What to do with some money
#1
I'm going to extend my house early next year and have allocated 60grand for the task.
I've arranged for a re-mortgage of my current house and so I will have 60 grand sitting around for 5 months before the work starts.
I'll be paying interest on the money, and obviously want to maximise the amount of interest I earn on it, while it's just sitting there.
Not keen on shares at the moment, and a bank although the safest option is'nt going to earn a lot of interest.
I had been thinking about premium bonds cus i've been told the chances are you'll get a lot more back than you put in, esp with the amount of money involved. I'm not sure about that one.
Another idea was to buy a house and then rent it out, but with property prices as they are and likely to drop and the short term involved this is'nt looking a good idea.
Anyone got any other ideas(cept for me to give it to them ) ?
[This message has been edited by Neil Smalley (edited 21 September 2001).]
I've arranged for a re-mortgage of my current house and so I will have 60 grand sitting around for 5 months before the work starts.
I'll be paying interest on the money, and obviously want to maximise the amount of interest I earn on it, while it's just sitting there.
Not keen on shares at the moment, and a bank although the safest option is'nt going to earn a lot of interest.
I had been thinking about premium bonds cus i've been told the chances are you'll get a lot more back than you put in, esp with the amount of money involved. I'm not sure about that one.
Another idea was to buy a house and then rent it out, but with property prices as they are and likely to drop and the short term involved this is'nt looking a good idea.
Anyone got any other ideas(cept for me to give it to them ) ?
[This message has been edited by Neil Smalley (edited 21 September 2001).]
#2
Most building societies will allow you to have the money available but not actually part of the morgage - this is what we did during recent extension. Also you are not going to pay out £60K in one go so we did ours in 2 or 3 'hits'. Alternatively someone like IF will allow you to put it in to a savings account where it is taken off of the outstanding morgage until used.
#3
As you have only got 5 months I think the whole buy a house then rent it out then sell it thing is a definite not starter as it is far too short a time to buy and sell the house let alone have somebody rent it from you!
Personally I wouldn't touch shares with a bargepole at the moment, in fact this morning I was helping our secretary find out the value of her shares and she was a little upset when I told her just how much they were currently worth! Trouble is so many people (her included) were taken in a year or so ago by the fact that there was easy money to be made on shares by private investors. I wonder how many of these actually made a profit (roughly around 0% I think!)
I think the premium bond idea is excellent as even if you don't win a single prize in the next 5 months (very unlikely) you can still get all of your £60,000 back. Just speaking to my boss about this I discovered he actually has £20,000 worth and he told me on average he wins a small prize (£50) every month or two and that this works out roughly as a 4% return a year.
Personally I wouldn't touch shares with a bargepole at the moment, in fact this morning I was helping our secretary find out the value of her shares and she was a little upset when I told her just how much they were currently worth! Trouble is so many people (her included) were taken in a year or so ago by the fact that there was easy money to be made on shares by private investors. I wonder how many of these actually made a profit (roughly around 0% I think!)
I think the premium bond idea is excellent as even if you don't win a single prize in the next 5 months (very unlikely) you can still get all of your £60,000 back. Just speaking to my boss about this I discovered he actually has £20,000 worth and he told me on average he wins a small prize (£50) every month or two and that this works out roughly as a 4% return a year.
#4
I disagree, shares are seriously undervalued right now, well below true levels, and people will make lots of money once things stabilize. Remember, for every share sold ther is a share bought, and the massive sell-offs right now mean that the smart ones are doying massive buys at bargain prices. Let the strike on Afgan or wherever happen, and by Christmas everything will be returning to true values, with the people that sold now feeling rather dumb, and the strong ones that bought now seeing their bank accounts swell - as usual, it's always the small (trends\panic driven) investor that loses out, and the big rich ones that get richer.
