread her cash between 1/2/4/5 year fixes (with Atom a day before they reduced their rates, pure luck I might add!) and then filtering it into a LISA each year (Nutmeg) to make use of the 25% government bonus.
    Hello mate, maybe I will have to look at some longer term bonds. However they might be Czech. The State has launched a new bond with a 6 year maturity which pays inflation plus 0.5%. I bought some for my wife, but think I might have some myself. Czech inflation is running at very similar levels to the UK's. Of course you have to be resident here to buy them so that doesn't help people on here, however it leads to a broader question. Why isn't the UK government encouraging cautious savers with a similar bond or account?. I can remember two issued by National Savings in recent years, I had one, but nothing recently. As it is, it is very difficult to be confident that the rates you mention would keep ahead of UK inflation.
    The reason the UK government/National Savings is offering lower rates than previous years, is because they have less need to attract funds, as the annual deficit has reduced significantly.

    The annual deficit, as a percentage of GDP, for the financial year ending March2018, was the lowest since the financial year ending March 2002 when it was 0.4%. In the calendar year 2017, the UK government deficit was £36.2 billion (1.8% of GDP), a decrease of £21.8 billion compared with the calendar year 2016.
    That might be a reason. However the corresponding Czech figure for 2017 was only 1.5%. 
  • @LenGlover I always utilise the HSBC offer on my account of 5% by paying in £250 per month. As @Rob7Lee says, it only brings you £100 or so, but the question is what else would you do with the money involved? It is offered by the banks to try and lure you as a potential customer.
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  • edited April 2019
    @LenGlover I always utilise the HSBC offer on my account of 5% by paying in £250 per month. As @Rob7Lee says, it only brings you £100 or so, but the question is what else would you do with the money involved? It is offered by the banks to try and lure you as a potential customer.
    £100 is £100 or maybe not to you rich Remain voters  ;)

    Seriously though you, I and others on here are 'of an age' and it's a big decision to tie money up should enforced retirement or redundancy befall us and then suffer exit charges, loss of interest etc as an extra boot to the balls.

    Regular savings accounts attract me, not that I have much to put in, because you can make a BIT more interest yet retain penalty free instant access should you need it for any reason.

    I mention them purely because I don't recall reading any other reference to them on the thread although I could be wrong.
  • How do people see the equity markets right now? They have recovered pretty well in the last couple of months, especially the Dow. Time to take some profits in anticipation of a downturn? Or, given signs of Trump and China making up, might we see a further push upwards?

    I think I am going to sell holdings in Neil Woodford's fund, either way. Fortunately at least in my non SIPP I can sell at a decent profit as I bought on launch. But in the SIPP it is my mother of all dog funds, with no real sign of improvement even if it is slightly up on recent days because everything is. It certainly does show that there can be hype around fund managers just as there can be around football managers. Is Neil Woodford the Mourinho of fund managers? :-)
  • So hopefully some of the experts here can help me out, my son is now 3 months old and I'd like to set up something for his future. I already have roughly 50k tied up here in savings so I'd like whatever I set up for him to be back 'home' as a way of diversifying away from Chinese savings systems.

    I'm looking to put away 1 or 200 quid a month somewhere he could access when he was 18 or 21 which would be around 25k or so. The problem is sending money back every month would get quite expensive so I'd much rather making a deposit every 6 months.

    I'd prefer a low level of risk and had been considering premium bonds, but @PragueAddick seem to think they are maybe not the best way forward, and he is someone I think knows his stuff.

    Any advice would be very appreciated.
  • Hi @Stu_of_Kunming there are several people on here from whom you can get more knowledgeable advice than I can give you (I've benefitted from them). They know who they are and I am sure they will be along soon. 

    The biggest practical problem you may have though is whether you will be able to invest in the things they may suggest when you are not a UK resident, and I suppose do not have an active UK bank account. 


  • That was something I thought might be an issue, I suppose a work-a-round would be transferring the money to a trusted family member and letting them deal with it.
  • That was something I thought might be an issue, I suppose a work-a-round would be transferring the money to a trusted family member and letting them deal with it.
    Or at a pinch, making that family member's home your UK address, in which case you could re-open a UK bank account. That's what I do. For a normal bank account, as a UK citizen they won't ask you about source of funds, just a sensible estimate of earnings that would be reflected in what they see passing through your account. Strictly speaking they ask you to declare that you are a "UK resident" but they really just want you to tick the box. They are banks after all, they want your money.

    You have the problem of transferring money from China to the UK cost-effectively of course, but you probably already know Transferwise. 
  • I'll probably try and finalise something next time I'm back, which will be for the play off final, or new year, it's not exactly an urgent rush as I get a decent rate on savings here.
  • Stu, if you're looking at investing semi-regularly over the next 18-25 years, would you not be better setting up a simple portfolio with someone like Interactive Brokers/DeGiro? It would almost certainly offer a better return than a bank over that time period, even keeping it very low-risk.
  • edited April 2019
    That was something I thought might be an issue, I suppose a work-a-round would be transferring the money to a trusted family member and letting them deal with it.
    Or at a pinch, making that family member's home your UK address, in which case you could re-open a UK bank account. That's what I do. For a normal bank account, as a UK citizen they won't ask you about source of funds, just a sensible estimate of earnings that would be reflected in what they see passing through your account. Strictly speaking they ask you to declare that you are a "UK resident" but they really just want you to tick the box. They are banks after all, they want your money.

    You have the problem of transferring money from China to the UK cost-effectively of course, but you probably already know Transferwise. 
    I'm surprised you managed to open a bank a/c in the UK pretending you are a UK resident.
    I thought banks asked for identification and proof of address, unless they can confirm your address by their electoral role search.
  • edited April 2019
    That was something I thought might be an issue, I suppose a work-a-round would be transferring the money to a trusted family member and letting them deal with it.
    Money Laundering could scupper that. More then my job is worth. If I was going to even get started down that road I'd want to meet you in person......in the UK. 
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