where to invest encashed family bond savings

janec

i wonder if anyone can help me ?i have been saving in family bonds tax free for 14 years.due to a recent seperation from my husband i can no longer afford to pay the premiums.i thought i could just leave them there but on speaking to the company they tell me the interest will be taxed after 2 months.i was also shocked to find how little they were worth!!i want to move them somewhere for the long term.i was planning on saving in them till retirement,still a long way off.i know so little about savings anymore,not possible with kids!!!
would an isa/mini cash isa/share isa be an idea or are there better places for long term growth?i have £4000 to invest and if i leave it in an ordinary account i'm sure it will get spent.the only other thing i could think of was to buy some more shares in northern rock,as i still have the original ones untouched and they seem to do quite well? i love the site and have saved money on loads of different tips but am stumped on this and it is the first time i have asked a question.please help me!!!!!!

cheerfulcat

Janec, will you be adding to this money with regular saving or occasional lump sums?

Cheerfulcat

cheerfulcat

Hi again, Janec!

To be honest, I think that if this is your life's savings, I would be inclined to keep it in cash mini-ISAs - you could open one this tax year and come April, put the remaining £1000 into another one.

Buying individual shares can be risky, and should only be done with surplus money which you can afford to lose. Also, you really need to spread the risk over, say, 15 or more companies in various sectors. However, if you have the time to do the research and the inclination to do the investment, have a look at the Motley Fool site -

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


You might find the High Yield Portfolio board of interest -

http://boards.fool.co.uk/messages.asp?mid=8987321&bid=51166

On the whole, though, my advice would be not to start investing until you have all debts paid and three months' worth of expenditure put by in case of emergencies.

HTH

Cheerfulcat

janec

hi cheefulcat
i had a quick look through the sites you posted but realise i haven't got the time or expertise to invest in shares.i save in the jump plan by witan for my kids after doing a small amount of research but don't know if there is anything similar for adults.i have got 15 more years to save with them and want long term growth for the kids but want long term growth on my £4000 too.if i could afford to save say £25 a month(doesn't sound much does it!!)would your advice be any different?janec ;D

cheerfulcat

Hi, Janec,

Yes, if you were saving regularly I would suggest that you put some money into the stock market as over the long term that should provide better returns than cash; it certainly always has in the past, over the long term.

No, £25 a month isn't a lot but it's a good start. And you might find that you can actually save more than that :-)

If you can afford to save regularly but only small amounts it makes sense to set up a regular saver account and make lump sum payments into your chosen investment whenever you have saved, say, £500 ( or whatever the minimum is ) - making sure that you don't forfeit any interest when making a withdrawal, of course!

I personally avoid investment products ( especially with- profits funds but also most unit trusts ) because I don't like the effects of the charges eating away at my investment. If this is truly long term ( 15 - 20 years ) you might consider a simple index tracker. I won't recommend a particular one but really what you want to look for is one with the lowest possible charges and the smallest tracking error . There's more information here -

http://www.fool.co.uk/ISAs/trackers/choosingindextracker.htm

HTH

Cheerfulcat

janec

hi cheerfulcat
i looked through the tracker index link you gave me.i feel a bit overwhelmed.at first i thought i would just put the money in a cash isa.after looking at trackers i have a couple of questions.can i put in a lump sum and that's it,possibly adding to it regularly in a few years,or can i only save regularly in it ?
next problem.if it is retirement i want to save for should i put it in an index linked tracker ,wrapped in a stakeholder pension? having just seperated from husband(reason that i can no longer save in friendly society!!) i am worried that i might have to claim benefits at some point over the next couple of years.hopefully not,but if i have £4000 in savings that will affect it,whereas if i put it in a stakeholder pension they can't touch it.does money in a friendly society count towards benefit savings? feeling overwhelmed so hope you can help a bit!!! cheers janec ???

cheerfulcat

Hi janec,

I know it all looks very complicated at the start but I promise it's not.

Yes, you can either put lump sums into the tracker as and when you get them or you can save regularly; you can make the choice when you set up the investment.

You can put a tracker into a mini share ISA or a stakeholder pension wrapper; some brokers will provide the wrapper very cheaply or for free. The extra benefit of the stakeholder is that the government will pay into it as well - if you contribute ( roughly ) £2800 it will be " grossed up " to £3600 ( this is the limit for anyone who has no employment income ) even if you don't pay tax. The only drawback with a pension is that you can't touch the money...but for some people that's a good thing!

If you do go down the pension route, have a look at Hargreaves Lansdown's Self Invested Personal Pension -

http://www.hargreaveslansdown.co.uk/SIPP/

It costs nothing to set up a SIPP and they don't make an annual charge, nor do they charge for contributions.

I don't know whether the money in a friendly society counts as savings ( though I suspect that it does ) but these are really rotten investments. The charges are dreadful and so is the performance :-(

HTH

Cheerfulcat

janec

hi cheerful cat
i read through the link on pensions savings.i am not sure i want to lock the money away that completely so i think for now i will put it in a mini cash isa.obviously the abbey postal saver one as that's the top one on martin's site!! i think if there is a chance that i have to claim benefit i will put it in a stakeholder pension but hopefully that won't happen.thanks for all your help,it 's good to know there are fellow money saving site people out there willing to help the more clueless of us!! janec ;D