I'd go shares, look for solid stuff that has been dragged down by the overall market hype but is performing solid as a Biz. Even major airlines would be a good buy if you could stay in the market for 12m plus.
wall
I'd go shares, look for solid stuff that has been dragged down by the overall market hype but is performing solid as a Biz. Even major airlines would be a good buy if you could stay in the market for 12m plus.
wall
#5
<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:<HR>Originally posted by JoeyDeacon:
<B>As you have only got 5 months I think the whole buy a house then rent it out then sell it thing is a definite not starter as it is far too short a time to buy and sell the house let alone have somebody rent it from you!
Personally I wouldn't touch shares with a bargepole at the moment, in fact this morning I was helping our secretary find out the value of her shares and she was a little upset when I told her just how much they were currently worth! Trouble is so many people (her included) were taken in a year or so ago by the fact that there was easy money to be made on shares by private investors. I wonder how many of these actually made a profit (roughly around 0% I think!)
I think the premium bond idea is excellent as even if you don't win a single prize in the next 5 months (very unlikely) you can still get all of your £60,000 back. Just speaking to my boss about this I discovered he actually has £20,000 worth and he told me on average he wins a small prize (£50) every month or two and that this works out roughly as a 4% return a year. [/quote]
Slight snag with premium bonds is you can only hold £20K worth each.
Over such a short period anything related to the stock market is NOT a good idea, unless you can afford to loose the money.
<B>As you have only got 5 months I think the whole buy a house then rent it out then sell it thing is a definite not starter as it is far too short a time to buy and sell the house let alone have somebody rent it from you!
Personally I wouldn't touch shares with a bargepole at the moment, in fact this morning I was helping our secretary find out the value of her shares and she was a little upset when I told her just how much they were currently worth! Trouble is so many people (her included) were taken in a year or so ago by the fact that there was easy money to be made on shares by private investors. I wonder how many of these actually made a profit (roughly around 0% I think!)
I think the premium bond idea is excellent as even if you don't win a single prize in the next 5 months (very unlikely) you can still get all of your £60,000 back. Just speaking to my boss about this I discovered he actually has £20,000 worth and he told me on average he wins a small prize (£50) every month or two and that this works out roughly as a 4% return a year. [/quote]
Slight snag with premium bonds is you can only hold £20K worth each.
Over such a short period anything related to the stock market is NOT a good idea, unless you can afford to loose the money.
#6
Wall is fairly spot on. There will be large amounts to be made on the stock market in the next few months. The entire market is heavily oversold, particularly with todays heavy losses both on European and American bourses . IMHO the markets will start to stabilise fairly soon. (< 2 weeks). An American strike will more than likely reverse the trend. The bottom feelers are starting to show now so you would be well placed to have an on-line trading account holding the money by next week. Look for a solid business which has taken a heavy fall over the last 10 days. Stay away from banks, insurance telecoms and travel. My best recommendation would be to watch the food and drink industry for the biggest faller who have not issues trading statements (I.E. They have only lost value as a result of panic selling), then buy a substantial stake as soon as you hear about the American fight back beginning. Another possible big profit but with big risk is BA. If they close a deal with the goverment to cover insurance and to recieve assistance in the wake of the attacks they could gain some of the near 50% they have lost in the past 10 days.
If you watch carefully on-line you can predict price movements over the next hour or so based on current movement and trading volumes. You can make huge amounts of money doing this but it is not for the faint hearted, and is probably not recommended if you really need the money, as it occasionally goes horribly wrong.
If you watch carefully on-line you can predict price movements over the next hour or so based on current movement and trading volumes. You can make huge amounts of money doing this but it is not for the faint hearted, and is probably not recommended if you really need the money, as it occasionally goes horribly wrong.
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#8
I work for BA and if you have only 5 months to invest your money, I would stay away from their shares.
The only help we are likely to get from the government is to provide insurance cover and that is all. Considering our insurance runs out on 24th Sep, it needs to be sorted out very quickly.
Over the last few months, BA had been trying to put all of its eggs in one basket by concentrating on business class and transatlantic routes. That is why after last week, BA has suffered more than most! With the current job losses and probably more on the way, there is no way BA can pull it around in 5 months. With rising insurance costs, fuel likely to rise coupled with a huge loss in the business travel to America, the advice to buy now will only hold true if you are prepared to wait a lot longer than 5 months. 2 years maybe?
