Investment ISA - How?

dave1983_2

Good morning all! I'm looking at starting up an investment ISA for some of my savings and I'd like to know how to go about setting one up and understanding about risks (what would be considered a high-risk product and what makes something a low-risk product). I am in the process of speaking to an IFA but I'd like to be able to look myself too, so I understand how it works and so forth.

I've currently got a full cash ISA and an easy-access saving acct for emergency use and I'd like to put away £250-500 initially followed by £50 per month. Whilst that's the most I can afford to lose a month (cost of a night out!) I'd prefer to see it grow over the next 3-5 years! Any pointers or advice is appreciated! Also, once the mortgage is paid (2014-15) I'd have around £1000 per month to put away.

Thanks in advance.

opinions4u

dave1983 wrote: »

Good morning all! I'm looking at starting up an investment ISA for some of my savings

An IFA, tied bank adviser, directly from the provider. Lots of options! The IFA will give you the best information face to face though based on the broadest range of providers.

Legal & General used to have an excellent tool on their web site that helps to identify risk profile and which funds to select (although I can't see it at the moment!).

Topcashback pay a £50 rebate if you take out an ISA with Legal and General via their site. That doesn't necessarily mean that you should invest with L&G, but for relatively modest savings it can be a nice kickback.

I'd prefer to see it grow over the next 3-5 years!

That's a relatively short term approach to investing. You might be better paying off mortgage capital or using high rate regular savings accounts.

grumpycrab

opinions4u wrote: »

...Legal & General used to have an excellent tool on their web site that helps to identify risk profile and which funds to select (although I can't see it at the moment!)...

Might be here ->
http://landg.kisshosting.com/corporate-pensions/atr/nonflash/questions.htm

dunstonh

I'd prefer to see it grow over the next 3-5 years!

Unlikely to happen. A small regular contribution is likely to need 10-15 years.

dave1983_2

Thanks for your tips, I can probably only afford £50 to maybe £100 per month but don't fancy having it tied up for 10-15 years. In this case, what would be best for me then please?

grumpycrab

dave1983 wrote: »

...Also, once the mortgage is paid (2014-15) I'd have around £1000 per month to put away...

Do you know if you can overpay on your mortgage? If your mortgage interest rate is low may not be a big deal, but you could do a regular saver for 12 months then use the accumulated sum as an overpayment.

dave1983_2

I'm already overpaying the mortgage and am overpaying to the tune of £750 per month! I'm looking to invest for the longer term so an investment ISA looks the best way of keeping the taxman's grubby hands off my money! I've seen the M&G Recovery Fund has performed well, would this be considered a cautious or risky investment?

Lokolo

dave1983 wrote: »

I'm already overpaying the mortgage and am overpaying to the tune of £750 per month! I'm looking to invest for the longer term so an investment ISA looks the best way of keeping the taxman's grubby hands off my money! I've seen the M&G Recovery Fund has performed well, would this be considered a cautious or risky investment?

Just because it has performed well in the last year, doesn't mean its going to perform well in the next 3.

dunstonh

I've seen the M&G Recovery Fund has performed well, would this be considered a cautious or risky investment?

Medium/high risk. Has the potential to drop 50% in a given 12 month period. It dropped by over 40% in during the recent drops. Its a good fund.

However, the problem with regulars is that you start of with nil (or near zero in your case). By the time you start building up a lump sum that is worth anything you are just about due for a major financial crash (which occur on average once every 7 years - 8 since 1956). So, you could see 5-7 good years and then see a 20-40% loss. Not a problem if you are still intending to pay monthly for another 5 or 6 years. Indeed, that drop can be a good thing for long term regulars. However, if you are looking shorter term then it can be catastrophic.

That is why many 10 year plans are failing to cover what they have paid in. Extend that to 15 years and you could well do well.

EdInvestor

Have a look at this site - it is the cheapest for investment ISAs as they rebate commissions and charges.

https://www.h-l.co.uk

Also gives access to all investmrnts, not just the funds provided by one provider.

Lansdowne

EdInvestor wrote: »

Have a look at this site - it is the cheapest for investment ISAs as they rebate commissions and charges.

Who says they are the cheapest? I have never found a proper comparative review of discount brokers. Some are cheapest for funds, others only do funds not share dealing, another is cheapest for large amounts but useless for small deals, etc.

If there is a site that compares them properly, please let us know.