£15,000 to invest and I don't know what to do

Lavendyr

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

zippygeorgeandben

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 :T

zippygeorgeandben

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

lynzpower

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.

hethmar

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/savings/savings-accounts-best-interest

zippygeorgeandben

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

hethmar

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.

zippygeorgeandben

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!!!!

hethmar

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.