Saving £1,400pm - what's the smart thing to do with this?

jimjames

2 years is too short for investing but if the time is flexible and you are happy with the risk then check out the options.

If you are prepared to invest then something like a mix of income funds and index trackers could be worth looking into. Income funds are currently yielding around 4%.

Past performance isn't a good reflection of what could happen in the future but if you had invested £1400 each month consistently over the last 5 years I think you would be substantially up on the amount paid in and that is through one of the worst periods in the market for some considerable time.

Remember that there is a risk that you would get back less than you put in but equally there is no tie in. You can invest £10200 of this money into an ISA each year and withdraw it at any point. There is no fixed term like some savings accounts and if the money is substantially up there is nothing to stop you selling all the units and converting to cash.