EDIT: Actually, I realized that in my below response post, I probably should have directed jbkunt2 to another thread, and answered him within that other thread - since my below response is NOT very much the topic of this thread... related to Stock Market 2014, but rather overall considerations in basic ideas about "safe" investing.
So fair warning: my below post is largely a tangent from the theme of this thread - and I will concede in advance that continuing such discussion, if anyone is interested in such, should be taken to another thread - relating to thoughts on overall "safe" investment strategies/considerations over the next 12 months or so.
(06-25-2014 08:04 PM)jbkunt2 Wrote: Hi all,
This may be slighty off-topic but can anyone recommend the best options for low to medium risk interest-bearing savings accounts or investments?
I am trying to save for a deposit on a mortgage - I have around $50k - but need to build credit history first (12 month goal).
I'd like to get this cash earning at least some interest over the next 12 months. A mix of low/medium/high risk investments would work too. I'm not afraid of putting a chunk in medium to higher risk investments.
Any recommendations on products or banks/firms would be greatly appreciated. I am clueless here!
Thank you kindly![/align]
You have outlined fairly well a few of your parameters, including the amount of money that you have and the timeline in which you want to be able to use it.. and the fact that you are continuing to work on your credit history.
I have a little bit of trouble understanding your scenario to have a solid $50k at the moment, but then don't you have some kind of cash flow over the next year? I am NOT much of a believer in pumping a large sum at once into one investment but diversifying it and using your cashflow over the time period to dollar cost average the investment while potentially front loading various aspects of the investment.
Guys are going to have varying opinions regarding this, but it has been my sense that in the past 5 years or so that most banks (whether online or NOT have been increasingly reducing the amount of interest that they pay). Accordingly, if you find anything paying 3% or more, then you would be doing pretty good, relatively speaking.
It appears that you are in the UK, and it is possible that you may have some better options than guys in the US... Much of my cash is getting less than 1%.. which is really bullshit. using Capitlal 0ne online banking (which used to be ING and used to earn more than 5%, but that was 5 yrs ago)
Personally, $50k is quite a bit to acquire without having it work for you in some kind of way.. or if you just have it in cash or if you just have it earning 1-2% interest.
Over the years (20 years or so) I have put a lot of my money in varying index funds (stocks and bonds), and they have done o.k., but NOT great, but overall they have averaged between 5 and 6% returns (they have had some good up years of 20 to 30% and some down years of similar magnitude). One good thing about index funds is that they may be less risk over the long run, but any one year period, they may be up or down... .and you could get screwed....
In the last 8 months, I have been putting some of my newly available investment funds into bitcoin (actually, i have been fairly strategic about it in attempting to invest on the dips and to plan the investment over an extended period of time), yet my timeline, when i started with bitcoin was 2 years or more, b/c I got into bitcoin after it had experienced more than a 50x increase in value (price) over the previous year.
Probably many guys here are going to be pretty hesitant about bitcoin, the future of bitcoin or how to allocate bitcoin investments within their overall investment holdings. Ultimately, there is a lot of misinformation and disinformation out there about bitcoin - even though there are some advantages to bitcoin (including being able to manage it fairly well yourself with varying amounts of investment, can put money in or out fairly quickly, and it has been going down in price over the last 7 months, so i believe it is likely to go up in the coming months especially if you measure probabilities 6-12 months from now).
Overall, I am of the belief that 12 months is a pretty short time line for any guy to plan how to invest $50k, and I am of the belief that you need to account for your cashflow over that time period, as well as how much you have available at this particular moment. Accordingly, if you were to adjust your timeline a little to 15-18 months, then you could invest in a variety of instruments over the next 2-3 months, and then just dollar cost average over the remaining period, until you cash out.
So in this regard, pick your various investment instruments, divide your $50k into $2-5K allotments, and distribute that money over the various instruments. I think that you should also plan out your cashflow for the next 15-18 months in order to continue to invest incoming money (on a dollar cost averaging basis) into the varying financial instruments that you chose. Ultimately, I would place between $5-10K of the initial funds into bitcoin, but certainly, you should be able to figure out some risk allocation that is comfortable for you.
I do NOT know about any one stop shopping bank that is going to get you more than 1% interest on cash, yet some other guy may know and be able to chime in with that kind of information.