Best place to save £800 pm?

[dingit]

Just that really. Next year our mortgage will be paid up and we don't want to piss the money up the wall. In 2 years we will need uni fees.
Thanks.

[specialsubject]

current accounts pay the best at the moment - 5% in TSB Classic Plus (open them quick so you can have 3 between you), up to 2k in each. When they are full, open a Club Lloyds account, takes up to 5k at 4%.

all need money paid in so you shift the same money around between them with standing orders. The Lloyds one also needs direct debits.

standard saving accounts pay much less than inflation, do not use.

[specialsubject]

oh yes, regular saver ISAs depending on your tax situation - the rates are also very low so if you don't pay tax they aren't worth it. Do the sums.

[dingit]

I have a regular savings account but can only pay in £300. I may get dh to do one. Also maximise our ISAs, but I don't pay tax, he pays higher rate.

[elephantspoo]

Currently in real terms we are running at between 6% and 8% inflation. Ie, it costs you between £106 and £108 to buy what cost you £100 last year. That means that if you have £100 last year, you needed to save it at at least 6% par just to not be loosing money. Anything under 6% means you are losing money year on year. The more you save, the more you lose. So be very careful about parking your money in cash anywhere.

[specialsubject]

you really think it is that high? Obviously the government figures too low as they are skewed by adding in the beepy-beepy toys, but fuel and energy prices really are dropping and so are some food prices. On food, not junk!

[Cindy34]

I do wonder what the real inflation figure is, taking into account the things that most people buy.

Retail bonds can pay 6% but they often have longer lock in periods, such as 3 years. They are also a gamble as if the company goes bust you don't anything - you may get a little via resolvancy service but you are way down the list of creditors.

There are some offering higher percentage but I can't say I have ever heard of the companies. I am a careful investor, I invest in what I know so I won't touch things where I have not heard of the company, don't buy their product/service. Some of the return may be in vouchers not cash, so you need to pick companies you would actually spend the vouchers at. An example of a company doing retail bonds is JohnLewis.

Would love to find low risk high interest. Government does not seem to be doing much for savers.

[elephantspoo]

Fuel prices will continue to drop as a result of the battle between OPEC and the US Shale industry. It's a staring contest to see who can drop prices the lowest and hold them there, and it is being dressed up by the talking heads in the west as an action they are encouraging to harm Russia. In reality western oil production is the only thing being damaged long term, and Russia is far more capable of handling austerity than any of us. We may be the beneficiaries right now, but we will be harmed by this in the future.

Also, no one seems to consider that the BoE base rate is practically zero, and has been since 2008. This is unprescidented in history, and not sustainable. When interest rates return to historic norms of between 5% and 7%, most families will not be prepared to alter their consumer lifestyles to pay down their debts. We live in a time of change, similar to the turn of the last century, and for most, the sand is the best place to keep their heads straight, because really understanding money is a very scary learning experience.

Either way I'd be placing capital into hard assets and not into a bank account, especially if it's money I was planning on sitting on for 3-5 years.

[elephantspoo]

Cindy - Is there really a need to earn interest over and above that required to maintain your capital's current purchasing power?

[Seriouslyffs]

Please don't pay your childrens' fees. Let them take the loan and help them out with living expenses or a housing deposit later.

[Cindy34]

Ideally I would invest in property as historically that long term has increased in value. However the amount I have to invest would not buy me a garage, yet alone a house.

Yes a return on investment is what I do desire. I don't want to see the money stay the same in terms of what it will buy, I want it to make money. My savings pot is for a rainy day, which may come along at any point.

BoE rate being low was great when I had a mortgage but now it is not so good for me but no doubt remains great for others. Thats the problem, what is good for a lot of people isn't so good for those of us who have taken advantage of the low rate, paid off our mortgage and now are looking to save what we were paying in interest.

[elephantspoo]

I am not so fortunate as to have the capital you have to invest. I only have my pension pot, and there are limitations on what one can and cannot do with it.

But for what it's worth, let me make a few observations...

I favour farmland over housing stock. Historically, aggricultural land has out performed all other asset classes bar none. Also, housing is currently being inflated artificially in many of the traditionally more appealing areas, so I suspect there is a mismatch between perceived value, and true value. In our major cities we have foreign (predominantly Chinese) private money flooding in and raising the prices of homes. We are also on the back end of the government stimulus that was put in place to rein folate the housing bubble after it crashed in 2008. I'm not saying there aren't bargains to be had, but I'd be buying £40K council houses in the valleys and not £400K faux Tudor villas in the shires.

The commodities and the mining stocks are very low. No-one is buying them. The contrarian in me says if I want to buy low and sell high, I can only do that by buying when few others are buying in that sector. So you may want to consider the mining inductries and the commodities and precious metals markets. You could do a lot worse than look at companies like Sprott Asset Management or the likes. I'm sure you know how to research your own investments.

I also favour buying and holding precious metals. They are cheap, some would say suppressed, and highly liquid if you wanted to turn them back into currency at a moments notice. I would tend towards silver despite the 20% vat! but given the amount of your investment! you may well be better with gold. Again, companies like bullionbypost are tremendously reputable and helpful.

In regard to the traditional stocks, I do like those tried and tested names, Coka Cola, Johnson & Johnson, BP, British Airways etc. they were here 50 years ago, and they'll be here 50 years from now. But to my mind they are currently overpriced, and if a company is involved in buying back it's own shares, that tells me two things, first that it is uncertain about its own future profitability and second that the shares volume traded no longer reflects the desire ability of the company in the marketplace. Not that they are not all good solid stocks, just that at this price I don't think they are good value for money.

The indices are mostly way over inflated, and both the stock market and the bond market, trading at something like 40+ year record highs, are both bubbles looking for pins. We are well overdue a major correction, and a lot of people are going to lose a lot of money sooner or later. Better safe in hard assets than sorry in pieces of paper.