Investment advice wanted

[Tricky]

I'm not going to keep banging on about this but it does seem worthwhile to note certain landmarks

 

And again...

[Vague_Boy]

but I think an ISA would be the way to go.

 

Bear in mind that with RPI inflation at over 5% you will need to get an interest rate of at least 5.5% just to stand still.

 

The Bank of England say that inflation will be lower in 18 months but they always say that, in reality they've missed all their inflation targets for the last 10 years.

 

The Bank of England’s core inflation forecast virtually always converge towards UK Inflation hitting its 2% CPI target in 2 years time which statistically fails to happen 96% of the time. This also means that the forecast trend also fails to be achieved as is usually the case within a matter of months from the publication of each quarterly inflation report as we have seen for the whole of 2010. Off course as illustrated above the Bank of England uses a wide fan chart mechanism to ensure that all eventualities are covered therefore technically the BOE forecasts can never be wrong as the forecast fan continues to expand going forward as the most recent inflation report illustrates that in 2 years time UK inflation could be between 4% and -1%. However whilst this may fool the the government, it amounts to a worthless exercise when it comes to actually making personal and business decisions.

 

LINK

 

 

Savers 'lose' £400 a year due to inflation

 

Savers are effectively being left £400 out of pocket every year on their £10,000 investments due to the rising cost of living.

 

The latest rise in inflation means higher rate taxpayers need more than 7 per cent to avoid losing money on their savings once inflation and tax is taken into account, while basic rate taxpayers need 5.5 per cent.

 

LINK

 

Basically savers (the prudent) are having to take it up the 'arris to bail out the feckless, the overextended and those who paid too much for their houses in the recent bubble.

 

Interest rates were cut to save house prices – and banks

 

Heaven forfend that people should ever have to face the consequences of their bad financial decisions.

 

 

Inflation surge means savers are losing money

 

Nine in 10 middle-class savers earn no real return on their cash

 

Savers lose out on £60bn in interest

 

Middle-class savers told no point in saving

 

In the current market you might get an ISA paying around 3%, meaning that you will lose around 2% or more of the purchasing power of your money (which is what inflation really amounts to) per year, around £400/£500 a year in your case.

 

Might as well flush that £400+ down the loo, it's quicker after all and there's no forms to fill in.

[Vague_Boy]

I have just arranged 2 double cash ISA's for my wife and myself that guarantee a rate of 1.45% over Bank of England base rate, not exciting but very safe.

 

Yep, guaranteed..... to lose money.

 

That's less than 2% at a time when inflation is over 5% (and that's trusting the official figures).

[Old_Bloke]

Yep, guaranteed..... to lose money.

 

That's less than 2% at a time when inflation is over 5% (and that's trusting the official figures).

 

Except that you are responding to a post from 2006 when inflation was extremely low so the cash ISA wouldn't have lost him money

[Cyclone]

And again...

 

Didn't you say that gold was experiencing a bubble back in 2006 (the implication being not to invest in it)?

 

But the price today is more than double what it was in 2006... It's been climbing steadily now for 2 years (although how much longer that can go on is the key question).

[vinyl]

I suggest you re read your initial post. You make no mention of two tax years. Your post implies that two people could invest £12,000 in a tax year, which is incorrect. They can invest only half this amount in mini cash ISAs in any one tax year.

 

An individual can pay up to £5,340 each tax year into a cash ISA. Personally I wouldn't bother as the return is less than inflation anyhow.

[JIbbo]

What would be the best way to invest £20,000 ? , I dont need access to this money for the next few years but i dont fancy anything risky.

Any suggestions [sensible ones only please].

 

As intrest is awful at the momemnt relative to inflation, i'd recommend switching to an offset mortgage, and overpaying it by £20K which you allowed to do on these products without peanlity, reducing your intrest bill massively.

 

Thats if you have a mortgage.

[Cyclone]

I wouldn't take investment advice from anyone who replies to a 5 year old post as if it were made recently!

[John X]

but i dont fancy anything risky.

 

I was going to suggest trebling your money by hiring a small plane in Florida, flying to Columbia, buying some local produce and flying back and selling it in Miami.

 

Only risky if you get greedy and try to do it more than once!

 

John X

[Tricky]

Didn't you say that gold was experiencing a bubble back in 2006 (the implication being not to invest in it)?

 

But the price today is more than double what it was in 2006... It's been climbing steadily now for 2 years (although how much longer that can go on is the key question).

 

Yes I did say it. But that wasn't necessarily the implication.

 

How long its price can go on rising is indeed the question. One that should be answered in terms of events rather than time.