Financial Services Compensation Scheme down to £75K.

[I1L2T3]

Irrelevant, I have to pay income tax on whatever form of investment makes me a return, so we consider the rate before my tax for the point of comparison.

I don't care, I'm making as much as I can without exposing myself to more risk and/or tieing the money up in something longer term.

 

This is exactly it.

 

People have their wages (for example) in the bank as cash, not as an investment. Most people do not want to expose that portion of their weath to risk.

 

If we were honest about why the scheme is needed at its current high level is to protect consumers from the high risk activities of the banks. The protection amount used to be quite modest reflecting the lower levels of risk in traditionally run retail banks with customer deposits invested across a wide range of sectors like mortgages, business loans etc...

 

If Osborne was not dilly-dallying we'd already be well on the way to having the retail/investment split in the banking sector and a return to how things were before. It still wouldn't be totally safe or risk free but consumers need it.

[drummonds]

Irrelevant, I have to pay income tax on whatever form of investment makes me a return, so we consider the rate before my tax for the point of comparison.

I don't care, I'm making as much as I can without exposing myself to more risk and/or tieing the money up in something longer term.

 

---------- Post added 29-08-2015 at 09:19 ----------

 

 

I'll be impressed if you can find >2% without using a fixed term deposit.

 

http://www.moneysupermarket.com/savings/search/results/?goal=SAV_NOTICE&wom=true

 

Charter savings are current offering 1.95% on a 120 day notice account, that's the account I have in fact, but a different "issue" of the account, hence the lower interest rate.

 

If you take a 5 year fixed term (I wouldn't do that at the moment) you can get 3%+, 2 year fixed term and you can get 2%+.

 

the problem with your link is it covers what you can take out today, not what you could open 4 years ago.

 

i think i get around 3% return on a santander account that also gives little bonuses for fuel purchases etc. i get 4.5 at aib and 5% from rothschilds. but those last 2 are 5 year deposits. still there is the ftse. most folk make the mistake of looking at the headline ftse 100. big mistake as that in dominated by utillities and large mining corps.

 

the ftse 250 is more representitive of uk plc. if you'd stuck £100K across the ftse250 on the day cameron moved into no 10 you'd have £200k today plus around £10k in income and not relly much of a tax liability.

[I1L2T3]

the problem with your link is it covers what you can take out today, not what you could open 4 years ago.

 

i think i get around 3% return on a santander account that also gives little bonuses for fuel purchases etc. i get 4.5 at aib and 5% from rothschilds. but those last 2 are 5 year deposits. still there is the ftse. most folk make the mistake of looking at the headline ftse 100. big mistake as that in dominated by utillities and large mining corps.

 

the ftse 250 is more representitive of uk plc. if you'd stuck £100K across the ftse250 on the day cameron moved into no 10 you'd have £200k today plus around £10k in income and not relly much of a tax liability.

 

And in another year it could be worth less than you put in. Barring a miracle the Chinese economy is going to implode and cause a lot of collateral damage. 2008 all over again - all the smart money is calling it and all the triggers are in place.

 

I'd rather be in cash. You never know but as your world is collapsing around you you might be grateful if a dude turns up with a wad of cash to buy your house and rescue your ass. Could be me

[Cyclone]

the problem with your link is it covers what you can take out today, not what you could open 4 years ago.

 

i think i get around 3% return on a santander account that also gives little bonuses for fuel purchases etc. i get 4.5 at aib and 5% from rothschilds. but those last 2 are 5 year deposits. still there is the ftse. most folk make the mistake of looking at the headline ftse 100. big mistake as that in dominated by utillities and large mining corps.

 

the ftse 250 is more representitive of uk plc. if you'd stuck £100K across the ftse250 on the day cameron moved into no 10 you'd have £200k today plus around £10k in income and not relly much of a tax liability.

 

 

Well, yeah, I can't go back in time and open an account, so if we're talking about what is available today, we look at what is available today.

