40K plus 1k a month to invest

ooobedoo

We are selling our house and will make about 40K when fee's and paying off some debts, we will be in cheap rental and can save about 1k a month. Can anybody suggest(as just an idea) the best way invest/save.


I have seen national savings and investment rate is 5.30 and is tax free. Any idea's??????????????????????????????

ReportInvestor

Will you need the money any time soon, or in the next 5 to 10 years, e.g. to get back onto the housing ladder?

If you do you're talking savings rather than investment.

The NSI tax free ISA is £3K pa limit per individual, and only applies if you don't have ISAs already in 2006/7. Maxing out your £3K pa mini-cash ISA allowances makes sense. Top up again with another 2x£3K from April 6th 2007, the start of the next tax year.

The £1K per month is ideal for regular savers, most of which set a £250pm maximum.
Alliance & Leicester 12% (you need to open a current account).
HSBC 10%
Barclays 10%
Lloyds 8% (you need a current account with these three banks).
Ipswich BS 8.25%
Halifax 7%
Abbey 7%
Check out other threads for further details.

All of the above regulard saver accounts run for 12 months except Lloyds (2 years).

For the £40K you are looking at 5.0% Birmingham Midshires or 5.1% Yorkshire BS or ICICI Bank 5.15%, but other new deals may appear as we are still seeing the fallout from a recent interest rate rise.

ooobedoo

We can save like this for the next 10 yrs, then get back on the property ladder.

bilbo_2

ooobedoo wrote:

We can save like this for the next 10 yrs, then get back on the property ladder.

invest in a house GOOD ADVICE

Dan29

ooobedoo wrote:

We can save like this for the next 10 yrs, then get back on the property ladder.

I'm in a similar position and have gone for a Coventry First account - 5.35% for the first year, as long as you pay in £1000 a month.

ReportInvestor

In that case you may want to invest some in the stock market - it depends on your attitude to risk. (Which comes in various forms e.g. risk to your capital or risk of not keeping up with house price inflation.)

With a house purchase in mind, I'd personally invest £1K pm into the stock market (via a unit trust or investment trust) for the next 24 months from your £40K. (The regular saving element helps to spread the risk and the last investment still has eight years to run, which is a reasonable investment period.)

If you put £500 pm each into the stock market you could use a mini- shares ISA (max £4K pa) just in case a future government plays silly !!!!!!s with capital gains tax.

I'd put £18K from that £40K into three mini-cash ISAs for both you and your partner 1) ASAP 2) April 2007 3) April 2008.

And I'd split the £1K pm into the best regular saver accounts you can put your hands on.

justpaper

u should invest it in a cottage then rent the cottage out on self catering system ,. well thats what i plan on doing,.. like bilbo said invest in a house,.

im just wondering why ur selling ur house and moving too rental in the 1st place ?

Mr_Mumble

You say "paying off some debts" so the presumption is you'll still have debt? Unless the APR on the loan is very low (e.g. student loan or stoozing at 0% on a credit card) you'd usually be better off paying off the debt rather than saving/investing.

Over a ten year period shares will almost certainly outperform cash in a savings account, especially if you pay income tax. Index trackers and the generalist Investment Trusts would provide an easy, low cost, low maintenance way to take advantage of equities. If this seems too risky then corporate bonds and gilts should be looked at rather than just sticking it all in a deposit account.

ooobedoo

We don't have much, £1128 on a car loan that is finished in Dec. Overdrawn about 1500 per month.

We currently pay £1000 per month on just the mortgage and car loan, before any bills.
DH's money is going down about £300 per month, the cheap rental is about £300 including rent, council tax and water rates. The house we own is tiny and the rental house is much larger. We can't afford to upsize so this is the better option. We already have one child and one due in Dec

justpaper

how about buying a new build around the london area thats if u can get the mortgage for it,. even better a lil holiday home in morocco,.

as u can till im not the ISA type of person