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Savings and Investments thread
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Mr F £25, Fanny £50.0
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PBs only £25 this month, but I did win £50 on Valley Gold on mad Saturday!!2
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Increased my holding so extra numbers in this month's draw, helping me to £125,0
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I have a stash of cash that I kept aside specifically as a "health insurance fund" - cash that I did not pay over the years to BUPA or PPP because they were a rip-off and not needed here when you are in the state health insurance system. Just an insurance against worst case scenarios. It had been in cash deposits but I got fed up with earning less than 1% on them, so I had the "bright" idea of sticking it in LS20 on the basis that it might earn 2-3% with low risk. That was based on actual experience over 5-7 years with all of these funds. The graph below shows what has happened this year.Rob7Lee said:
I'm not so sure that's entirely true, the 20/40/60 are all risk level 4 of 7, 80 & 100 and 5 of 7, so the 80 & 100 are only marginally riskier.PragueAddick said:
However it is marketed as the safest option, because only 20% is equities, supposedly more risky. And up to this year it worked that way ( I have some 40 and 60 ). I will post up the graph later, and then my question for those who understand bonds/gilts/Treasuries better than I would be, is the graph going to recover, or might it not be better to cash out and stick it in a deposit account fixed at 5% for a year or more?Rob7Lee said:The LS20 is simply made up of other Vanguard funds, looking at the mix it's not surprising it has dropped.
https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-20-equity-fund-gbp-gross-accumulation-shares/portfolio-data
I guess it all depends on what you are trying to achieve and your overall portfolio, I personally don't have any 20 (or 40), have a bit in 60, a bit in 80 and much more in 100. I do also hold about 5% in bonds/gilts separately so overall about 8% of my portfolio is in that.
You also need to consider the yield as much as the value. Most UK Gov 10 year bonds are paying a yield of over 4% now.
OK, roughly I know why; the whole retail investment market had worked on a rule of thumb..if equities do well, then bonds less so, and vice versa. This year, as we know, that rule of thumb fell part. Yet Vanguard continue to assert on their website, right now and in multiple places :"It’s all about finding the right level of risk and reward. Shares typically give you a higher return over the long term, but are riskier. Whereas bonds are more stable but offer lower potential returns."
If you take Vanguard's six question test about personal attitude to risk, it steers you towards LS 20 if you answer in the most risk averse way. That's not my actual attitude, but it was for this stash of cash, and as others have mentioned, many cautious mug punters have relied on it to build their own pension portfolios. I suspect a lot of them have not yet realised what's happened.
Anyway, what I'd appreciate now are views on what's going to happen now. I am pretty sure cash funds like that Fidelity one will move up more next year as interest rates rise. What do you think those Vanguard bond heavy funds will do? Will they recover all their lost ground? What factors will influence them? I'm not sure about the money market funds, but if I can stick the cash away on deposit for 1 or 2 years at 5%, will that beat keeping it in LS20? that's what I have to decide...
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Why not just hold cash in the portfolio then Most platforms these days have a cash "account", which is usually used as a go between before investing or when holdings are sold & waiting to be reinvested. I've a few clients I've done that with when property funds have closed & the money has been paid back to the clients. Might not earn anything but its not losing anything either.PragueAddick said:
Indeed, they are not, but I wonder if this is about to change. I had a quick look at the Vanguard LS 20 vs a Fidelity cash fund, and will try to post up the graph later. It is pretty…graphic. But the returns so far this year for a cash fund are not that great, they just haven’t lost punters money, whereas the Vanguard fund has shed 15%. I am surprised that isnt being talked about more in the financial media.golfaddick said:
Royal London had 2 "cash" funds in their Personal Pension range. Both changed their investment mandate earlier this year & changed their name from Deposit and Deposit Plus to Short Term Fixed Rate and now invests in short dated Gilts.PragueAddick said:Fellow mug punters!! I may have hit upon an idea. It may however not survive the scrutiny of those more ITK which is why I am posting it before looking further into it.
This applies to mug punters like me who are aghast at the destruction of their “safe” ballast funds such as Vanguard Life Strategy 20 and with some relish and relief you turn to the rapidly rising number of savings accounts which actually pay interest..whereupon you run into a new problem, when to take advantage of the fixed term offers with the best rates. You can end up with a turkey there too…like this mug stuck untíl March with one paying 2.1%, while my new Santander instant account pays 2.72%…
So. If you already invested in funds in the early 90s, you may recall the cash funds. I had one with Fidelity on their platform which sometimes was showing 5% gains, because at that time bank rates were pretty high. As we entered the long low inflation period, these funds became pointless.Now, I suppose their time has come again. But here’s my question: can they, would they invest in fixed term high interest instruments? If so, that is a way to access those instruments without committing to a timespan- you can buy and sell the fund when you please, like any other.
whaddya’ reckon?