The santander current account pays 3% but only up to a balance of 20k and only if you make monthly payments in. Not much use as a form of investment.

Fixed term deposits can be great, but obviously the money is tied up, so they're no use if you need flexibility.

 

Ftse250 in May 2010 about 10k, today about 17k

Of course from the point of investment you'd have only been breaking even in Nov 2011, 15 months later! That would be worth 170k today obviously, not 200.

 

I can't find a definitive answer to what a ftse250 investment would have yielded in terms of dividend, but the numbers I'm seeing are suggesting way less than the 10% you suggested.

Perhaps 2.5% is more realistic

What’s more, the FTSE 250 tracker offers an annual dividend yield of 2.5%.

http://webcache.googleusercontent.com/search?q=cache:rLwY06YJdvMJ:www.fool.co.uk/investing/2015/01/27/forget-the-ftse-100-the-real-money-is-made-in-the-ftse-250/+&cd=2&hl=en&ct=clnk&gl=uk

 

The underlying return from the growth is impressive at approx 11% though, so long as you'd held on through the lean 15 months and not panicked.

 

Not much tax though? Capital gains perhaps. At 16.5k by my calculation. Making a real profit of 53.5k

Still not shabby, but of course it was at a real risk, unlike money in the bank (also there are fee's associated with buying, holding and selling shares, and you'd need a ftse250 tracker with a % charge of it's own).

 

If you reinvested the income it might be closer to the 200k figure you mentioned (188k i think).

[Fudbeer]

While a forum is not the best place to talk about investments as everyones circumstances are different I will say in my experience having some of your money in the market while increasing your risk often proves very profitable for long term investing.

 

Investing in ftse companys many of which currently yield about 5% with either your own portfolio if you are prepared to do the research or through a fund/unit trust (but watch out for the charges) with dividends re invested is an excellent strategy in my experience.

 

I have a very cautious uk equity income investment which has nearly doubled in 5 years investing this way,compare that with deposit rates.

 

A lot depends on your attitude to risk your investment could go down and if there is a crash it could drop considerably.

 

Personally I take Warren Buffets advice "Be fearful when others are greedy and greedy when others are fearful" and used the recent sub 6k ftse drop to top up.

[I1L2T3]

While a forum is not the best place to talk about investments as everyones circumstances are different I will say in my experience having some of your money in the market while increasing your risk often proves very profitable for long term investing.

 

Investing in ftse companys many of which currently yield about 5% with either your own portfolio if you are prepared to do the research or through a fund/unit trust (but watch out for the charges) with dividends re invested is an excellent strategy in my experience.

 

I have a very cautious uk equity income investment which has nearly doubled in 5 years investing this way,compare that with deposit rates.

 

A lot depends on your attitude to risk your investment could go down and if there is a crash it could drop considerably.

 

Personally I take Warren Buffets advice "Be fearful when others are greedy and greedy when others are fearful" and used the recent sub 6k ftse drop to top up.

 

Each to their own. If you are comfortable with the risks it's right for you. I'm getting (when the rate is averaged out across accounts) about 2% which is enough for me but obviously wouldn't be enough for some.

[drummonds]

I can't find a definitive answer to what a ftse250 investment would have yielded in terms of dividend, but the numbers I'm seeing are suggesting way less than the 10% you suggested.

Perhaps 2.5% is more realistic

 

http://webcache.googleusercontent.com/search?q=cache:rLwY06YJdvMJ:www.fool.co.uk/investing/2015/01/27/forget-the-ftse-100-the-real-money-is-made-in-the-ftse-250/+&cd=2&hl=en&ct=clnk&gl=uk

 

The underlying return from the growth is impressive at approx 11% though, so long as you'd held on through the lean 15 months and not panicked.

 

Not much tax though? Capital gains perhaps. At 16.5k by my calculation. Making a real profit of 53.5k

Still not shabby, but of course it was at a real risk, unlike money in the bank (also there are fee's associated with buying, holding and selling shares, and you'd need a ftse250 tracker with a % charge of it's own).

