With the stock market 'bombing', many investors are reluctant to commit their funds to Equities. Calling the bottom is difficult, and can be like trying to catch a falling knife. With corporate profits under pressure, poor corporate management and fragile recovery prospects, many investors are looking for alternative homes for their money. Pink Finance looks at a few alternative places in which to keep your wedge.
Premium Bonds are still popular with many, even though there is no actual interest rate return. Winners are selected monthly by a machine called ERNIE (Electronic Random Number Indicator Equipment). ERNIE is not a computer, so cannot be pre-programmed with winning numbers, and more importantly yours cannot be left out of the draw.
On purchasing a premium bond you are allocated a number, which is then entered into a monthly prize draw. Unlike the National Lottery, you keep the number until you decide to cash your bond in. Prizes of up to one million pounds tax-free are awarded every week - with many smaller cash prizes also awarded at between £50 and £100,000.
Current odds as quoted by the National Savings website of someone investing £20,000, would expect eight prizes a year on average. You can invest anything from £100, up to £20,000 - in multiples of £10. Investments into Premium Bonds are 100% secure, as the treasury backs them.
Why not visit the National Savings Website to find out more at www.nationalsavings.co.uk?
Paintings, furniture and items of value such as coins have become popular investments recently. They offer little regular yield prospects, just capital growth opportunities. Growth is governed by market forces which, most of the time, is in the eye of the beholder.
Specialist knowledge in the field is an obvious advantage, and many first time investors may not feel confident in this area. However, if kept for long enough, items of value can make worthwhile investments. Many paintings, for example, with their returns being in the eye of the beholder, have done very well for their owners.
If you are an admirer of beautiful things, you also get the added pleasure of having the item in your home for the term of the investment. You should be aware that like the Stock Market, values of art and antiques are sometimes governed by market forces, so are not risk-free.
Any spare cash you have lying around could be used far worse than offsetting against the balance of your mortgage. There are many products that allow money to be placed into a current or savings account alongside your outstanding balance.
Instead of paying you interest in your hand, this method means you will not pay interest on this portion of the debt that you owe. This type of alternative investment has become popular, especially for higher taxpayers.
Taking an example of a Base Rate Tracking product at .75% above Bank of England Base Rate, the effect of not paying the 4.50% would be equivalent of earning 5.76% for basic taxpayers, and 7.5% for higher payers.
Like any savings account the balance of your funds are secure from any movements in the market. The only variation in return will come if the Monetary Policy Committee of the Bank of England makes interest rate policy changes.
The rise in property prices has encouraged a growing number of people to invest in their primary residence and in a second, or buy to let, property. Lower interest rates have compounded this effect, with borrowing costs at a manageable level.
The failure of the stock market to perform has meant that many have looked to bricks and mortar for long-term investment purposes. The rise of the market has been supported by a relatively low proportion of the nation's net income being used to service repayments to mortgage debt.
There are still opportunities within property, but returns over the next couple of years may not be as strong as those past. There are question marks over the sustainability of the market, especially if interest rates rise, or demand starts to fall.
If the capital value of property continues to increase rapidly, then demand will be naturally restricted by people's ability to raise the required finance. Also, if interest rates rise in the future, the level of monthly payments being made against the debt will also restrict demand.
Before moving back into the stock market investors are going to wish to see the early shoots of growth, continued positive news-flow from companies and restoration of confidence in corporate management.
The static state of the market makes the correct time to invest difficult to predict. The reluctance of some experts, commentators, fund managers and economists to call the bottom compounds the situation and makes predictions even tougher.
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