Not sure cash funds are "in vogue" thesedays0 -
I noticed a couple of months back that a lot of the ITs that I own had loaded up on short term cash instruments but have since been dripping them back in. I think one of the reasons retail people worried about them was because of the liquidity crisis that sparked the financial crisis. Not really my area but I would have a thought a strategic bond fund would be skewing that way ...?PragueAddick said:
Indeed, they are not, but I wonder if this is about to change. I had a quick look at the Vanguard LS 20 vs a Fidelity cash fund, and will try to post up the graph later. It is pretty…graphic. But the returns so far this year for a cash fund are not that great, they just haven’t lost punters money, whereas the Vanguard fund has shed 15%. I am surprised that isnt being talked about more in the financial media.golfaddick said:
Royal London had 2 "cash" funds in their Personal Pension range. Both changed their investment mandate earlier this year & changed their name from Deposit and Deposit Plus to Short Term Fixed Rate and now invests in short dated Gilts.PragueAddick said:Fellow mug punters!! I may have hit upon an idea. It may however not survive the scrutiny of those more ITK which is why I am posting it before looking further into it.
This applies to mug punters like me who are aghast at the destruction of their “safe” ballast funds such as Vanguard Life Strategy 20 and with some relish and relief you turn to the rapidly rising number of savings accounts which actually pay interest..whereupon you run into a new problem, when to take advantage of the fixed term offers with the best rates. You can end up with a turkey there too…like this mug stuck untíl March with one paying 2.1%, while my new Santander instant account pays 2.72%…
So. If you already invested in funds in the early 90s, you may recall the cash funds. I had one with Fidelity on their platform which sometimes was showing 5% gains, because at that time bank rates were pretty high. As we entered the long low inflation period, these funds became pointless.Now, I suppose their time has come again. But here’s my question: can they, would they invest in fixed term high interest instruments? If so, that is a way to access those instruments without committing to a timespan- you can buy and sell the fund when you please, like any other.
whaddya’ reckon?
Not sure cash funds are "in vogue" thesedays
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Sorry to be pedantic but anyone who believes that Ernie is sophisticated enough to generate genuinely random numbers probably doesn't work in IT ;-)bobmunro said:
Whether a sequential block of 50,000 or 50,000 randomly distributed amongst the 119 Billion bonds issued - the chances of each individual number being drawn for a prize is exactly the same. Anyone who believes otherwise does not have even a fundamental grasp on statistics.Chaz Hill said:£75 (3x£25) for me, £25 for Mrs Chaz and £200 for jnr (£100, £50, £25x2).I noticed on the ‘High Value’ winners list that somebody with a £100 holding won £50,000 and another with £300 holding won £100,000. Neither £1m winner had the full £50k holding. So really can’t see having a single £50k block makes any difference.
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That's another issue entirely - my comment was based on pure probability theory and was predicated on approaching true randomness in the RNG!WishIdStayedinthePub said:
Sorry to be pedantic but anyone who believes that Ernie is sophisticated enough to generate genuinely random numbers probably doesn't work in IT ;-)bobmunro said:
Whether a sequential block of 50,000 or 50,000 randomly distributed amongst the 119 Billion bonds issued - the chances of each individual number being drawn for a prize is exactly the same. Anyone who believes otherwise does not have even a fundamental grasp on statistics.Chaz Hill said:£75 (3x£25) for me, £25 for Mrs Chaz and £200 for jnr (£100, £50, £25x2).I noticed on the ‘High Value’ winners list that somebody with a £100 holding won £50,000 and another with £300 holding won £100,000. Neither £1m winner had the full £50k holding. So really can’t see having a single £50k block makes any difference.2 -
Your point on probability was, of course, sound!bobmunro said:
That's another issue entirely - my comment was based on pure probability theory and was predicated on approaching true randomness in the RNG!WishIdStayedinthePub said:
Sorry to be pedantic but anyone who believes that Ernie is sophisticated enough to generate genuinely random numbers probably doesn't work in IT ;-)bobmunro said:
Whether a sequential block of 50,000 or 50,000 randomly distributed amongst the 119 Billion bonds issued - the chances of each individual number being drawn for a prize is exactly the same. Anyone who believes otherwise does not have even a fundamental grasp on statistics.Chaz Hill said:£75 (3x£25) for me, £25 for Mrs Chaz and £200 for jnr (£100, £50, £25x2).I noticed on the ‘High Value’ winners list that somebody with a £100 holding won £50,000 and another with £300 holding won £100,000. Neither £1m winner had the full £50k holding. So really can’t see having a single £50k block makes any difference.
