Best place to invest 7,000

gingerdad

we have 7,000 from a cis policy to invest, we are looking at using the money towards our childrens marriage/uni etc.. so won't need it for 10 years or so, any suggestions. we don't have any isa's yet and it has been suggested we look at a unit trust isa, we are happy from some risk.. any thoughts

Thanks

GD

dunstonh

A stocks and shares ISA fits with amount involved (£7200 limit per person per year). Obviously, doing it with CIS isnt the best option by a long way but what investments you place in that ISA will depend on how you want to invest and your risk profile as well as how you want to buy it.

mrtg0525

I would say this depends on your appetite for risk - are you willing to come out of the ten years potentially with less money than you invested, do you at least want to keep up with inflation or are you willing to shuffle the money around to get better returns?

Personally I'd say I'm pretty conservative when it comes to "parking" money, so I'd shop around for a good cash ISA and stick the maximum 3.6k in there. Keep an eye on inflation and move it to a different provider to ensure your return keeps above inflation.

You could then park the rest of the money in a high-interest savings account until the next tax year comes around and then move the money into the cash ISA.

Another possible investment I would look at are Index Trackers in the form of ETFs (Exchange Traded Funds) - most of them can be held in a Stocks & Shares ISA and have low management fees. Of course they'll never outperform the market but then again, they're unlikely to underperform by large amounts either provided you have chosen one with a minimal tracking error.

Personally, I'm not a big fan of unit trusts - they tend to be more expensive than index trackers for starters, so you need to do your research very well. Also, you have to keep in mind that in order to outperform an index tracker, they have to consistently generate returns that beat an index tracker by the difference in management fees. And unless that difference is very small, I can see that becoming a bit of a problem.

jamesd

gingerdad, have a look at "sector allocation" to see how to build a range of investments.

You might consider a fairly high proportion in the BlackRock UK Absolute Alpha fund for the next six months, perhaps longer.

The Skandia Alternative Investments fund is also potentially interesting but as a new launch there's no history for it.

CF Arch Cru Investment Portfolio A also has interesting performance for times when market drops may happen.

mrtg0525, while there's always the potential to come out with less money than invested, there has been no point where a lump sum invested for ten years in either the FTSE All-share index or the MSCI World Index would have done so over the last 25 years.

ETFs or trackers are OK only where you don't want to do the research to find consistently good performers, or in the rare cases where you do that and find there aren't any that consistently do better than the trackers and ETFs. Your scepticism about beating the fees difference isn't justified by the real results of the consistent best performers. Just look at staples like the Invesco Perpetual Income fund to see what you can buy instead of a tracker. Studies of the UK funds for UK investors have shown that you can beat trackers by using active managed funds, the opposite of the result for US funds.

Index trackers are mostly unit trusts so saying that they tend to be more expensive than them is not very accurate. More accurate would be saying that many index trackers have lower costs than the unit trust average.

For fun you might want to try to find any savings accounts that will beat the Cru and BlackRock funds I've mentioned above for a 7200 lump sum investment.