46k to invest and dont know where to start

Aegis

Rollinghome wrote: »

I think we should be a little responsible on a public board like this in encouraging others to invest - especially doing so on the basis of anonymous "analysts". Who are these analysts, anyone we've heard of? Or perhaps just someone who works for a fund management company and so with a vested interest in getting the public to invest?

How reliable has their advice been in the past? Did they warn you to get out of equities a year ago before the big falls and if so did you post their warning to this board?

The whole point was to offer up an alternative viewpoint to DiggerUK, who essentially recommended cashing in the ISA with absolutely no backing whatsoever. His claim that "economic indicators are dire in my opinion" went completely unchecked, so I offered an alternative opinion from a number of analysts that I chat to. There are a few with other opinions, but I feel that even falling markets at this time can be a good opportunity for longer term regular saving style investment. I don't think it's a great idea to be selling and cashing in a tax-free investment unless there's a great need.

It may well turn out to have been a good time to invest, or not. Time will tell.

Exactly. So having one person claiming that selling is the best strategy due to economic indicators suggests that the opposite opinion should at least be heard.

I for one like the idea of investing, as do some of my analyst customers. As I'm an anonymous poster on the internet, you can take or leave whatever you like from that claim.

Maybe I should have phrased it differently, but we all make mistakes!

samnorris2

MrCornish wrote: »

Thanks for the replys,


I think I would rather just do savings this time and play safe or get some off the Dam mortgage.

I just spoke to Nationwide and it is a 3% penalty for paying a chunk off. I can overpay £500 per month without any penalties. I am fixed until Nov 2011.

What you can do is call NW and ask them to reduce the term of your mortgage by x years.

For example say your current term of mortgage was 15 yrs with the £97k you have outstanding, you'd be paying £780 a month with the ability to overpay by £500 per month. Total monthly payment £1280

You can ask them to reduce the term of the mortgage to 7 years which would put your monthly payment to £1385 and you would still be able to overpay the £500 per month. With the overpayments this would allow you to reduce your mortgage to ~ 5 years and you would'nt have to pay any overpayment charges to do it.

You can always extend it again if you need to reduce the monthly payments.

Sam

jamesd

MrCornish, now's a good time to be investing because prices are low, so if you want to be cautious I suggest:

1. £500 a month off the mortgage.
2. £900 a month into investments inside a S&S ISA to use the full 7200 annual allowance over 8 months.
3. Savings accounts for the rest until the money is used for investing and mortgage payments.

This gets you the certainty of the savings and mortgage reduction with the likely gains from the stock market, but at reduced risk because it's a regular contribution instead of a lump sum.

If your S&S ISA money is in less than five funds at the moment you might also ask for assistance on increasing diversification and likely gains.

You might also consider whether your pension situation, or that of any spouse, is worth looking at.

MrCornish_2

Some good ideas have come up here and I am glad I posted now

What are peoples thoughts about getting off my NWs fixed rate of 5.18% would the penalty be worth it to get on a tracker or a lower cost fixed deal?

I like the idea also of reducing the term of the mortgage if we want to really get stuck into it if we want to.

I popped into the A&I on Friday and left with my head spinning after all the stuff they were trying to get me to do with the cash, fixed bonds, isa, an account which pays 6% on the first £2500 as long as £500 was going into the account each month. I left with out doing any of it in the end because I had done no research on these products and only went in to open the 3.15% instant access account which I found out you cant do in the branch anyway.

So now I have opened the 3.15% A&L instant access account and also opened a cash ISA from intelligent finance at 2.75% and will be overpaying the mortgage by £500 from next month.

The one thing I dont have and have never got round to is a pension.

samnorris2

Mr Cornish,
Gettting out of your NW mortgage will cost 4% of the outstanding sum ~£3900 and any arrangement fee for a new mortgage so could cost you £4500 in the end.
Personally I think moing to a tracker will reduce your initial rate for a short while but when rates move up next year it mght not be longer before your paying at a 5% rate your on just now. The best flexible 3 year fixed mortgage I could get was 4.49% and most variable will be 3-4 percent. I think you'd be pushed to get something that is going to save you £4500 over the term.

If you are thinking of a pension I would suggest you check out SIPPs (Self Invested Pension Plans) with Hargreaves Lansdown. These are a great tax relief product and if you are a high rate tax payer you get £10k of investment power for the effective cost of £6k up to the value of tax you pay each year.

http://www.h-l.co.uk/pensions/SIPP

http://www.h-l.co.uk/pensions/The-tax-benefits-of-a-SIPP

You can withdraw out of these when you are 55 and hold cash in them until you know what to invest in so your £46k fed in over a few years (to offset the tax you pay each year) would be worth ~£76k plus any investment income or capital gains, all of which are tax free. Then when you are 55 you can withdraw a tax free lump sum of 25% and the rest like a normal pension.

Hopefully this gives you a couple of options to consider.

Sam

jem16

samnorris2 wrote: »

If you are thinking of a pension I would suggest you check out SIPPs (Self Invested Pension Plans) with Hargreaves Lansdown.

A SIPP is really a product for an experienced investor who wants to use all the extra features that it provides over a stakeholder or personal pension. The OP does not give me the impression of being an experienced investor.

If only using funds a stakeholder or personal pension will work out cheaper.

Primrose

Mr Cornish doesn't say how old he is, but as he doesn't have a pension I would suggest that if he's older rather than younger this should have at least equal priority to reducing his mortgage. The State is going to be even less of a pension provider in the future, especially with a growing ageing population and the huge deficit in the economy, so long term provision for our old age is going to have to be a personal priority. It also has the benefit of contributions being tax deductible, so pension planning certainly shouldn't be overlooked. There is nothing worse than reaching retirement age and finding that you don't have enough to live on.

MrCornish_2

I am 33 years old and just checked through some paper work and found that I do have a pension that was set up at the same time as the stocks and shares ISA. Its with Clerical & Medical. I do not contribute towards this at the min and the value is £12,867 on the 9th of march this year. I need to start looking into this also

jem16

MrCornish wrote: »

I do have a pension that was set up at the same time as the stocks and shares ISA. Its with Clerical & Medical. I do not contribute towards this at the min

This is the best time to be contributing to it when fund prices are lower than they have been for years.

jamesd

As Jem says, now, when there's a sale on due to reduced prices, is the time to be adding regular payments to pension if you don't fancy it for ISA. You always need to be looking to put more money in when everyone is writing about doom and gloom, and move bits to government or corporate bonds inside the pension or ISA when everyone is saying that the times are wonderful and the boom will go on forever.

Takes a lot of nerve to do it after seeing losses, though.