I have a lot of money tied up in BA shares through share options, share save schemes etc and it will just have to sit there for a very long time before I can turn it into hard cash.
You could always try Ryan Air? They are now worth more on paper than BA now. But personally I would stick £20k in premium bonds, just in case, and put the rest away in an e-savings account. I don't think you are going to make much in 5 months unless you take some very big risks but the premium bonds may bring in a nice cash bonus!
The only help we are likely to get from the government is to provide insurance cover and that is all. Considering our insurance runs out on 24th Sep, it needs to be sorted out very quickly.
Over the last few months, BA had been trying to put all of its eggs in one basket by concentrating on business class and transatlantic routes. That is why after last week, BA has suffered more than most! With the current job losses and probably more on the way, there is no way BA can pull it around in 5 months. With rising insurance costs, fuel likely to rise coupled with a huge loss in the business travel to America, the advice to buy now will only hold true if you are prepared to wait a lot longer than 5 months. 2 years maybe?
I have a lot of money tied up in BA shares through share options, share save schemes etc and it will just have to sit there for a very long time before I can turn it into hard cash.
You could always try Ryan Air? They are now worth more on paper than BA now. But personally I would stick £20k in premium bonds, just in case, and put the rest away in an e-savings account. I don't think you are going to make much in 5 months unless you take some very big risks but the premium bonds may bring in a nice cash bonus!
#9
FBS - The difference would be that if the shares regain 20% of the value they had 10 days ago you would still be losing 30% wil a new investor will be gaining 20%. I think the will fall further for another couple of days, and then rally to some extent. Buying after stabilisation would not be a huge risk but buying just before stabilisation is the big risk with possible big reward if you get it right
#10
Shares all day long...
The market fell by nearly 200 point today and then recovered 150, so it was only 50 down..
It's now dropped another 50...!!! ...
Just have a look on any decent Financial website.. Bloomberg etc..
James
The market fell by nearly 200 point today and then recovered 150, so it was only 50 down..
It's now dropped another 50...!!! ...
Just have a look on any decent Financial website.. Bloomberg etc..
James
#11
To make a point - Friends provident was trading at 250 a couple of weeks ago. It opened at 192 today and dropped to 164 by 2 o'clock then rallied to 194 before closing at 188. Buying 60k at online at 3.00 and selling now would yield a profit of 10 grand. In case you think this is easy with hindsight, look at my post of 3 o'clock. Correctly predicts the intervention of bottom feelers. These are people and/or funds who aim to take a high risk and make a high profit.
p.s. If you are wondering why I chose FP as an example its cos I just made 2 grand since lunchtime
p.s. If you are wondering why I chose FP as an example its cos I just made 2 grand since lunchtime
#12
Scooby Senior
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Neil,
why on Earth are you borrowing GBP60K five months before you need it??????
Unless you are very lucky (or very clever) you are not going to earn more than your loan interest payments. If it was soooo easy to do so, building societies would invest their money in whatever you are planning, rather than make piffling amounts from home buyers!!!
Premium bonds have just reduced their percentage for winnings, and although GBP20K (the max single investment) should on average mean one win a month, that may only be GBP250 in your timescales!!!!
Shares are a big risk at the moment, but as i mentioned in another thread - (skyscraper) construction companies and military hardware makers could be a good bet over the next six months to two years. You can guess why
mb
why on Earth are you borrowing GBP60K five months before you need it??????
Unless you are very lucky (or very clever) you are not going to earn more than your loan interest payments. If it was soooo easy to do so, building societies would invest their money in whatever you are planning, rather than make piffling amounts from home buyers!!!
Premium bonds have just reduced their percentage for winnings, and although GBP20K (the max single investment) should on average mean one win a month, that may only be GBP250 in your timescales!!!!
Shares are a big risk at the moment, but as i mentioned in another thread - (skyscraper) construction companies and military hardware makers could be a good bet over the next six months to two years. You can guess why
mb
#13
Boomer,
The reason is, that the mortgage I chose was a limited offer.
