Small sum of money to invest - Help please

Amnesia180 · 1 August 2007 at 9:22AM

Hi All...

I recently had just over £3k in my bank. I decided to start renting a flat etc... but now I'm left with £1600.

I don't know where to invest it, or who to invest it with. My money is currently sitting in a Lloyds Online Savings account earning very little interest.

I could put a minimum of around £60 in a month and keep adding to it that way.

Any suggestions or advice would be much appreciated!

I'm also thinking of adding a couple of hundred pounds to Premium Bonds aswell.

Thanks in advance,
Dan

dunstonh · 1 August 2007 at 10:22AM

How do you want to invest?
What risk do you want to take with the money?
How long are you looking at?

Typically, with this amount you would use a MINI Stocks and Shares ISA and pick a fund (it would have to be one or two with this amount) that suits your risk profile.

Amnesia180 · 1 August 2007 at 10:47AM

Thanks for the reply.

Well, I'm not looking to risk too much... as I don't really know what I'm doing yet.

I am hoping to get some short term results (nothing massively huge!) but it's more for the long term when I start looking for housing etc.

My goal is just to build on my finances... without the risk of losing it ALL!

Thanks,
Amnesia

Amnesia180 · 6 August 2007 at 11:02AM

*bump*

Any more advice on this?

meggles · 6 August 2007 at 11:10AM

risk & reward are roughly inversely proportional. ie- the most you are willing to risk, the more £ you may make. however, this comes with risk.

£1600.
is there a possibility that you'll need this money over the next 12-24 months?
have you used your Isa allowance this year?
if you lost 50% of this in the next 12 months, would you be distraught? would that be a problem financially?

jamesd · 6 August 2007 at 9:26PM

Can you delay your house purchase by several years if the markets drop just before you want to buy? If not, and if your plan is to buy within the next five years, you might look at regular saver accounts.

If you do think that you have the flexibility to accept a possible loss if you need to withdraw the money when the markets are down, first read Ok then - How do I choose a S&S ISA to get an idea of what a sector allocation is and how you can buy and sell funds within a stocks and shares mini or maxi ISA. There's an example there of a sector allocation for risk level 5 that may suit your objectives.

Amnesia180 · 7 August 2007 at 8:58AM

Thanks for your replies.

I don't have an ISA at all. £1600 is all I have left now. I did have over double that - but I recently moved out into rented accomodation and bought furniture, TVs etc etc...

Before I invest, would it be wise to take a mini ISA? or use a regular savings account for now to build on the amount of cash that I have?

Another factor is my job, I may be looking to change job in January, which means I'll lose my company car... so I'll have one of those to buy as well as insurance and petrol costs.

So my thoughts are (as already said) keep building on that £1600 until I have some more money and then look at S&S?

Thanks again
Amnesia

CLAPTON · 7 August 2007 at 9:56AM

you need to have some cash savings before you even consider investing in stocks and shares.
put the money in a mini cash ISA and add the regular savings amounts too until you have used up your 3000 ISA allowance for this year.

Amnesia180 · 7 August 2007 at 10:01AM

With a mini cash ISA can I put money in as often as I like? (up to the total value of £3000?)
Then how long does it have to sit before I can withdraw money (if I need to?).

I'll go research some good min cash ISA out ther!

Thanks again.
Amnesia

Dithering_Dad · 7 August 2007 at 10:16AM

With a cash ISA, you can take the money out whenever and as often as you like, without penaties. You can't put the money back in though if you have already saved up to the £3000 maximum.

If I were you, I would calculate how much it costs to run your life over the course of a month (i.e. bills such as rent, council tax, food, utilities, going out, etc.) and them multiply this by three. Save this much money into a cash ISA as your emergency savings before you even think of investing.

Amnesia180 · 7 August 2007 at 10:39AM

When you say work out how much I spend, and multiply by three. That would come to more money than I have left over.

Small sum of money to invest - Help please

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