Reply to: Gbp

[denver2k]

should they move their money into something else, such as gold for example?

Buy Chinese Yuan

On Serious note...Diversification in investment is the way forward.

Reduce the exposure in GBP. Gold and other good old commodities are lot better than speculattive equities,fockd up bonds and valueless paper currency(backed by debt driven economy).

[ASB]

Since you are in the process of buying a house why not borrow some of the money from the parents and pay them what you would pay in Mortgage payments?

[Cyberman]

Do they own a property with equity ? If they do then they can consider equity release as my parents have done, although of course it will not help your inheritance.

[Bagpuss]

What rate or interest have they been accustomed too?
You can still get 4.3% on a fixed one year deposit.
Or 3.12% on a 90 day notice.

Yep, if you look at the longer term accounts interest rates are higher which implies the banks expect interest rates to rise in the medium term. Therfore I wouldn't fix for more than a year, this time next year there are likely to be accounts paying over 5% again

[HairyArsedBloke]

Lend it to the government - you know it will be safe there.

[crack_ho]

What rate or interest have they been accustomed too?
You can still get 4.3% on a fixed one year deposit.
Or 3.12% on a 90 day notice.

[suityou01]

True, but by the time rates are back to the long term average of about 6%, they will have starved to death and owe about £10K in council tax alone.

I'd never let them starve, but they would be much much thinner.

[DimPrawn]

But remember - rates will not stay this low forever. Your parents have seen multiple enonomic cycles and they can probably see that the next cycles are just around the corner: Deflation (coming now) and hyperinflation (high interest rates).

True, but by the time rates are back to the long term average of about 6%, they will have starved to death and owe about £10K in council tax alone.

[ChimpMaster]

I was also going to mention property - though I believe prices will still fall.

An example I have is to buy a 3 bed house for £150k and rent it to the council on a 3 year contract. They pay £800/month. In the area I've been looking at you could actually get a 3 bed house for £130k now, probably needing a bit of work but gives a 7% return on that rental income.

But remember - rates will not stay this low forever. Your parents have seen multiple enonomic cycles and they can probably see that the next cycles are just around the corner: Deflation (coming now) and hyperinflation (high interest rates).

[DimPrawn]

Good advice there.
I would also add don't have all your money in GBP - have some in Euros

Trouble with putting your money directly into other currencies (if you are living off the dividends/interest) is that you are at the mercy of the exchange rates and if you need an income that can be rather worrying month to month.

[sasguru]

Some things to look into.

1. Buy a managed fund or bond that pays a monthly dividend, has some risk to the capital, and ties the lump sum up for several years.

e.g.

http://investor.invescoperpetual.co....ncome_fund.pdf

2. Buy UK property and enter the BTL market. With cash you could pickup some bargains at auction and have an agency fully manage the properties for your parents. They then live off the rents.

3. Build your own portfolio of shares and bonds, choosing defensive stocks that pay a high dividend.

4. Lend the money on Zopa. http://uk.zopa.com/ZopaWeb/public/le...g-at-zopa.html

5. A mix of the above.





Whatever you do, it's better than sticking it in a high street bank that pays 0.1% interest.

Good advice there.
I would also add don't have all your money in GBP - have some in Euros

[suityou01]

Some things to look into.

1. Buy a managed fund or bond that pays a monthly dividend, has some risk to the capital, and ties the lump sum up for several years.

e.g.

http://investor.invescoperpetual.co....ncome_fund.pdf

2. Buy UK property and enter the BTL market. With cash you could pickup some bargains at auction and have an agency fully manage the properties for your parents. They then live off the rents.

3. Build your own portfolio of shares and bonds, choosing defensive stocks that pay a high dividend.

4. Lend the money on Zopa. http://uk.zopa.com/ZopaWeb/public/le...g-at-zopa.html

5. A mix of the above.





Whatever you do, it's better than sticking it in a high street bank that pays 0.1% interest.

[DimPrawn]

Some things to look into.

1. Buy a managed fund or bond that pays a monthly dividend, has some risk to the capital, and ties the lump sum up for several years.

e.g.

http://investor.invescoperpetual.co....ncome_fund.pdf

2. Buy UK property and enter the BTL market. With cash you could pickup some bargains at auction and have an agency fully manage the properties for your parents. They then live off the rents.

3. Build your own portfolio of shares and bonds, choosing defensive stocks that pay a high dividend.

4. Lend the money on Zopa. http://uk.zopa.com/ZopaWeb/public/le...g-at-zopa.html

5. A mix of the above.





Whatever you do, it's better than sticking it in a high street bank that pays 0.1% interest.

[Gonzo]

It took 3 posts to get to that?

No. I started that response as soon as you had posted it.

While previewing it I thought the response was a bit aggressive so I cancelled it.

After a few minutes I thought "what the hell?"


On the plus side, as long as RPI inflation is negative the capital is not being erroded by the low interest rate.

[suityou01]

But Gold pays precisely zero interest. Look for good solid dividend plays in the stock market and hope for the best.

You make your money if the price of gold goes up I think. Buy at price X, and sell at price Y. Y-X equals profit.

Hang on a mo .....

<searches draw for some crayons>