How best to invest 5000 pound's

ohnno · 30 April 2010 at 1:44PM

I want to put this much away for my daughter who is 14 year's old. What would be best to do with the best interest ?
Thanks x

lisyloo · 30 April 2010 at 1:55PM

How long are you willing to tie it up for?

ohnno · 30 April 2010 at 2:43PM

3 years at least i think. Thanks

purtoo · 30 April 2010 at 2:56PM

I have a similar amount to save and would love some advice, thanks

ohnno · 30 April 2010 at 3:02PM

Me first Purtoo,lol ! :rotfl:

lisyloo · 30 April 2010 at 4:47PM

Right, well investment need 5 years plus, so you don't want to invest.
You want to save.

You have the choice of getting the highest savings account you can. If you can tie the money up for 3 years then you can get about 4%.
Nationwide e-bond is 4.13%
LLoyds TSB is 4.10%

However interest rates are likely to rise, so you might want to go for a variable account. There are plenty paying 2.75%.

The other alternative is to go for an NS&I (governement) index linked certificate.
These pay RPI + 1%. Currently RPI is 4.4%, but we can't tell you wth it will be in future. I have some of these as I think inflation will stay high, but it is a bit of a gamble. They have a 3 year version but you can take money out after 12 months.

So basically you have to take a view on what you think might happen to interest rates and inflation.

Easiest thing would be to get the Nationwide account at 4.13% and leave it there for 3 years.

Be aware that if you are a tax payer then you will have to pay income tax on your interest so may be better to put the money into your daughters name.

ohnno · 1 May 2010 at 5:38PM

Thanks.
Ive been to the Natwest and i can get 600 pound interest after 3 years in a childs name,paying no tax. Does this sound ok to you ? x

amcluesent · 1 May 2010 at 6:21PM

> 3 years at least i think.<

36 month A* market on Zopa, currently returning something like 6% after bad-debt and fees.

mbga9pgf · 1 May 2010 at 7:40PM

I personally would go 50% in 3 year fixed bonds, 50% in strong UK midcap firms involved in exports and high tech. Couple of good uns in the FTSE250. Steer clear of the stock market for the next few months post election, I reckon we are in for a bit of a savage drop. You can get some pretty good yeilds (6%+) off defensive stocks (energy suppliers, food producers, supermarkets, SAFE banks etc).

I wouldnt stick with just one asset class, thats one thing I have learned investing for the mid to long term. As long as you spread your investments across a couple of differing asset classes, you minimise risk and maximise profit.

Hope this helps.

How best to invest 5000 pound's

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