But I think people suspect that, for example, very old numbers don't come up and that perception could be down to all sorts of things. But there's always been a suspicion that the programming can't generate genuinely random numbers and therefore there are biases.0 -
Well the trouble with that is, inflation. You dont want cash sitting around too long doing nothing. Mistake I made with my SIPP when I switched it to H-L. Now when you have instant access accounts with big banks paying 2.75% it really ought to be avoided for any period longer than a month or so, I reckon.golfaddick said:
Why not just hold cash in the portfolio then Most platforms these days have a cash "account", which is usually used as a go between before investing or when holdings are sold & waiting to be reinvested. I've a few clients I've done that with when property funds have closed & the money has been paid back to the clients. Might not earn anything but its not losing anything either.PragueAddick said:
Indeed, they are not, but I wonder if this is about to change. I had a quick look at the Vanguard LS 20 vs a Fidelity cash fund, and will try to post up the graph later. It is pretty…graphic. But the returns so far this year for a cash fund are not that great, they just haven’t lost punters money, whereas the Vanguard fund has shed 15%. I am surprised that isnt being talked about more in the financial media.golfaddick said:
Royal London had 2 "cash" funds in their Personal Pension range. Both changed their investment mandate earlier this year & changed their name from Deposit and Deposit Plus to Short Term Fixed Rate and now invests in short dated Gilts.PragueAddick said:Fellow mug punters!! I may have hit upon an idea. It may however not survive the scrutiny of those more ITK which is why I am posting it before looking further into it.
This applies to mug punters like me who are aghast at the destruction of their “safe” ballast funds such as Vanguard Life Strategy 20 and with some relish and relief you turn to the rapidly rising number of savings accounts which actually pay interest..whereupon you run into a new problem, when to take advantage of the fixed term offers with the best rates. You can end up with a turkey there too…like this mug stuck untíl March with one paying 2.1%, while my new Santander instant account pays 2.72%…
So. If you already invested in funds in the early 90s, you may recall the cash funds. I had one with Fidelity on their platform which sometimes was showing 5% gains, because at that time bank rates were pretty high. As we entered the long low inflation period, these funds became pointless.Now, I suppose their time has come again. But here’s my question: can they, would they invest in fixed term high interest instruments? If so, that is a way to access those instruments without committing to a timespan- you can buy and sell the fund when you please, like any other.
whaddya’ reckon?
Not sure cash funds are "in vogue" thesedays1 - Sponsored links:
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For anyone who holds a 50k block: have you had a month where you've won zero?WishIdStayedinthePub said:
Your point on probability was, of course, sound!bobmunro said:
That's another issue entirely - my comment was based on pure probability theory and was predicated on approaching true randomness in the RNG!WishIdStayedinthePub said:
Sorry to be pedantic but anyone who believes that Ernie is sophisticated enough to generate genuinely random numbers probably doesn't work in IT ;-)bobmunro said:
Whether a sequential block of 50,000 or 50,000 randomly distributed amongst the 119 Billion bonds issued - the chances of each individual number being drawn for a prize is exactly the same. Anyone who believes otherwise does not have even a fundamental grasp on statistics.Chaz Hill said:£75 (3x£25) for me, £25 for Mrs Chaz and £200 for jnr (£100, £50, £25x2).I noticed on the ‘High Value’ winners list that somebody with a £100 holding won £50,000 and another with £300 holding won £100,000. Neither £1m winner had the full £50k holding. So really can’t see having a single £50k block makes any difference.
