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£15,000 to invest and I don't know what to do
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# 1
zippygeorgeandben
Old 17-07-2008, 2:21 PM
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Question £15,000 to invest and I don't know what to do

Hello everyone,

First time posting in this particular board. I hope you are all as friendly as the DFW's and the House Buying board, time will tell I suppose!

I have recently been given £15,000 which is sitting in my current account and I am unsure as to what to do with it. I'm looking for any pointers here.

I currently put £300 into my ISA each month so I've put about £900 in since the start of this financial year and this accrues interest on a monthly basis.

Me and my partner have been studying the property market for the last 8 or so months now and realise it's best to keep renting at the moment before buying our first property. This £15,000 could come in very useful to help build up/towards our deposit and the quicker I stick it somewhere beneficial, the better (at least that's my thinking anyway). It could do with going into an account where it can be withdrawn at any time as if we find a property in 6 months time, I don't want to be in the situation where it can't be used as I am unable to with draw it due to the terms of the savings scheme.

The alternative is to use part of this £15,000 to pay of a graduate personal loan (currently standing at £1400 but if i pay it off in full, I can pay only £1300 of it back, thus saving £100 pounds in the process) or fully pay off my student loans which stand at around £4,000 gathering annual interest at a low rate.
I have just started paying these student loans back monthly as I am now over the threshold so I currently pay them approx £95 a month. I suppose I could pay off my student loans, my Graduate Personal Loan out of this £15,000 and the £220 a month I currently pay towards my GPL and student loans, I could put into my ISA thus increasing my ISA payment to £520 a month.

I hope that made sense!

Thanks for reading and any advice would be appreciated.

Ben
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# 2
debbie42
Old 17-07-2008, 2:28 PM
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For the short term you're interested in, it's not investing you want, but savings, from the sound of it, and you should be making your cash work for you as hard as it can.

It depends on the interest rates of your student loans etc. but if you can get better rates elsewhere then you could maybe get more by putting the capital into higher paying accounts?

There are some good rates on regular saves, fixed rate term savers, and cash isas, with some threads on here (and the ISA sub-forum) on all these things.
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# 3
oldandgrumpy
Old 17-07-2008, 2:30 PM
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Maximise your annual ISA holding for one. Fill up with petrol and food, they always seem to go up. Me, I'd take a very long holiday, somewhere warm, come back refreshed. Preferably not in the Euro zone, though.
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# 4
zippygeorgeandben
Old 17-07-2008, 2:32 PM
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Thanks Debbie42,

I did consider quickly joining up to Halifax's one (it came on Martins weekley email) and putting £500 away each month, increasing my ISA standing order and then using the money off to pay my Student Loans, I think the interest is always in line with whatever the Bank Of England state, is that 3.8% or similar?

The other side of the coin is I find a property but haven't got a big enough deposit and I could easily say "well yes I may not have a deposit as big but I've increased my ISA payments and paid off my student loans". I don't think will cut it do you!

Ben
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# 5
debbie42
Old 17-07-2008, 2:43 PM
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If it's that low a rate then you'd be better off putting the cash in a higher rate account anyway (unless you're a higher rate tax payer?). There are some good instant access accounts which pay 6% +. You'd also be better off lumping the max amount for your yearly allowance into the cash ISA now, if you can, as the interest will start compounding more earlier then, rather than monthly payments.

That lot are all instant access, so don't affect your deposit, and will grow your cash faster than paying off your student loan (potentially).
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# 6
zippygeorgeandben
Old 17-07-2008, 2:43 PM
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old and grumpy, don't need to stock up on Petrol as I don't drive!
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# 7
zippygeorgeandben
Old 27-07-2008, 3:16 PM
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I decided to max out my ISA for this financial year which meant putting £2769 into it. This means i've had to cancel by standing order of £300 per month into my ISA as I've reached the allowance so this still leaves me with circa £12K and the £300 pm to put somewhere.

i have read A&L have a 12% interest saver although you can't withdraw for the year of the contract.

Thanks or reading
Ben
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# 8
j-man
Old 27-07-2008, 3:31 PM
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If your thinking of buying a house in the near future it would be best in my opinon to put your remaining 12k in an instant access account. There are many which you can manage online paying 6.5%+ and there are no strings attached so you can withdraw the money when needed. I just opened one with Kaupthing Edge, it made more sense than opening a regular saver because I had a lump sum rather than it being an account to put a bit in each month. Hope this helps!
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# 9
zippygeorgeandben
Old 27-07-2008, 3:53 PM
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Cheers j-man, let me be the 2nd person to thank you now. 2 thanks in 2 posts = 100%!
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# 10
stogiebear
Old 27-07-2008, 6:40 PM
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Pay off your existing debts... surely this is a no brainer, right?

Even when you go to apply for a mortgage you'll be penalized for any existing debts.

How about being a debt free Briton? It makes you a minority but at least you won't get shunned by the BBC!
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# 11
MABLE
Old 27-07-2008, 6:47 PM
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[quote=stogiebear;12837941]Pay off your existing debts... surely this is a no brainer, right?

Bit of a sweeping statement. If the interest on current debts is lower than what can be achieved by putting into a high interest savings account then do not pay them off. However if they are then pay those debts off.

As you say no brainer!
The day of financial judgement has now arrived.
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# 12
Lavendyr
Old 27-07-2008, 7:27 PM
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Actually, I'd suggest you don't pay off the actual student loan as the interest on this is lower than what you could earn on that money in a savings account. Especially if you are planning to buy a house, it's likely that your mortgage interest rate will be higher than the student loan interest rate - so better to have a higher student loan and lower mortgage. It's not always a 'no-brainer' to pay off debts.

