£9k to invest - advice needed

adonis10

Martin_the_IFA wrote: »

Don't forget Premium Bonds through NS&I. Interest rates are low so you would sacrifice a low amount of interest to potentially win anything from £25 to £1million every month. And if you don't win you can get your money back at any time.

Thanks Martin. Yeah, I've already got a separate £2,000 in Premium Bonds which I intend to keep there for that reason.

I think I may be making more of it than I need to considering the situation. I currently use my cash ISA (2.76% ING Direct) for general saving, which is not an efficient way of doing it because it's an account where money is going in and out on a regular basis.

Considering I don't want to tie anything up for more than a year, I think I will do the following:
- ICICI Bank 1 Year HiSAVE Fixed Rate Account 3.1% for £5,500
- Use the remaining ISA allowance for the other £3,500
- Set up a new online saver for general month to month savings. Interest rate (net) only around 2.2% but there's only usually £500-1,000 in at any one time so the rate isn't a huge issue. It's basically an account I use to get cash out of my current account to avoid temptation to spend!

Sound about right?

tillybabygirly

Buy Bp Shares

adonis10

tillybabygirly wrote: »

Buy Bp Shares

Someone else said this, but I'm apprehensive about doing so as I don't want to put all my eggs in one basket.

I'm naturally a bit of a risk taker and spontaneous, so I probably should look for somethign with a little more risk and return.

Martin_the_IFA

You are right to change how you use your cash ISA, Adonis ... as the £5,100 limit is on contributions not outstanding balance. Your other suggestions seem fine.

As for BP shares ... hugely risky to invest in one shareholding despite BP's current worth ... especially as you have a shorter term purpose for the funds.

You have to stick to deposit based options despite the poor returns.

adonis10

I'm thinking a couple of grand into an NSI index linked saving certificiate. I know it's a risk but at the moment the RPI is 5.3% (+1% bonus) so perhaps a risk worth taking for the sake of £2k. If I need the cash before the 3 years are up I can borrow it from elsewhere, interest free, so that's not a problem.

Questions:
- Is the interest calculated monthly? For example, JUly RPI is 5.3% - interest paid at that rate, August RPI is 4% - interest paid on that rate etc etc?
- Locking the money down for 3 years - what are the chances that interest rates are going to rise much in the next 3 years?
- Early cash in is allowed, with the sacrifice of interest. Essentially, the worst that could happen is that I get my initial investment back?

Am I thinking along the right lines?

Also, looked at Punjab National bank and ICICI - as they are full UK subsidiaries and protected by the savings guarantee, the foreign banking sector would not affect this account in any way?

adonis10

*bump* ..

grubby23

As far as I understand:

The interest of an NSI index linked certificate is payed annually; thus, in one year you will get 0.85% plus RPI in this month.

If you withdraw money within the first year, NO interest is payed but there is also NO penalty at all. After the first year you can take it out with a small penalty paid on the interest.

Hope that helps.

adonis10

grubby23 wrote: »

As far as I understand:

The interest of an NSI index linked certificate is payed annually; thus, in one year you will get 0.85% plus RPI in this month.

If you withdraw money within the first year, NO interest is payed but there is also NO penalty at all. After the first year you can take it out with a small penalty paid on the interest.

Hope that helps.

thanks.

I thought it was 1%+RPI?

Oh well, for 2k it's worth the risk. Knowing my luck RPI will be 1% when they apply the interest! To be fair though, on 2k it's a neglible difference as the most Ill get from a one year saver is 2.48% (3.1% less tax).

Sceptic001

adonis10 wrote: »

thanks.

I thought it was 1%+RPI?

Oh well, for 2k it's worth the risk. Knowing my luck RPI will be 1% when they apply the interest! To be fair though, on 2k it's a neglible difference as the most Ill get from a one year saver is 2.48% (3.1% less tax).

The 1% fixed element is tiered, so you get 0.85% at the end of first year, 0.95% at end of year two and 1.21% on maturity = 1% AER. This is paid in addition to the index-linking.

adonis10

Sceptic001 wrote: »

The 1% fixed element is tiered, so you get 0.85% at the end of first year, 0.95% at end of year two and 1.21% on maturity = 1% AER. This is paid in addition to the index-linking.

Thanks.

I went for it. I doubt I'll end up losing too much over the 3 years on 2k. May even have grown some balls in that time and invest in some shares!