Money To Invest.

odannyboy

one last question for anyone of you who can help (and thanks very much by the way). Had an idea to just lump 70,000 of the money into the highest interest savings account? and every 6 months look for another account with better interest. making sure the account would let me withdraw the money without penalty.

pretty new to all this so your help is really appreciated.

mikeorange7

if you constantly move money around different providers the cist of transfer ( minimum 6 days lost interest if BACS both ways or 10 days if postal cheques are involved) will eat in to any potential gains of moving the funds. the rate differentials would have to be significant if you move every 6 months.

Not many people realise the cost of moving money in this country. I think I'm right in saying that in Sweden all transactions are same day free not lost interest. Money Money Money!!!

odannyboy

whats to stop me opening an account in sweden and doing the same process there?

(i feel this could be a silly question)

deemy2004

one last question for anyone of you who can help (and thanks very much by the way). Had an idea to just lump 70,000 of the money into the highest interest savings account? and every 6 months look for another account with better interest. making sure the account would let me withdraw the money without penalty.  

pretty new to all this so your help is really appreciated.

Yeh, if you see the opportunity then take it
I.e. last year cahoot offered an instant access saving account at 5.65% for savings upto £50k, which was and still is a great deal, now it runs out in June 05, maybe they will offer something new around June, keep looking for these types of offers.

cheerfulcat

Hi, odannyboy,

If you really think that you won't need this money any time soon ( within the next eight to ten years ) then I would suggest that some of it go into direct shareholdings, or at least a tracker fund (look for the one with the lowest charges ) or an ETF ( which is a share which behaves like a tracker fund ). I say this because, while shares are certainly more volatile than the investments that you are contemplating, they are a lot more likely to give you a capital gain than either cash or bonds.

I would avoid guaranteed equity "bonds". Most of them give you only a " smoothed " return as they use the average level of the index over the last six or twelve months to determine the return. Also, you miss out on dividends ( 3.2%, which you would receive in a tracker or ETF ). And the " risk-free " tag they use is a nonsense. OK, you get your initial capital back but inflation has nibbled away at it ( at 3% inflation £10,000 now will be worth £8587.34 in 5 years' time ) and you have missed out on the interest you would have had from a bank account ( £2166.53 if invested at 4% net). Adjusted for the same rate of inflation,by the way, even a " safe " bank account would give you a pretty measly return - your £10,000 would be worth £10447 in 2009 pounds.

So, as you are still young and thus have many happy years of investing ahead of you :-) I would say - go and buy a few books on investing, have a look at the Motley Fool ( especially the Fool School pages ) -

http://www.fool.co.uk/help/sitemap.htm

and see whether you're suited to share investment. If not, at least put some of it into an index tracker and forget about it for ten years :-)

HTH

Cheerfulcat

odannyboy

Thanks for the advice, checking out that site now and a tracker fund looks good, looked into guarented equity bonds alot since yesterday and dont think there for me really. Alot of the reasons you stated ,did come up.

So far the 3k is going into the isa.

15k in the national savings cert.

5k into a high interest deposit account.

20k into a 2 year fixed rate bond.

and 2k into a stakeholder pension

35k still to tuck away any more ideas?

Anywhere I could possibly get into investing in new products or ideas based in Britian?

cheerfulcat

There are Venture Capital Trusts, which invest in small new(ish) companies. Here's some further reading but bear in mind that this was put out by an investment co and is thus very optimistic! -

http://www.isisam.com/uploadfiles/vct_guide.pdf

However, and this is a big however, they are really only suitable for experienced or very wealthy investors; small companies are inherently very risky propositions and quite a large proportion of them go bust. If you wish to invest in start-ups, whether directly or through a VCT, you need to do a lot of research first.

HTH

Cheerfulcat

dunstonh

Thanks for the advice, checking out that site now and a tracker fund looks good

Be careful. Tracker funds are cheaper than managed funds but placing all your ISA/OEIC investment into a tracker fund to save 0.25% pa in charges is not advisable. A spread on funds within the ISA covering main asset classes would outperform a tracker fund over the med to long term.

The UK stockmarket tends to be top performing sector every 5 to 7 years. So placing all your ISA funds in a UK tracker means you will have the top performing area once or twice every 10 years.

Also, due to Labour removing the tax credit on dividends for ISAs and Pensions, the UK stockmarket has been underperforming all the other major economies. It is estimated that the indirect taxation introduced by Labour on investment linked products has removed around £300 billion from the value of the stockmarket. They show no signs of altering that position and indeed Gordon Brown has now put forward proposals to hit with profit funds even further with a new tax.

So, personally if you are looking at investing on the UK stockmarket, you ought to be considering UK Equity Income funds. Yes the annual management charge is higher but just look at the performance difference.

You ought to consider commercial property funds being part of your portfolio. These are lower risk than stockmarket funds but higher risk than corporate bond/gilt funds. Historically good performance (usually in double rate figure returns - ie NU Prop 14.2% in 12 months).

One final note. Read this thread as guidence and suggestions for areas to investigate. Do not treat what is written here as advice as there are some good comments and some bad. Some things are good for some people and not others. Just because its been good for one person doesnt mean its good for you.

Read, learn, investigate and then decide.