Best investment?

misscharlie

As we taking an interest only mortgage, I would like to set up something to save into. For the first couple of years it will only be a small amount £30-£50 a month, and in a few years time increase the payment to around £100-150. Is it worth setting up an endowment. I have no clue about any of this so please be gentle!

TIA

wymondham

misscharlie wrote: »

As we taking an interest only mortgage, I would like to set up something to save into. For the first couple of years it will only be a small amount £30-£50 a month, and in a few years time increase the payment to around £100-150. Is it worth setting up an endowment. I have no clue about any of this so please be gentle!

TIA

What about an ISA - cash and/or investment? I don't think endowments are around now are they??

turbobob

I don't think mortgage endowments are sold by anyone now. You can use stocks and shares ISA's but this is an option for the more sophisticated investor as there are risks attached. The main risk is that they won't grow by the amount required to pay off the mortgage. You also need to choose your investments carefully. You can use one of the online savings calculators and a conservative growth rate (e.g. 5%) to give a rough idea of how much you will have to pay monthly into an ISA.

dunstonh

I don't think mortgage endowments are sold by anyone now.

Not from advice channels but a few direct offer ones still exist. Mainly as the buyer has virtually no FOS protection if they choose these.

Personally, I think you need to be an experienced investor or have an experienced IFA involved in this if you are going to consider investing. You also need to be fully aware of the pros and cons. The concept is fine if you can understand it but its not something you should do on a whim and without research.

Ian_Griffiths_Halifax

misscharlie, have you considered simply overpaying on your mortgage if the facility is available?

lisyloo

I think Ian is right.
Repayment is a very safe and tax free method with a reasonable return.
A bit of a "no brainer" if you are not a sophiticated investor.
It's quite a big deal to "gamble" with money for your home with little upside if you aren't a sophiticated investor.

Conrad

If you do go the savings route, Warren Buffet the worlds most sucessful stock investor and richest man advocates a simple tracker fund which is a fund that holds the shares of the FTSE100 (UK blue chip companies) companies.

CHARGES - the unwary need to be aware that sych a plan should have low charges, say about 0.3 in total. A fund can easily be gobbled up by charges, which tend to be higher on managed funds - those fund managers have to pay thier Chelsea Mortgages and school fees you see, yet managed tracker funds if anything have provided a worse return than unmanaged.

toonfish

Conrad wrote: »

If you do go the savings route, Warren Buffet the worlds most sucessful stock investor and richest man advocates a simple tracker fund which is a fund that holds the shares of the FTSE100 (UK blue chip companies) companies.

CHARGES - the unwary need to be aware that sych a plan should have low charges, say about 0.3 in total. A fund can easily be gobbled up by charges, which tend to be higher on managed funds - those fund managers have to pay thier Chelsea Mortgages and school fees you see, yet managed tracker funds if anything have provided a worse return than unmanaged.

This is absolute horseplop - do you think Buffet made his money in tracker funds?

There are loads of funds that have consistently out-performed trackers even after charges.

dunstonh

If you do go the savings route, Warren Buffet the worlds most sucessful stock investor and richest man advocates a simple tracker fund which is a fund that holds the shares of the FTSE100 (UK blue chip companies) companies.

FTSE100 has been one of the worst indicies in the world to track and has spent most of the last 14 years in the bottom quartile of its sector. Indeed, a fair bit in the bottom percentile. The FTSE all share trackers are consistently mid table in it's sector (as it would be expected).

There are merits to trackers but there are also disadvantages. Its not as clear cut as the pro tracker or pro managed fund brigades make out. As with most things, the middle ground is where the reality is once you look past the half truths and false stats (such as the rubbish that MF spout).

Warren Buffet does say trackers are ideal but it should be noted that it is directed to the US market where holding trackers has advantages over managed funds which is not the case outside of the US.

Warren Buffet himself invests on a strategy of looking for value. So, if you really want to mirror what Buffet does you would use a managed fund focusing on value purchases.

poppy10_2

Motley Fool has always said that trackers outperform the majority of managed funds?

tyrell_2

I went down the endowment route when I was quite young and they did not tell me it might not hit the total owed. Thankfully, when I went to my new job I went to a repayment and my endowment is sitting...but overall a bad move. Watch out for buying shares as even with a professional stockbroking company - it is an unreliable method for securing your home....hope this helps.