Best way to invest £7,000. ISA??

pazza2000

Hello,

Looking for some advice. I know with extensive reading all the answers are already here no doubt, however i know someone will be able to give me them straight off.

I have about £7,000 to invest. I dont really need short term or instant access to this however i wouldnt like to lock it away for a few years either. I am clueless about savings accounts/ISA's, all i know is i basically make no interest on it in my my bank account.

I have just seem Martins email shouting about this new A+L ISA at 3.5%. Is this the best bet or is there better ways to save for those who dont need access to it or willing to take a small risk??

As i am a bit of a lazy saver -perhaps this ISA would be my best bet. Now... would i be able to put in £3,600 into it now(A&L ISA) and the rest in a few weeks time when the next ISA allowance is reset(when is that??) -if i do this will my allowance for next year also earn 3.5% interest... & is it for a year only from time of investment or longer??

Any advice or help would be great.

Thanks

mitchell

hello
if you dont want to lock your cash away ie fixed term then go for a variable isa 3.5% is about the best currently, put £3600 into this and the in april you can open another isa doing the same thing but hopefully getting a slighty better rate

mitchell

oh yeah the cash isa next year ie this april is going up so you can save upto £5100

G_M

The A&L deal is very good, but remember to transfer (not move it yourself) it 12 months after opening the account as the rate will drop substantially.

£3,600 now (£5,100 if you are over 50) and the rest after April 5th.

You might just beat this if you lock the cash away for a (longish) fixed period, but if rates rise, so will the A&L, whereas a fixed rate deal will not.

pazza2000

Thanks for the replies. Ill put the £3600 limit into the ISA now and the see what the situation is in April for the rest.

Any recommendation on where to put the rest until April or sould i just leave it in my 0.2% RBS account? Has anybody ever heard of a site called Zopa?

jamesd

Heard of Zopa, used Zopa but it doesn't seem suitable for your situation because your money is tied up until repaid, with no way to get it back until it comes back from the monthly repayments.

If you're willing to take risk then there are 25 funds that pay interest tax free inside a stocks and shares ISA and have yields (roughly equivalent to interest) of 7% or higher. The ones paying more than 8-9% have a higher chance of capital value drops, so don't just go for the highest return, these aren't savings accounts that can only go up in value.

Watch out when reading the Zopa promos, they give the 8% rate that is for the last year, completely ignoring bad debt, across all markets including those where they estimate the bad debt as likely to cost a non-taxpayer 5.2% a year (C36 months) as well as those with a 0.4% estimate (A*60 months). For the one to two year ago period the bad debt rate has been over 4% on average and is likely to continue to increase for that generation of loans. They and I hope it's going to be lower for current lending but only time will tell. If it's still interesting, have a read of Zopa lending so you can see how to correct your offer rates for your tax situation.

You can do better than average, you don't need to offer as low as average and with the amount of money you're looking at, you shouldn't, because patience will let you get higher rates. I'm very patient...

Declaration of interest: I both have loans via Zopa and lending offers via Zopa, though I think it's not likely that my lending offers will be accepted at present.

mitchell

the link to 25 funds does not work

sibot74

mitchell wrote: »

the link to 25 funds does not work

It does - Jamesd said there were 25 funds which had yields of 7% or over. The link lists a large number of funds, sorted by yield. The first 25 funds on the list have a yield of 7.00% or greater (the second numerical column in the table).

pazza2000

Had a quick look at 25funds. Rather baffiling. Although i am willing to fiz my money away for a year at least, and take some risk....

Thanks for all the advice so far

jamesd

In case it helps, here are the most popular few funds in the list, measured by the amount of money invested in each:

Invesco Perpetual Monthly Income Plus 2663.2 million, 7.35%
Newton Higher Income 2714.3 million, 7.08%
L&G High Income 1825.8 million, 7.70% *
SWIP High Yield Bond A 1097.1 million, 7.20% *
Threadneedle European High Yield Bond 707 million, 8.10%
Artemis High Income 641.7 million, 7.71%
Stan Life Inv Higher Income 580.4 million, 7.37% *
Threadneedle High Yield Bond 570.6 million, 9.20%

The largest fund in the UK (Invesco Perpetual High Income) has about 9,260 million invested in it, the tenth most popular about 3700 million. The most popular of those above is about fifteenth largest in the UK.

* are major UK insurance company funds that have a lot of investors restricted to using only their funds, so you might want to downrate them a bit in popularity with investors who can go anywhere.

pazza2000

jamesd wrote: »

In case it helps, here are the most popular few funds in the list, measured by the amount of money invested in each:

Invesco Perpetual Monthly Income Plus 2663.2 million, 7.35%
Newton Higher Income 2714.3 million, 7.08%
L&G High Income 1825.8 million, 7.70% *
SWIP High Yield Bond A 1097.1 million, 7.20% *
Threadneedle European High Yield Bond 707 million, 8.10%
Artemis High Income 641.7 million, 7.71%
Stan Life Inv Higher Income 580.4 million, 7.37% *
Threadneedle High Yield Bond 570.6 million, 9.20%

The largest fund in the UK (Invesco Perpetual High Income) has about 9,260 million invested in it, the tenth most popular about 3700 million. The most popular of those above is about fifteenth largest in the UK.

* are major UK insurance company funds that have a lot of investors restricted to using only their funds, so you might want to downrate them a bit in popularity with investors who can go anywhere.

So what would you recommend, Zopa or a 25fund. I do not mind some risk, there just a vast amount of research to do and i want to narrow down my options with stong advice firstly.