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Treacodactyl
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 25795
Location: Jumping on the bandwagon of opportunism

Posted: Tue Mar 04, 14 2:50 pm Post subject:

Sadly it is very much a borrowers market and it's likely to continue for years to come.

One thing worth remembering is savings rate vs inflation, although your rate may have gone from 1.75% to 0.9% as the inflation rate has fallen from 4% to 2% you're actually better off (although that does depend on what you're saving for).

With premium bonds the prize fund is based on an interest rate (currently 1.3%) so you can use that to compare to other rates.

As for savings rates vs funds or investments, generally as the rate of return goes up so does the risk. Personally I can't see the stock market going up in the next couple of years as much as it has done in the last few years.

If you've got a large chunk to invest I'd seriously consider seeing a financial adviser if you don't know what you're doing, but read up on what to expect first so you don't get stung on charges. There's plenty of DIY guides out there.

And here's something on peer-to-peer lending: https://www.moneysavingexpert.com/savings/peer-to-peer-lending

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Tue Mar 04, 14 3:12 pm Post subject:
Here's another MSE link that I came across last night on the subject of Premium Bonds; https://www.moneysavingexpert.com/savings/premium-bonds

Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Wed Mar 05, 14 10:14 pm Post subject:

Rob R wrote:

Lorrainelovesplants wrote:

Rob - I can hardly invest my mothers money in a scheme that will basically pay her back in meat - I mean she stopped eating a few months back. Id end up in jail!

I realise the cash ISA thing is crap right now, but am looking at wider investments also - government bonds, anything really.

Not all crowdfunding pays back in meat and small businesses are crying out for funding right now. We can't complain about bankers and the government then continue to pay them all our capital to do with as they wish. As I said, the Zopa investment is a more regular form of peer to peer lending and far better rates than ISA's.

You should never treat crowdfunding as an investment. You do it, fully aware that you could lose everything, and have no comeback.

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Wed Mar 05, 14 10:22 pm Post subject:
What definition of 'investment' are you using?

Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Wed Mar 05, 14 10:24 pm Post subject:
Getting a financial, increased return on your money. As he asked for.

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Wed Mar 05, 14 10:34 pm Post subject:

Yes, that seems to be exactly what crowdfunding can be.

Quote:

in·vest [in-vest] Show IPA
verb (used with object)
1. to put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Wed Mar 05, 14 10:39 pm Post subject:

Martin Lewis has just sent me this;

Quote:

It's the final ISA countdown - de-de dur-dur...
Warning: Use it or lose it. Only ONE MONTH left to take advantage of this year's tax-free savings allowance

Don't get scared off cash ISAs - they're not complex, they're just savings accounts where you don't pay tax on the interest. You can put £5,760 per tax year in, and after that the money stays tax-free year after year. So if you've not saved any cash in one since 6 Apr 2013, and have savings, consider using yours ASAP. Full info in Top Cash ISAs, here are the best buys...

Get 1.75% AER variable with the ability to take money out. Many wrongly believe you need to lock money away in a cash ISA. National Counties (min £100) pays 1.65% & allows unlimited withdrawals. Britannia's a higher 1.75% (min £500) but only allows 2 withdrawals a year; though you can transfer in past years' ISAs to up their rates.
Lock cash away to earn up to 2.75% AER. If you don't need to access the cash, Top Fixed Cash ISAs pay more. Though beware locking in, in case other rates bounce back. Top 1 & 2-yr fix: Britannia 1.85% and 2.05% (2% and 2.2% for existing custs). 3 yr: Coventry BS 2.75% (no transfers).
Should I use a 3% AER easy access savings instead of an 1.75% ISA? If you're willing to switch to Santander's 123 bank account (2nd top for service in our poll), it pays 3% if you've £3,000-£20,000 in it. Does this beat an ISA? Often, yes. It pays 2.4% after basic rate tax, 1.8% after higher rate. Yet by putting cash in an ISA you protect it from tax year after year. So balance higher rates now versus building up a bigger tax-free savings pot each year.
Does your local credit union offer up to 3% AER? A few of these local non-profit savings and loan co-ops offer higher rate cash ISAs, eg, Voyager Alliance (open to those working in transport) pays 3%. See Credit Unions guide.
Cash ISA golden rules. 1) Monitor your rate. If it drops, ditch & ISA transfer. 2) You can use your ISA allowance for share investing too - see the ISA Guide for more. 3) ) All accounts listed have full £85k savings safety.

Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Wed Mar 05, 14 10:45 pm Post subject:

Rob R wrote:

Yes, that seems to be exactly what crowdfunding can be.

Quote:

Can be. But isn't, often enough, or convenient enough to offer a better return than a cash ISA to someone who wants security, and fast access to his money. It's a daft suggestion for Bodger.

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Wed Mar 05, 14 10:57 pm Post subject:

Nick wrote:

Rob R wrote:

Yes, that seems to be exactly what crowdfunding can be.

Quote:

Can be. But isn't, often enough, or convenient enough to offer a better return than a cash ISA to someone who wants security, and fast access to his money. It's a daft suggestion for Bodger.

It's not a suggestion for Bodger - it's for everyone who doesn't know it exists as an option. It is an investment, though.

Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Wed Mar 05, 14 10:59 pm Post subject:
My mistake. It was the way you posted it in his thread, ten minutes after he asked for investment options that threw me. I didn't realise it wasn't related to his question.

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Wed Mar 05, 14 11:28 pm Post subject:

Well obviously it could be open to Bodger if he wished, but as it was so clearly not what he asked for I didn't think he'd go for it. And he's asking for ideas - I'm assuming, because he has money, that he's not going to take the second, or any, suggestion from a bunch of people on an internet forum, but if it suits him, he will look into it further.

If you want instant access to your money, you're going to get a crap rate, if you can be a little more flexible/more risk, there's better returns available. You're never going to get both though. Zopa offers some safety, according to Lewis,but it does mean locking it away for a bit longer;

Money Saving Expert wrote:

How quickly can you withdraw money? You get monthly repayments. But if you need your capital back before your term ends, its not-that-rapid Rapid Return system takes three to five days to get you the cash. It'll cost you an additional 1% fee.

Crowdfunding may have started out as a high-risk trust based exercise in the film industry but there's working going on, to really push it forward as a serious challenge to bank lending, at national & European level, in various sectors.

Lorrainelovesplants

Joined: 13 Oct 2006
Posts: 6521
Location: Dordogne

Posted: Thu Mar 06, 14 12:27 pm Post subject:

Im just posting to say that this morning I had a good look at crowdfunding on the net and Im more interested - not for mums money (my brother will never agree to it), but for my own savings - if I can invest, say £1000 in something, assure myself that its going to be reasonably safe, and get a bigger return than at the BS, AND help someone out then Im happy to risk it.

I will need more info, but I just thought Id post to say, Im open to the idea now that Ive had time to look at it.

wizz

Joined: 06 Apr 2005
Posts: 561

Posted: Thu Mar 06, 14 1:56 pm Post subject:
Saw something on the news this morning about regulation being introduced to the crowdfunding market, so perhaps a bit more reassurance for those of us who are quite risk averse. I think the issue in all investments when you want to keep the risks low(er) is that you spread your investment - hence your risk...

Nick

Joined: 02 Nov 2004
Posts: 34535
Location: Hereford

Posted: Thu Mar 06, 14 2:22 pm Post subject:
5Live were talking about this this morning. Clearly, it's a broader market than it used to be. There's never a guaranteed return, but by spreading out in a portfolio the guy interviewed suggested he made 9% before bad debts, 6% overall. No timescales given, but it's not a fast return, and it guess you rarely have control over when you get your cash back, unless it's equity in a traded company.

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Thu Mar 06, 14 4:35 pm Post subject:

The same goes for receiving crowdfunding - you're a creditor of the company/individual & if something happens to them, the family can want the money back, so don't put all your eggs in one basket without some decent legal contracts. Most crowdfunding is no more than you'd pay for the product/services of the company, any bigger than that and it's too much risk. You should agree & confirm your terms & conditions before investing/receiving though - don't wait until afterwards. You're more likely to be able to get your money back if the money is being spent on assets, rather than services - I wouldn't invest in anything that involves spending the money on 'marketing'.

Last edited by Rob R on Thu Mar 06, 14 8:13 pm; edited 1 time in total

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