Investing

[megamuel]

Hello all,

Its not a trading question but I am guessing there will be some people in here that might be able to help. The question is on behalf of my Dad. He will be retiring in a couple of months time and will be recieving a lump sum which he wants to invest. He plans to put around 75% of it just in normal savings accounts (a few in case there are any problems with the banks and he needs to claim it back). He hopes to make a bit of money each month to pay the bills with etc. But he's unsure what to do with the other 25% or so. I've tried to pursuade him to give it to me to trade with but that didn't go down to well He says he is willing to put it into something a tad more risky, but when my Dad says risky he means really safe! Does anyone have any ideas (sensible!)? Someone posted a link to something called 'Zopa' on here the other day where you can lend money to people and set your own interest rate.... He's gonna look into it. I don't know how good that is. Anyone else got any suggestions?

Thanks in advance,

Sam.

 

[Rossini]

Oil? I am in the process of buying the stuff, small ammounts at a time. We may not have seen the bottom yet but the value of oil and the fundamentals are in place for a good rise in my opinion (long term). I’m not going in leveraged and as there will always be demand I can’t see the price going to 0. So I’m just buying and holding.

Also-

Unless I'm mistaken, Northan rock guarantee all of the funds you deposit with them, regardless of size? Maybe someone could confirm?

 

[timsk]

Hi Sam,
Your dad might like to consider ETF's (Exchange Traded Funds). They trade much like individual shares, but they don't carry the risk associated with investing into an individual equity.
London Stock Exchange - Investing in ETFs
Tim.

 

[fibonelli]

You don't mention the amount nor the holding period.

Unless you are given more than £25k, I'd steer away from company shares. You have to buy at least 10 to diversify specific and sector risk.

Far better to choose a small selection of highly regarded managed funds. The lower the holding period, the lower volatility the funds need to have.
Trustnet - Unit trust, OEICs, investment trusts, life, pension and offshore fund factsheets, prices, performance, ratings, videos, news & research

Finally, make sure you read the small print before investing.

 

[Jack o'Clubs]

Corporate bonds. Spreads vs gilts are sky-high and overly discount an economic disaster. £25k too small to invest direct so a spread it across a couple of good investment grade bond funds like Invesco Corporate Bond, or Aegon Investment Grade Bond Fund.

Alternatively the Investec High-5 account is a good way of getting decent interest rates without permanently hopping between accounts, and £25k is the minimum deposit.

 

[Fatema Abdulla]

ZOPA ( E-Marketing )

Dear Sam,

I'd like to stress on Zopa as a good choice of investment. Zopa is the world's first online social finance company which allows the lender to deal directly with the borrower by bypassing the role of the bank. The lending process through Zopa is quite simple and transparent; the lender has the option to choose amongst borrowers with different risk profiles. If you chose lending to a borrower with lower credit worthiness it will subsequently give you a higher rate of interest and vice versa. However, in both cases the average return to lenders is 9.1 per cent before any bad debts, and even after bad debts lenders can still expect a 50 per cent more than banks saving accounts.
Moreover, to reduce the overall risk, a lender does not essentially lend to a single borrower, instead a lender lends money across at least 50 different borrowers to diversify the risk. Zopa adopted the approach of lending responsibly, and not to the subprime market. In fact most of the loan applications in Zopa are turned down, it only accepts people with a valid and positive credit history, this has led to default levels of below 0.1 percent.
Lenders must enter into a legally binding contract with their borrowers; Zopa handles all the monthly repayments and if there was a delay in the payment, Zopa uses the same process that high street banks use for money collection. If you are wondering what it’s in it for Zopa, it charges only 1% annual fees on your lendings.
Since Zopa's launch in 2005 it has won many international awards for its innovation and technology including one from the banking industry itself in 2007. Therefore, I strongly agree with the person who recommended Zopa as one of the best ways of investing your fathers' money. To wrap it up, Zopa is a secured website and I am certain that you will get satisfying returns on your investment.

Best Regards
Fatema

 

[timsk]

Hi Fatema,
Welcome to T2W.
Are you connected with Zopa in some way and / or are you a lender?
Cheers,
Tim.

 

[jaet1989]

Zopa, no, I would advise supertrending on a 5 year that should point you in the right direction.

 

[arabianights]

The Zopa markets are massively underpricing risk at the moment. It's a great deal for borrowers but for lenders... nah