Money To Invest.

odannyboy

Hi I,m about to sell my property and will have about 80,000 to invest, setting up an £3000 ISA with the abbey and putting £15,000 into a five year national savings certificate are my two first ports of call. Then maybe an guarented Equity bond from the national savings when the next lot are available to buy.

Dont mind if the money is locked away for afew years and dont have a clue about shares!!!! any advice with what to do with the rest please?

(blowing it on wild nights out not an option, sorry)

deemy2004

Premium bonds - say £2k
Fixed Interest Bonds the longer the term the higher the interest.

I would limit your exposure to the guaranteed equity instruments to a small % of your portfolio - say 10 or 15%.

Others are Index Linked Government Stock
Government bonds in an equity ISA

National savings products tend to be relatively poor in comparison to other product providers / options

odannyboy

Thanks for the help if anyone has any more advice please let me know?

odannyboy

never used premium bonds before whats the best deal?

and index linked goverment stock doesn,t mean investing in any goverment arms deals does it?

mikeorange7

I will be able to offer some suggestions but will need some more detail odannyboy:

1/ what other accounts/ holdings have you got besides this?
2/what pension schemes are you contributing to?
3/ how old are you?
4/how many dependants have you got?
have you got spending plans for any of this money?
5/ are you a basic or higher rate tax payer?
6/ do you need this capital to generate regular income or are you looking for capital growth?
7/ how much of the capital would you be prepared to expose to some degree of risk?

odannyboy

Thank for the help Micky,

To answer your questions:

I have nothing else, only one standard bank account.

No pension

Am 25 years old

No dependants

No spending plans for the money

Basic tax payer

Looking for capital growth.

Would expose about 10,000 of the 80,000 to some risk.

hope you can help.

deemy2004

and index linked goverment stock doesn,t mean investing in any goverment arms deals does it?

Not directly

Premium bonds - http://www.nsandi.com/products/pb/index.jsp?section=details

odannyboy

worth putting the maxium 30,000 in premium bonds for about 3 months, anyone got any experience of this?

Reaper

Premium Bonds are fun, but not the best rate of return you can get. The average return is currently 3.2% tax free.

If you were to put the money in, say, an Egg savings account it would earn 4.4% after tax (5.5% gross) during the 6 months promotional period.

You mention the NS&I Gaurenteed Equity Bond. If you haven't already, read Martin's article and make sure you understand the catches.

deemy2004

worth putting the maxium 30,000 in premium bonds for about 3  months, anyone got any experience of this?

Its best to put a small % say 2% so in your case £1600, then forget about them, as the rate of return is very low.

P.S. I did what your saying, and put £30k in Premium bonds for about 8 months, the return was about 2%, so not worth it

mikeorange7

Based on what you've said the below portfolio would suit you:

5k into high interest deposit account AA savings offer easy access at 5.36% gross.  This would be your emergency fund.

3k into cash isa . Abbey offers 5.3% easy access variable.  I also like halifax 5 yr fixed at 5.7%.

3k into stocks and shares min isa.

1k into insurance mini isa
The ISA's offer tax free returns on the cash isa part and virtually tax free and full capital gains tax free captial growth on the equity parts.  Your total allowance of 7k is utilised.

15k into 5 yr 79^th issue national savings certificates. This provides fixed tax free returns with maximum capital security (as backed by Government). You could consider splitting this in half with the index linked certificates as well which would provide a gauarantee above inflation, again tax free.

20k into 2 year fixed rate bond Kent Reliance BS currently offer 5.35% gross .  Such bonds offer safe and sound fixed returns over the short term.

15k into a Gauranteed Equity Bond Birmingham Midshires offer consistent well tested FTSE 100 Index accounts with a minimum guaranteed return aswell. This give risk free capital growth potential.all tax paid in last year.

5k of Gold Gold coins (Krugers or sovereigns).  Becoming fashionable again and a low risk holding.

10k into managed equity funds mutual funds, oeic's, unit trusts etc.  This provides medium to long term ( 5 to 20 year) capital growth potential.

£300 into friendly society scottish friendly assurance are sound. this would be a 10 year savings plan . £300 a year would fully utilise your personal allowance.  These funds are more tax efficient.

£2,808 into stakeholder pension with tax breaks this equates to a saving of £3,600 a year.  Choose a low volatility fund based on fixed interest and gilts.  This will help provide you with a tax efficient growth plan for your later life (can not be accessed  before age 50).  Also look into what pension provisions your emplyer make as you can have stakeholder up to this amoutn as well as occupational or personal pension.

This does not constitue financial advice on this site and is only my personal opinion of the facts presented.  

Any Q's buzz me.

Happy Hunting