 

If you reinvested the income it might be closer to the 200k figure you mentioned (188k i think).

 

at 2.5% per annum that would be 12.5% over 5 years. dividends are only taxed at 10%.

capital gains tax isn't really an issue. you can sell shares every year and buy others. you would really need to be a mug to have a capital gains liability on 100k of shares.

 

again it is difficult to see the risk of stock market investment if you are in it for the long term. the ftse was at 1000 points in 1985. 30 years later it is 6 times higher. it has been up and down but the trend (like house prices) is ever upwards. we ain't talking china here. the ftse250 was around 2000 in 1993. it is now 8.5 times higher.

there are shares in the ftse250 that are going down. there are others that are static. with advice from a decent broker it wouldn't have been difficult to get a 10 to 12 times return over 22 years with virtually no tax liability.

 

i regard shares like a bank. i can sell at 5 minutes notice if i want the cash.

 

---------- Post added 29-08-2015 at 10:57 ----------

 

Each to their own. If you are comfortable with the risks it's right for you. I'm getting (when the rate is averaged out across accounts) about 2% which is enough for me but obviously wouldn't be enough for some.

 

an investment yielding below the rate of inflation is not an investment.

[Cyclone]

at 2.5% per annum that would be 12.5% over 5 years. dividends are only taxed at 10%.

If you're in the lower tax bracket...

capital gains tax isn't really an issue. you can sell shares every year and buy others. you would really need to be a mug to have a capital gains liability on 100k of shares.

You were talking about the gain made since 2010. You can't sell every year and realise the gain available today. To realise that, you have to sell today.

 

again it is difficult to see the risk of stock market investment if you are in it for the long term. the ftse was at 1000 points in 1985. 30 years later it is 6 times higher.

Which means a compound interest rate of what? Just over 6%.

6 times higher sounds huge, but it's meaningless. 6% APR tells you a lot more.

The BOE base rate in 1985 went to over 13%. At that point, paying down a mortgage (if you had one) would have been a better bet than investing in the stock market.

 

it has been up and down but the trend (like house prices) is ever upwards. we ain't talking china here. the ftse250 was around 2000 in 1993. it is now 8.5 times higher.

there are shares in the ftse250 that are going down. there are others that are static. with advice from a decent broker it wouldn't have been difficult to get a 10 to 12 times return over 22 years with virtually no tax liability.

Except for that massive capital gains liability when you actually sell.

 

i regard shares like a bank. i can sell at 5 minutes notice if i want the cash.

And if you need that cash during a market dip, you'll have lost money.

 

an investment yielding below the rate of inflation is not an investment.

 

Shares can of course yield a negative return, actually eroding your capital.

[drummonds]

If you're in the lower tax bracket...

You were talking about the gain made since 2010. You can't sell every year and realise the gain available today. To realise that, you have to sell today.

Which means a compound interest rate of what? Just over 6%.

6 times higher sounds huge, but it's meaningless. 6% APR tells you a lot more.

The BOE base rate in 1985 went to over 13%. At that point, paying down a mortgage (if you had one) would have been a better bet than investing in the stock market.

 

 

Except for that massive capital gains liability when you actually sell.

And if you need that cash during a market dip, you'll have lost money.

 

Shares can of course yield a negative return, actually eroding your capital.

 

you really don't have a clue do you?

[Cyclone]

Really, that's your response to a polite discussion.

 

You're the one who pointed out the gains to be made between 2010 and today. Yet you want to pretend that if you sold to realise that gain you wouldn't have to pay capital gains?

 

It's easy to prove me wrong if I am wrong, so do it. Educate me.

 

All the figures I used were real historical ones.

Who'd want a 6% return on an investment when they could instead not pay 13% interest on the same amount?

Shares can and do lose value, why pretend otherwise?

 

I'm not saying that shares aren't a good investment option. I'm just putting your claims into some sort of realistic perspective.