In your situation, what I would do is as follows:

- Pay off personal graduate loan of £1300

- Fill up ISA (which you have already done) and make sure that the rate is a good one (market leaders are around 6% or above)

- Put the remaining lump sum in a fixed term savings account, which are currently available at around 7%. Many of these simply don't allow withdrawals, or have a high penalty, but Kaupthing Edge do a one-year account at 7.15% and if you need to withdraw early, the penalty is only 1% of interest to date, meaning that you will earn interest to the day you close the account at 7.15%-1% (i.e. 6.15%).

- Put your £300 per month EITHER in a Regular Saver (if you don't think you will need it until maturity as the majority of these either don't allow access or have a very punitive rate), OR into a standard high-interest instant access saver such as Kaupthing Edge @ 6.5%, A&L at 6.5% or Icesave @ 6.3% (or other top payers). That way you still have access to some of your cash but the lump sums are doing the best they can for you. Once April 09 rolls around you can put what you've saved up into an ISA.

I am actually doing something fairly similar with my finances so I am putting my money, quite literally, where my mouth is! I have filled up my ISA for this year and last (with Icesave at 6.1%), have a lump sum in a fixed term account with Kaupthing @ 7.15%, regular savings of £500 a month going into Halifax's 10% regular saver and some spare cash kicking around in an instant access savings account should I need it.

Hope that helps
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# 13
zippygeorgeandben
Old 27-07-2008, 9:14 PM
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Lavendyr, if I could thank you more than once I would do!

I may indeed pay off the personal graduate loan of £1300 and the current standing order of £115.00 I have monthly paying the PGL off I could put into my Kaupthing Edge account each month which I should be opening next week (application was successful although it doesn't role off the tongue that easily does it?!).

Regarding the student loans, I have to pay these off now as I'm over the earning threshold. I shouldn't complain too much really though as I went over the threshold about a month after I was eligible for deferrment for another year so that worked out in my favour (and yes I did check with them to see if I had to tell them I was now earning over but they said I was eligible for deferrment at the time evidence had to be submitted).

Regarding Regular Saver's I was a bit put off those when I had an HSBC 8% one a couple of years back. Ok so I didn't put an amazing amount each month into it, (it might have been around a minimum of £50 a month but when it matured 12 months later, it only earnt me £30 in interest. I expected a lot more than that.

I actually opened an e-ISA (on the advice of my bank) and put my remaining ISA allowance in that as it was a better rate than the regular Cash Isa. I hope someone can back that up??

Thanks everyone for their helpful comments as I value everyone's opinions so you will all be getting a thanks from me for taking the time out to reply.

Ben
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# 14
zippygeorgeandben
Old 31-07-2008, 8:14 PM
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Hello everyone,

Wasn't very happy with HSBC as they advised me I could fill an e-ISA up with my remaining allowance, so I let them do that and then i get a letter back a week later stating that they can't do this because I already own a cash-ISA. They gave me duff information :-(

I've decided to put £2769 into my Cash Isa and i'll have to leave it there now as I've hit the £3600 target now.

Regarding my student loans, I found out today they were quite a bit higher than I originally thought. £5800 in total. At an interest rate of 4.8%. can anyone do the sums on this to see how much I would pay in interest?? Actually I can do that by snowballing can't i?

ANyway, any advice would be appreciated, i.e. should i take the lump sum out of Kaupthing Edge and pay off the student loans?
Thanks
Ben
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# 15
lynzpower
Old 31-07-2008, 9:04 PM
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what is your rate on that isa.

Ruffler are doing 6.3 but this is with 2 months notice. We feel that if we DO need to use it for a property deposit, 2 months is fine for getting the money out as conveyancing takes at least that.
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# 16
hethmar
Old 31-07-2008, 9:13 PM
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You dont have to completely pay off the student loan when you are over the earnings threshold. You just keep paying it off year after year at a very very low rate. Martin Lewis would definitely tell you not to waste your nest egg on paying that up.

Some of the Building Societies are paying7% or more on fixed rate bonds for a year.

Check out best rates courtesy of Martin:

http://www.moneysavingexpert.com/sav...-best-interest

Last edited by hethmar; 31-07-2008 at 9:15 PM.
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# 17
zippygeorgeandben
Old 09-09-2008, 3:35 PM
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Hello everyone,
Just to update you. I put £11,000 into the Kaupthing Edge account @ 6.55% interest (i like the knowledge I can transfer it to my current account pretty swiftly).
I've just been given a pay rise as well so I'll be increasing my monthly savings to 20% of my salary and sticking this in Kaupthing Edge account.
Thanks for all the advice everyone. I appreciate it.
Ben
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# 18
hethmar
Old 09-09-2008, 11:25 PM
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Ben, how lovely that you bothered to up date us.

Just one point, does your employer have a pension fund? It may be worth while looking into that, even at your tender age - a few quid a month now could make a big difference when you come to retirement age.
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# 19
zippygeorgeandben
Old 10-09-2008, 11:20 AM
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Hi hethmar,

No problems with the updates. I do find on this site that people tell you their problem/query but never let you know the final outcome!

They may have a pension scheme but I don't know about it. I've always just put a percentage of my salary into an ISA each month and accrued interest this way.
Ben

PS Tender age?! I'm nearly 30!!! arghhhhhhhhh!!!!
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# 20
hethmar
Old 10-09-2008, 12:57 PM
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Well, do check out about the pension because often they will bung in as much as you put in or more - money for nothing. Oh and believe me, you will look back and you will realise you are just a kid at the moment. Make the most of it.
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