Advice on where to invest!

pennilesspete

Hi there,

I've recently turned my life around and got out of debt thanks mainly to this site, and now am in a position to save money. I have saved £3500 so far, £2500 which is all sitting in an instant access ISA earning not very much and £500 is in Premium bonds.

What I'd like to know is whats the best way to invest money and get it working for me - its not a massive amount of money I know, which makes it even more important to get the best deal going. Should I tie it up for a few years or will interest rates pick up? I envisage being able to add about £5000 a year.

Thanks,

Pete

opinions4u

pennilesspete wrote: »

I've recently turned my life around and got out of debt thanks mainly to this site, and now am in a position to save money. I have saved £3500 so far, £2500 which is all sitting in an instant access ISA earning not very much and £500 is in Premium bonds.

Great stuff.

How much is "not very much" on your ISA?

You haven't said what your savings objectives are - car? house? or simply good habit?

I've put a suggested answer below - this is very generic though and you should try to tie this back in with your reasons for saving. No point sticking money away for 2 years if it's intended to by a new car in April!

What I'd like to know is whats the best way to invest money and get it working for me

Do you mean "invest" as in sotcks and shares where you take the risk of your capital possibly falling in the hope of a higher return, or "save" as in get the best possible return for your money without risk to capital?

Here's what I would consider:

1) Having an easy access contingency fund with between 3-6 months net pay in it would be a good starting point. This could be a cash ISA or a normal easy access account. Take a look at www.moneyfacts.co.uk. The AA pay 3.15% at the moment on easy access. Standard Life Bank, Intelligent Finance and Barclays have rates over 2.5% for easy access cash ISA accounts too.

2) Your signature line still has debts on it. Clear these next, if you haven't done so already.

3) Anything over and above your contingency fund you could / should start looking at higher paying account that restrict your access in return for a higher rate of interest. For example you should be able to get 4%+ on a 2 year fixed rate account.

4) Investing regularly in to a tax free stocks and shares ISA may also be an option to consider if you are looking to build up a fund over a period of longer than 5 years (possibly longer than 10 years).

pennilesspete

I think its something like 0.6%! Its the Principality Instant Access ISA.

All my debts are cleared and my signature has been changed to reflect this!

You've raised a good question - I was just saving for the sake of saving. It all started off as 'pension' as I didn't have one in my last job so I was paying 10% of my wages in, but I now have a new job and pay into that pension as well.

I hadn't really thought of a contingencies fund - its unexpected bills like car tyres and maintanence that started getting me into trouble in the first place so this would be a good idea.

I have no idea about stocks and shares. I am not risk averse, but then I have not lost any money yet either. What is a Stocks and Shares ISA and where do I get one?

Thanks for your help!

opinions4u

pennilesspete wrote: »

I think its something like 0.6%! Its the Principality Instant Access ISA.

First step would be to arrange to transfer this to one of those companies I mention above. You should be able to add around 2% to the rate. I know Intelligent Finance accept transfers in for cash ISAs. Do not, however, simply close the Portman account and open with the new company. Let the new company organise a transfer.

All my debts are cleared and my signature has been changed to reflect this!

Result!

You've raised a good question - I was just saving for the sake of saving. It all started off as 'pension' as I didn't have one in my last job so I was paying 10% of my wages in, but I now have a new job and pay into that pension as well.

Nothing wrong with saving for savings sake.

I hadn't really thought of a contingencies fund - its unexpected bills like car tyres and maintanence that started getting me into trouble in the first place so this would be a good idea.

And if you ever have to dip in to it, top it up from the subsequent pay packets.

I have no idea about stocks and shares. I am not risk averse, but then I have not lost any money yet either. What is a Stocks and Shares ISA and where do I get one?

It's a tax free wrapper for a range if investments. Common ones include tracker funds that invest in the constiuent firms on an index (e.g. the FTSE 100) and the value of the fund will reflect the value of the index. If the index falls, so does your investment. The opposite applies when the index rises .

You can get them from a range of places. Legal & General are one firm that have a good online set up, a local IFA may be able to set one up for you and most banks offer a fund (although these tend to have higher management charges). As a rule of thumb, don't invest what you can't afford to lose.