£20,000 to invest...

gordon.hunter

Hi all,

I have £20,000 that I want to put to better use. I currently have this amount in a Halifax Websaver earning 4.25% Gross p.a. so my return is poor.

I am looking for suggestions on how best to maximise this amount of money however I would require returns and a withdrawal in or just before August of 2009.

I have been suggested to put £7200 into a Tracker ISA and the rest in Premium Bonds. I dont really understand the former (in that I dont not want to loose money and I am unsure of the current market and its potential to offer returns based on which FTSE index / areas I invest in) and I am already setup with premium bonds and so would just be investing a significant amount more.

Look forward to you advice.

Kind regards

freddysmith

You don't want to invest it, you need to save it.
Personally I would put £3600 in a cash ISA like Barclays Tax Haven for example & the rest in an online interest savings account like B&B eSaver 3 account at 6.51% for example.
Giving a good interest rate while access to your cash when needed.

Have a look at these websites for some info
http://www.moneyfacts.co.uk/default.aspx
http://www.moneysupermarket.com/money/

Just my opinion but its a starting point and there are many other options

Baldur

What's wrong with transferring it to a Halifax Fixed Rate Web Saver for 6 months at 7%?

A tracker Stocks & Shares ISA is a long term investment - as you want access to your money next summer, it's not something that I would consider in your position.

Aegis

gordon.hunter wrote: »

Hi all,

I have £20,000 that I want to put to better use. I currently have this amount in a Halifax Websaver earning 4.25% Gross p.a. so my return is poor.

I am looking for suggestions on how best to maximise this amount of money however I would require returns and a withdrawal in or just before August of 2009.

I have been suggested to put £7200 into a Tracker ISA and the rest in Premium Bonds. I dont really understand the former (in that I dont not want to loose money and I am unsure of the current market and its potential to offer returns based on which FTSE index / areas I invest in) and I am already setup with premium bonds and so would just be investing a significant amount more.

Look forward to you advice.

Kind regards

Anything involving stocks and shares (like the tracker ISA) would not be best for you unless you are going to be leaving your money along for 5-10 years, which you clearly aren't looking for.

Premium bonds are safe but have an atrocious return on your deposit.

You'd be better off maximising your cash ISA allowance (and your partner's if applicable), possibly with a 1-year fixed rate if you want to hedge against the risk of rate decreases on variable rate products and can afford to wait until October rather than August.

freddysmith

I like the sound of Baldur's suggestion which should be quick and easy for you to setup.

gordon.hunter

Baldur wrote: »

What's wrong with transferring it to a Halifax Fixed Rate Web Saver for 6 months at 7%?

A tracker Stocks & Shares ISA is a long term investment - as you want access to your money next summer, it's not something that I would consider in your position.

I do like this suggestion for ease however need to clarify that surely if I were to do this I would pay tax on the interest received. I am in the higher tax bracket i.e. over £34,800 per year and therefore would I be taxed 40% on the interest?

If so would I not be better to spread the whole amount over several cash ISA's?

freddysmith

You are only allowed to fund one cash ISA per year so thats only £3600 of your cash.

Baldur

gordon.hunter wrote: »

If so would I not be better to spread the whole amount over several cash ISA's?

You can only open & pay new money into ONE Cash ISA per tax year, so that would account for £3,600 of your funds in the present tax year, a new Cash ISA could be not be opened until 6th April 2009.

Yes, you would be taxed on the interest on the Fixed Rate Web Saver, in exactly the same way as you currently are on your present Web Saver.

Speculator

gordon.hunter wrote: »

Hi all,

I have £20,000 that I want to put to better use. I currently have this amount in a Halifax Websaver earning 4.25% Gross p.a. so my return is poor.

As you're a higher rate tax payer, you're earning only 2.55% after tax on your variable Websaver. You could put £3600 in a fixed rate cash ISA and the remainder in the 7% (4.2%) Fixed rate Halifax Websaver. When it matures next April, open another Cash ISA with £3600 from your matured 6 month Websaver.

jem16

gordon.hunter wrote: »

I do like this suggestion for ease however need to clarify that surely if I were to do this I would pay tax on the interest received. I am in the higher tax bracket i.e. over £34,800 per year and therefore would I be taxed 40% on the interest?

Remember that's taxable income - i.e. salary, interest from savings and dividend payments. It does not include your personal allowance of £6035. So in total you need to have over £40,835 to be a higher rate taxpayer.

And yes if you are you will be taxed at 40% on the interest.

EdInvestor

Index linked savings certificates may be the answer.They are paid tax free.The rate is inflation plus 1% and you can put in up to 30k half in each of two issues

https://www.nsandi.co.uk