But I think people suspect that, for example, very old numbers don't come up and that perception could be down to all sorts of things. But there's always been a suspicion that the programming can't generate genuinely random numbers and therefore there are biases.0 -
Can you win zero or just not win? 🧐🥸😉JamesSeed said:
For anyone who holds a 50k block: have you had a month where you've won zero?WishIdStayedinthePub said:
Your point on probability was, of course, sound!bobmunro said:
That's another issue entirely - my comment was based on pure probability theory and was predicated on approaching true randomness in the RNG!WishIdStayedinthePub said:
Sorry to be pedantic but anyone who believes that Ernie is sophisticated enough to generate genuinely random numbers probably doesn't work in IT ;-)bobmunro said:
Whether a sequential block of 50,000 or 50,000 randomly distributed amongst the 119 Billion bonds issued - the chances of each individual number being drawn for a prize is exactly the same. Anyone who believes otherwise does not have even a fundamental grasp on statistics.Chaz Hill said:£75 (3x£25) for me, £25 for Mrs Chaz and £200 for jnr (£100, £50, £25x2).I noticed on the ‘High Value’ winners list that somebody with a £100 holding won £50,000 and another with £300 holding won £100,000. Neither £1m winner had the full £50k holding. So really can’t see having a single £50k block makes any difference.
But I think people suspect that, for example, very old numbers don't come up and that perception could be down to all sorts of things. But there's always been a suspicion that the programming can't generate genuinely random numbers and therefore there are biases.1 -
JamesSeed said:
For anyone who holds a 50k block: have you had a month where you've won zero?WishIdStayedinthePub said:
Your point on probability was, of course, sound!bobmunro said:
That's another issue entirely - my comment was based on pure probability theory and was predicated on approaching true randomness in the RNG!WishIdStayedinthePub said:
Sorry to be pedantic but anyone who believes that Ernie is sophisticated enough to generate genuinely random numbers probably doesn't work in IT ;-)bobmunro said:
Whether a sequential block of 50,000 or 50,000 randomly distributed amongst the 119 Billion bonds issued - the chances of each individual number being drawn for a prize is exactly the same. Anyone who believes otherwise does not have even a fundamental grasp on statistics.Chaz Hill said:£75 (3x£25) for me, £25 for Mrs Chaz and £200 for jnr (£100, £50, £25x2).I noticed on the ‘High Value’ winners list that somebody with a £100 holding won £50,000 and another with £300 holding won £100,000. Neither £1m winner had the full £50k holding. So really can’t see having a single £50k block makes any difference.
But I think people suspect that, for example, very old numbers don't come up and that perception could be down to all sorts of things. But there's always been a suspicion that the programming can't generate genuinely random numbers and therefore there are biases.
I've had the odd month, on average maybe one a year, my Father in Law has had one blank month ion about 5 years!
Interest rates up, interesting times.1 -
With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).1
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It's important to remember the tax element which reduces the headline rate on savings (by quite a chunk if you are a higher rate tax payer). Cash ISA's are starting to pick up a bit, almost 4% for a 1 year fix (of course limited to £20k).RaplhMilne said:With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).
PB's have never given the best return due to the variability/pot luck nature, but it's secure, pays a decent return of you hold a lot and there's always that chance.............
Personally unless you are holding at least £25k or have tax issues I wouldn't bother.1 -
RaplhMilne said:With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).I'm thinking the same.I've not entirely got my head round the tax on savings bit yet ...0
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https://www.gov.uk/apply-tax-free-interest-on-savingsArsenetatters said:RaplhMilne said:With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).I'm thinking the same.I've not entirely got my head round the tax on savings bit yet ...
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Interest is now paid gross. It's your responsibility to tell HMRC how much interest you recieved in any given tax year. Basic rate taxpayers can earn £1000 in interest before any of it is taxed. 40% taxpayers can earn £500 before any is taxed.Arsenetatters said:RaplhMilne said:With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).I'm thinking the same.I've not entirely got my head round the tax on savings bit yet ...0 -
If you have no wages or a very low level of other income, the balance of your personal allowance will be used against your interest income too.1
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I don't pay tax so it looks like I can earn £5000 in interest plus a couple of grand as I have a pension that brings in £10000 taking me up to my personal allowance. I'm going to have to do some calculations before trying to take advantage of the interest rate increase! Haven't filled in a tax return for years. UGHgolfaddick said:
Interest is now paid gross. It's your responsibility to tell HMRC how much interest you recieved in any given tax year. Basic rate taxpayers can earn £1000 in interest before any of it is taxed. 40% taxpayers can earn £500 before any is taxed.Arsenetatters said:RaplhMilne said:With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).I'm thinking the same.I've not entirely got my head round the tax on savings bit yet ...
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Bear in mind the institution paying the interest to you will also report it to HMRC, so if you under declare there's a chance you'll be caught.