1.4% discount below base rate for the lifetime of the loan. So for 25 years I get 1.4% discount. It also allows me to pay back any extra with no penalties, and what's more I can underpay to the value that I overpay if you see what I mean. Therefore I get a form of mortgage protection without having to pay mortgage protection premiums..
I also need the money to buy other stuff for the extension, so i will be using it before building work takes place.
Fastbloke it's easier to make money after the event. But remember if I lose any money I still have to pay for it over 25 years.
The reason is, that the mortgage I chose was a limited offer.
1.4% discount below base rate for the lifetime of the loan. So for 25 years I get 1.4% discount. It also allows me to pay back any extra with no penalties, and what's more I can underpay to the value that I overpay if you see what I mean. Therefore I get a form of mortgage protection without having to pay mortgage protection premiums..
I also need the money to buy other stuff for the extension, so i will be using it before building work takes place.
Fastbloke it's easier to make money after the event. But remember if I lose any money I still have to pay for it over 25 years.
#14
Neil,
Blubell is quite right in this case. You're dealing with too short a time frame to consider "investing " in the Stockmarket. Anything less than a three year view is speculation and from your posting, I dont think that's what you had in mind. Even with prize bonds, you may not win anything as the average 4% annualised net return normally applies if the bonds are held for an average of 5 years or so. You could always be lucky of course but your money would be perfectly safe for sure. Were I in your shoes, I would do a few searches on the net and secure a decent deposit rate with a quality bank or Building Society (check Guernsey too. At least you'll be able to sleep at night.
Fast Bloke, with your flair for the markets, you must have taken early retirement, drive a Porsche and live in the Bahamas! I'm sure you're right and money will be made in the market when the rally comes but for the uninitiated, you must admit the current volatility and exceptional political circumstances prevailing make for a very high risk scenario particularly as Neil is committed to such a short time frame.
Just my twopence worth.
Jerome (Mr conservative)
Blubell is quite right in this case. You're dealing with too short a time frame to consider "investing " in the Stockmarket. Anything less than a three year view is speculation and from your posting, I dont think that's what you had in mind. Even with prize bonds, you may not win anything as the average 4% annualised net return normally applies if the bonds are held for an average of 5 years or so. You could always be lucky of course but your money would be perfectly safe for sure. Were I in your shoes, I would do a few searches on the net and secure a decent deposit rate with a quality bank or Building Society (check Guernsey too. At least you'll be able to sleep at night.
Fast Bloke, with your flair for the markets, you must have taken early retirement, drive a Porsche and live in the Bahamas! I'm sure you're right and money will be made in the market when the rally comes but for the uninitiated, you must admit the current volatility and exceptional political circumstances prevailing make for a very high risk scenario particularly as Neil is committed to such a short time frame.
Just my twopence worth.
Jerome (Mr conservative)
#15
Fast Bloke,
The reverse is surely true. If BA shares had been bought the day before, what would you have done when they fell to below £1.10 on Friday? Sold and took a loss! Or rode the market and waited for them to go back up?
What would have happened if they had dropped further?
I am sure yesterday other shares that you thought that would have went up actually went down. So the 24k that could have been made might have actually been a loss of 24k just as easily. I am sure I could find many companies that this happened to yesterday!
If I had £60k to invest of my own money, I wouldn't want the risk of losing any and at the moment that risk is very high.
Just as a matter of interest what trading sites on the web allow you to trade such that you can buy shares one minute and sell the same shares the next minute?
The reverse is surely true. If BA shares had been bought the day before, what would you have done when they fell to below £1.10 on Friday? Sold and took a loss! Or rode the market and waited for them to go back up?
What would have happened if they had dropped further?
I am sure yesterday other shares that you thought that would have went up actually went down. So the 24k that could have been made might have actually been a loss of 24k just as easily. I am sure I could find many companies that this happened to yesterday!
