I've just read the bozo's thread talking about his guaranteed 12% with no risk to capital and wonder what are the best guaranteed no risk rates available.
It seems that anyone can get a safe return of around 4% plus a bit by investing cash in one, or other of the banks - ing come to mind.
I am wondering what the best guaranteed rates, with no risk to capital, are available if you had say £1 million, or £10 million etc. to invest.
Also, what difference would it make if you were willing to commit to say, a 5 year investment, rather than immediate access, and whether you drew the interest as income, or commited to reinvesting it?
You have to say what you mean by "no risk", there are different kinds of risk. Anything other than government bonds (and national savings etc) has the risk of default - in theory even the government could default, although it's pretty unlikely. Bank deposits are only protected up to something like £30k, although it's probably the case that a big bank wouldn't be allowed to go under. Also you run an inflation risk unless you have an index-linked investment. On that basis you could argue that long-dated index-linked gilts are as close as you can get to risk-free, currently offering about 2%. However, you would still run the risk of a substantial capital loss if you needed to sell after a few years and real interest rates had moved up.
There's also a tax risk, some of the return may be taxed and tax rates may change. You could buy index-linked gilts in a pension, although 75% of it will still be taxed eventually. Or there are premium bonds: "win a million pounds tax-free or your money back". But the total holding is fairly small, likewise many of the national savings products.
I guess I meant "no-risk" to the actual capital sum, and I guess I would include the banks and, probably, building societies, i.e. an investment where the capital is not at risk to fluctuations in its' value.
In fact, I am really wondering if banks, building societies, and other "safe" investments, would pay higher interest rates for large sums like £1 million etc..
I am sure my definition of "no risk" is still not watertight, but I think you will get the gist
Hi Richard, The Bozo is offering a fixed return of 12% gross over a three years e.g Put a million in get 1.36 million out after 3 years. If you want to invest over a shorter period I can offer 11% over one year and 11.5% over 2. N.B Basic guaranteed return for amounts over 100k is 10% with bonuses of
1%, 1.5% or 2% for 1,2or 3 years terms.
for smaller investors with 5000 or more it is 8% plus 1/2%, 1.5 or 2% for
1,2 or 3 years.
I think 8.5% is as good as there is for 5000 over 1 year.
I can understand the scepticism, you cannot get this anywhere else, it has not been offered to the public before, hence all the garbage in the other threads.
Why don't you say what that would *actually* be?? - ie only **10.8%** per annum return (which is less than your return for 1 or 2 years tie-in).
1m plus 10.8%pa -> 1.108m after 1 year, 1.228m after 2 years & 1.36m after 3 years.
12%pa would of course give 1.12m after a year, 1.25 after 2 years and finally 1.405m after 3 years.
If I had a million pounds to deposit I think I'd definitely start worrying about how safe the banks are!
Well, yes and no. You'd get money market rates, but they might well come out lower than the teaser rates from e.g. ing - OTOH for that kind of thing they may have a maximum deposit (I haven't checked) so you could actually come out worse with a big sum.
Yes, but if it's a real question as opposed to an academic exercise then you do need to think about different kinds of risk!
As it happens, this morning I got a mail shot from Sarasin for a product which looks somewhat interesting. It's basically an investment in a low-risk "managed balanced" fund, i.e. invested in a mixture of cash, bonds and shares, but there is a 5-year capital guarantee underwritten by Rabobank who they claim to have the highest credit rating of any bank in the world. Of course there are many such products, but this is somewhat unusual: a) it pays out income, most products absorb the income as an effective charge. b) it's based on an existing managed fund, most of these things are linked to some fixed basket of shares or indices. c) most interestingly, the charge for the capital protection is explicit: 0.45% per year over the five years. That's really pretty low, but then the fund is low-risk and markets are currently likely to be at a low point so I guess the expected risk of a fall over 5 years is rather small. Personally I'm not looking for a protected product, but if I wer e that would look a lot better than most of the things I've seen.
The bonuses are based on how long you invest. The Capital is used for a specific purpose and earns a fixed percentage. The investment company has set the scheme up so that you receive more the longer you invest. There is nothing complicated about this. I can send you a prospectus of the invetment. You can then see what it is. send a request to snipped-for-privacy@surestar.co.uk.
It's a real question in that one alternative to collecting rent as an income, with all the hassle that goes with it, I could sell the properties and invest the money. It probably wouldnt be a million, (except on a good day ), and it probably isnt an option I would choose, but it ought to go in the brainstorming pot.
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