(not aimed at you, Arsene, just a general point)2 -
How do you get that much personal allowance!?!Arsenetatters said:
I don't pay tax so it looks like I can earn £5000 in interest plus a couple of grand as I have a pension that brings in £10000 taking me up to my personal allowance. I'm going to have to do some calculations before trying to take advantage of the interest rate increase! Haven't filled in a tax return for years. UGHgolfaddick said:
Interest is now paid gross. It's your responsibility to tell HMRC how much interest you recieved in any given tax year. Basic rate taxpayers can earn £1000 in interest before any of it is taxed. 40% taxpayers can earn £500 before any is taxed.Arsenetatters said:RaplhMilne said:With Easy access looking like going over 3% and 1 year bond over 5% , is it worth staying in Premium Bonds. £50,000 in a one year is going to bring you in over £2500 a year interest (before Tax).I'm thinking the same.I've not entirely got my head round the tax on savings bit yet ...0 -
Bollocks all for me/us this month (PBS)0
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Good article in the FT from Paul Lewis of BBC MoneyBox. It will be paywalled for most of you but I can share this clip, which is a more coherent version of what I been been banging on about above, and also our favourite subject, Premium Bonds. But he also deals with the mortgage side, which will be interesting for more of you
Interest rates are returning to the old normal
One strange effect of the rapid rise in the cost of borrowing — gleefully passed on by the high street banks as their third quarter results have shown — has been that the return paid on cash exceeds that on shares. With their value plunging — the FTSE All Share index is down over 8 per cent since the start of the year — the yield from equities in the form of dividends has risen to 4 percent. But there is now a risk-free option to get a one-year return of 4.6 per cent with RCI Bank and a five-year annual return of 5.05 per cent with Close Brothers in their fixed-term savings accounts. The deposit is not at risk provided it is divided up into £85,000 parcels and so covered by official guarantees. Even National Savings & Investments is paying 1.8 per cent on its Income Bond and 1.75 per cent tax-free in its individual savings account (Isa). Money with NS&I is safe to any amount up to the NS&I investment ceiling — for example, £2mn in its Income Bond. Short-term safety and certainty is now found in cash. At the latest count in April more than a million people had the maximum £50,000 in premium bonds which now pay prizes worth 2.2 per cent tax-free — though if you discount the big ones, which you will normally not win in a lifetime, the average return is 2 per cent. An extraordinary £100bn was held that month by those with more than £20,000 bonds out of a total of £117bn in bonds. The maximum is per person so couples can have £50,000 each and put up to £50,000 each into earmarked accounts for children or grandchildren.
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The often forgotten part on premium bonds is the tax free element on any winnings, especially for higher rate tax payers makes the return much greater.
I think it's also dangerous to compare shares v cash over such a short time frame, and not forgetting a large proportion of shares (or funds) held by most members of the public are in pensions so again the tax free/efficient element needs to be factored in.1 -
I've earned about £1200 on 50 k in PBs in the last year so negligible when set against how much I am losing against the cost of living rise which will probably cost me in excess of £5k in real terms value by April.0
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Thing is, what do you do with any "prizes" you get from NS&I ? If you have the maximum £50k you can't re-invest the money and so the interest is paid out. If you just bank that into your usual current account then you aren't really gaining anything, because I expect it will just be swallowed up by your normal expenditure. Really need to set it aside somewhere.0
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European Stockmarkets doing well so far today. France up 3%, Germany up 2.4% and the FTSE100 up 2.3%. This followed Hong Kong being up 5% overnight.
Eyes all turned to the US. If they follow suit then it will be a good end to the week and a good week overall with the FTSE100 up almost 5%.
crisis....what crisis.0 -
It's certainly been a roller coaster!golfaddick said:European Stockmarkets doing well so far today. France up 3%, Germany up 2.4% and the FTSE100 up 2.3%. This followed Hong Kong being up 5% overnight.
Eyes all turned to the US. If they follow suit then it will be a good end to the week and a good week overall with the FTSE100 up almost 5%.
crisis....what crisis.
I moved pension provider in June. In July it was up £33k, August down £1k, September down £29k! October up £14k and so far this month up £4k but that won't include any rises today.0 -
Bear market rally.golfaddick said:European Stockmarkets doing well so far today. France up 3%, Germany up 2.4% and the FTSE100 up 2.3%. This followed Hong Kong being up 5% overnight.
Eyes all turned to the US. If they follow suit then it will be a good end to the week and a good week overall with the FTSE100 up almost 5%.
crisis....what crisis.
Wise up and join the "rate-catchers" (as they call themselves on the MSE forums discussing cash accounts
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