If I had £60k to invest of my own money, I wouldn't want the risk of losing any and at the moment that risk is very high.
Just as a matter of interest what trading sites on the web allow you to trade such that you can buy shares one minute and sell the same shares the next minute?
#16
Fast blue scooby - can I rest my case with the actuals from BA trading today. When I posted at 3.00, BA shares where trading at around 110. They hit 155 before closing at 146 after government announced insurance 'sponsorship' Had Neil's 60k gone into this at 3 oclock and been sold at close, he could expect a profit of 20 (33%). Selling at the high price is unlikely, but had he been either lucky or astute enough to sell at the high price he would have made 24k. That is I believe a UK300 for five minutes work. This is no bsh1t. Check the post times and FT interactive charting, and believe me, there are people who are much cleverer and subsequently richer than I am in this game
#18
Neil - Check the post times and share prices. Ok, so BA was a big risk as I said at 3.05. I also stated at 3.05 that they could be a big gain. i was right. I might have been wrong and lost 10k. I was right and would have made 25k if I had 60 to play with. As it was I went with FP and made 2k. 10k over 25 years is about 22.00 quid a month.
Fast blue scooby - You need to buy shares for a reason. There was no reason to buy them before Gordon Brown announced that he had reached insurance agreement with BA at approx 3.25. BA was getting nailed beforehand. At 3.25 the government announced free money for BA. Good reason to buy if you ask me. Where can you get free money?
FBS and MattN. Open a trading account with Nat West. you can trade in 20 second intervals.
Neil - you should be looking at 100k when you start the improvements. There has been no better time to make money since 1987.
p.s. For those of you that don't read, the EU appoved similar insurance deals with EU controllled airlines today. Watch them jump on Monday
Fast blue scooby - You need to buy shares for a reason. There was no reason to buy them before Gordon Brown announced that he had reached insurance agreement with BA at approx 3.25. BA was getting nailed beforehand. At 3.25 the government announced free money for BA. Good reason to buy if you ask me. Where can you get free money?
FBS and MattN. Open a trading account with Nat West. you can trade in 20 second intervals.
Neil - you should be looking at 100k when you start the improvements. There has been no better time to make money since 1987.
p.s. For those of you that don't read, the EU appoved similar insurance deals with EU controllled airlines today. Watch them jump on Monday
#19
Fast Bloke
For an Irish Muppet you offer surprisingly good financial advise!
But, the key element here is risk aversion, as with all forms of investment. My area of business is also investments (hence the Offshore Jersey location) and any short term investment over the next six months is likely to be extremely volatile. Yes, you could make a fortune but equally you could loose a lot.
It is obviously not "free money" that we are investing here. ie if you were in the fortunate position of having "spare" money then obviously you could afford to take a gamble with it, but that is NOT the case here. Firstly the money you will be investing is borrowed and secondly it is needed for a specific purpose in the short term. Both of these factors would lead any professional advisor to stear you away from any high risk investments.
On the other hand the world may end before Christmas so spend it all on enjoying yourself and to hell with the long term.
Hope this helps
Sid (Member of the Securities Institute)
For an Irish Muppet you offer surprisingly good financial advise!
But, the key element here is risk aversion, as with all forms of investment. My area of business is also investments (hence the Offshore Jersey location) and any short term investment over the next six months is likely to be extremely volatile. Yes, you could make a fortune but equally you could loose a lot.
It is obviously not "free money" that we are investing here. ie if you were in the fortunate position of having "spare" money then obviously you could afford to take a gamble with it, but that is NOT the case here. Firstly the money you will be investing is borrowed and secondly it is needed for a specific purpose in the short term. Both of these factors would lead any professional advisor to stear you away from any high risk investments.
On the other hand the world may end before Christmas so spend it all on enjoying yourself and to hell with the long term.
Hope this helps
Sid (Member of the Securities Institute)
#21
can you hire companies to buy and sell on your behalf ? if so who are the best to trade with and what sort of commission would you expect to pay.
happy to take high risks with a small amount of cash
happy to take high risks with a small amount of cash
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