Could entrepreneurs help to boost your coffers? Jim Duffy comment

More bad news for savers this week as NS&I reduces rates on its products.
Third up is a risky venture and that is go and have an adventure with a start-up, says Duffy. Picture: contributed.Third up is a risky venture and that is go and have an adventure with a start-up, says Duffy. Picture: contributed.
Third up is a risky venture and that is go and have an adventure with a start-up, says Duffy. Picture: contributed.

Even worse, it’s now harder to win a bob or two on the Premium Bonds. TV pundits telling us that low interest rates could be here for years and traditional building societies sitting with poor rates for savers all adds up to a headache for those requiring a return.

Whether you plugged in 3 per cent or 5 per cent or optimistically 10 per cent returns on your money to see you into retirement, the opportunities to achieve these numbers seem to be dwindling. But rather than add to your doom and gloom as the value of your hard-earned cash diminishes over time, I thought we could try and be a bit more optimistic by looking at alternative investments.

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But from hereon in it is just my opinion and, of course, always get professional advice before putting your cash into any investment. What follows is really just a fantasy scorecard for what could be, rather than a sound retirement and savings plan. Now that you have been warned, here are a few ways that cash can be invested rather than the sub 1 per cent returns offered by NS&I. But beware, these are not for the faint-hearted.

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The first is probably the safest out of all of my fantasy suggestions. Yes, you guessed it – real estate or good old buy-to-let-type stuff. It seems that many of you still like to put your money into bricks and mortar hoping for a decent capital return along with some monthly income. While I have nothing like this, I have friends who are slowly building up small portfolios and tell me over dinner that these little gems will make a good medium-term investment.

From what they tell me, 5 per cent to 7 per cent is to be expected. Heck, that seems a lot more than NS&I is offering. Mind you, it takes a bit of work to buy them, look after them and sort the self-assessment out for these kind of investments.

Cryptocurrency

The second option is an old favourite of mine – cryptocurrency. This is easier than you would think. It used to very difficult with massive barriers to entry. But with new digital exchanges such as Coinbase, for example, it is much more user-friendly. If you need any help, just ask a millennial and they will gladly show you their online “wallet”. A good friend of mine right now is cock-a-hoop as he stuck £1,000 into a cryptocurrency five weeks ago.

That particular coin called Cardano has doubled in value for him. Drinks on him. Of course, it could all come crumbling down by next weekend, so drinks on me.But cryptocurrency appears to be here to stay for the long term.

Third up is another risky venture and that is go and have an adventure with a start-up. Places like Edinburgh are awash with so many exciting new-start entrepreneurs who will gladly take your money. They will have fancy business plans, slide-decks, and one minute pitches to woo you. It will all look quite exciting and full of positive energy. It has to be, as these folks are building their dreams and need to focus and sell to make it successful as they have everything on the line.

Of course, many of them will do well, but a lot more won’t make it. And how do you choose? Well, one way to do this is to join an angel syndicate. Essentially these are pooled sophisticated investor groups, where a group of say 20 investors will all stick £10,000 into a start-up. I think the success stats, though, are still that for every ten investments made, only two to three will make a return. As I said at the beginning, not for the faint-hearted or those who cannot afford to lose money.

I could go on and on with wine, coins, classic cars etc, but all of the above means putting your money at risk. A risk that is a lot higher than the safety of NS&I. But therein lies the dilemma. Be a “safety Steve” with little return, but cash pile intact after five years or go up the risk ladder with a potentially bigger return, but where you could lose it all overnight. Bring back the good old days of 5 per cent at the local building society, eh?

Jim Duffy MBE, Create Special