BEst way to use 5k

DesertFlyer

bitemarx wrote: »

Im gettin a modest bonus of approx £6000.

Although a grand would prob get used up in a holiday, I'm unsure about how best to invest the remaining 5k. I can't lock it into any fixed rate savings instruments for more than 7 months (since I may need access to it sometime mid 2010).

ANy advice would be much appreciated!

Thanks!:beer:

I'm in a similar position. I'm considering a Self Select Trading ISA (Looking for a thread on this in here at the moment and speaking to TD Waterhouse) but this will require you to be fairly confident in your investment decisions and of course reduces the liquidity, or at least puts you at risk of losing if you have a short, fixed investment horizon.

I hadn't really thought of Premium Bonds - always viewed them as kind of the last resort once you have used up ISAs, regular savers, early mortgage repayments etc. (Or what your grandparents gave you when you were born! I have £15 somewhere - never got a penny from them!).

Does anyone have the stats on the expected return for Premium Bonds? Will have a look at their site.

Edit: Do not put money in premium bonds! :eek:

I did some quick research and calculations (before I realised there was a calculator on here and whole thread on the topic).

The expected return/"Prize rate" is 1.5%, however if you take the most common prize of £25 which represents 96% of the prizes awarded this drops to c. 1.2%! Both are less than CPI at 1.9%!

There is absolutely no value I can see in putting money in premium bonds unless you have so much already that you can put £30k in and forget about it (like a penny dropped down a drain!).

As one of the posters stated in the Premium Bonds thread - almost better off going to a casino and at least it would be more fun !

Aegis

DesertFlyer wrote: »

I'm in a similar position. I'm considering a Self Select Trading ISA (Looking for a thread on this in here at the moment and speaking to TD Waterhouse) but this will require you to be fairly confident in your investment decisions and of course reduces the liquidity, or at least puts you at risk of losing if you have a short, fixed investment horizon.

I hadn't really thought of Premium Bonds - always viewed them as kind of the last resort once you have used up ISAs, regular savers, early mortgage repayments etc. (Or what your grandparents gave you when you were born! I have £15 somewhere - never got a penny from them!).

Does anyone have the stats on the expected return for Premium Bonds? Will have a look at their site.

Edit: Do not put money in premium bonds! :eek:

I did some quick research and calculations (before I realised there was a calculator on here and whole thread on the topic).

The expected return/"Prize rate" is 1.5%, however if you take the most common prize of £25 which represents 96% of the prizes awarded this drops to c. 1.2%! Both are less than CPI at 1.9%!

There is absolutely no value I can see in putting money in premium bonds unless you have so much already that you can put £30k in and forget about it (like a penny dropped down a drain!).

As one of the posters stated in the Premium Bonds thread - almost better off going to a casino and at least it would be more fun !

The expected returns from Premium bonds are dire. Never buy them thinking they're a good investment, because they're not. About 1 in 5 people actually beat savings account rates as they currently stand, with the vast majority falling well below.

If the idea of putting your money into a savings account and spending the interest on Lottery tickets sounds like a good idea but too much effort, then Premium Bonds might be right for you. Otherwise I'd seriously consider just about every other alternative before resorting to them.

DesertFlyer

I mentioned the idea of a Self Select ISA but I wondered if I could get some thoughts on an alternative .... using my spread betting account.

Typically I only play with a few hundred pounds in my spread betting account to top up my disposable income each month. My overall performance and return is pretty good but I wouldn't want to risk a huge amount just yet as I still make some mistakes.

However profit from spreadbetting is tax free already I believe so why would I need an ISA?

e.g. Using a very simple example let's say I wanted to put c. £5000 into a FTSE linked ETF.

• I could either do this through a Self Select ISA, paying my trading fee and annual management etc. and owning the ETF share, or;
• I could take out a roughly £1 per point bet on the FTSE in my IG spread betting account, paying only through the spread and requiring a lower deposit. If I wanted to act as a long term passive investor I would just need to ensure I deposit enough in my IG account to continually set the stop low enough so it is unlikely to close out e.g. £2k deposit (Although the FTSE may well decline into the New Year I'm not expecting it to hit 3300 just yet!).

I could then deposit the remaining £3k in a normal c. 3% Instant access ISA.

Unless I am missing something here it would appear that I would be better off trading on my IG account? Plus I can short, which I don't think I can in the Self select ISA.

Apologies if this is in the wrong place!

pawlala

burntcookie wrote: »

To break it down simply, if you have £5000 in the account, you will earn 4% on 0 -£5000. If you have £8000, you will earn 4% on 0 - £7000 and 0.1% on £1000.

I thought the 4% interest started at £5000 and up to £7000 rather than any figure between 0-5000?

D1zzy

pawlala wrote: »

I thought the 4% interest started at £5000 and up to £7000 rather than any figure between 0-5000?

4% kicks in at £5000 but you get it on the fulll balance upto £7000. If you go over £7000 the extra bit gets zilch

But the rates for balances below £5000 are not bad either

pawlala

thanks dizzy!

Does anyone know how many vantage current accounts can be held by the same person at any one time?

DesertFlyer

D1zzy wrote: »

4% kicks in at £5000 but you get it on the fulll balance upto £7000. If you go over £7000 the extra bit gets zilch

But the rates for balances below £5000 are not bad either

Thanks Dizzy! Looks like a great account and have just applied!

I noticed though that the rates are from Feb 2009 - do you happen to know if they are still applicable?

Fingers crossed it goes through OK, but I know banks don't really like mutliple current accounts.

burntcookie

The rates are still applicable on the vantage accounts and you are allowed a maximum of 3 per person.

pawlala

just a couple more quick questions about Vantage:

1) Is it possible to close a vantage account at any time?
2) Is the interest rate tracked with the BoE rates or am I likely to want to move my money again in the future to a better place?

D1zzy

pawlala wrote: »

just a couple more quick questions about Vantage:

1) Is it possible to close a vantage account at any time?
2) Is the interest rate tracked with the BoE rates or am I likely to want to move my money again in the future to a better place?

1) Yes
2) No -its at the behest of LTSB & yes you may need to move yr money again - but as its a current account that's easy, -so make hay whilst the sun shines, where else are you gonna get 4% on 21K with instant access:D