Saving and/or investment, what should we do?

Brendan_Ashford

Hi all!

My partner and myself are selling our house and have around £15,000 in profit. We are moving into my parent’s house and living rent free and putting £600 pm into a savings account for the foreseeable future i.e 5years. The intention is to save around £50,000 not including additional interest that would be accrued during this period. This is for a larger deposit on a house. And to get married!

I want this money to make money! But don’t want to lock it away in a fixed 4% interest account for 4 years because i think the interest rates will go up by then and would get better deals!

I haven’t used this year’s ISA allowance and my partner has only used a little bit.

Should we split the money and put it in ISA's for both this year and again the remainder after 7th April 2011. And then put our additional £600 (£300 each) pm onto a locked 1year accounts i.e. first direct 8% savings account. and pay our 20% tax onit?

Or shall I look at ISA shares? Or other share dealings?

Suggestions please!

Thanks for your advice in advance!

Thank you in advance!
:money:

Loughton_Monkey

You are torn between a rock and a hard place.

Put it all in savings and it will not keep up with inflation [don't know about 'house inflation']

Put it all in Stocks and Shares, then you have not only the usual 'volatility' risk, but [what I would call] a 'timing risk in that come the fay you 'plump' for buying the house, you may find a minor (or major) 'readjustment' which loses you money.

Get it all in tax free ISA's as soon as you can, but my own individual apporach would be to hedge and put a bit into savings and a bit in 'safer' funds. [Fairly well 'balanced' rather than any speocific focus or geography].

Consumerist

Have you considered the LloydsTSB Classic current account with vantage. It needs a deposit of £1,000 per month and pays 4% AER on balances between £5,000 and £7,000 ( no interest on any excess). If you open one vantage account each and transfer £1,000 per month to each other (e.g. by standing order) on the same date, this will give you 4% gross on £14,000 of your lump sum.

Newly_retired

You can open more than one Vantage ac!!!! each.

cloud_dog

Newly_retired wrote: »

You can open more than one Vantage ac!!!! each.

I assume you had a little typo there - Ooops

Brendan_Ashford

Hi thanks for everyones advice!

What about the wackly idea of buying Gold bar(s)?

I can buy a 500g of Fine Gold bar 999.9 (16.07540z) for £14,171.00 and over the pasy five years gold has risen by 250% so if the market keeps rising in the same vain it could be worth £35,427.50 in 5 years? Also i think it is tax free!

Just an idea!

Nikel

Brendan_Ashford wrote: »

....over the pasy five years gold has risen by 250% so if the market keeps rising in the same vain...

Yes, IF...!

B_Blank

Terrible idea to put all your money in one (extremely volatile) commodity! It could continue its rise, but it could fall alot.

Thats a similar risk to taking £5k of your money and putting it on black at the casino.

Diversify - simple!

Thats my (uneducated) view anyway

Aegis

Brendan_Ashford wrote: »

Hi thanks for everyones advice!

What about the wackly idea of buying Gold bar(s)?

I can buy a 500g of Fine Gold bar 999.9 (16.07540z) for £14,171.00 and over the pasy five years gold has risen by 250% so if the market keeps rising in the same vain it could be worth £35,427.50 in 5 years? Also i think it is tax free!

Just an idea!

Northern Rock shares went up by about 54% in a single year from 2005 to 2006. By your logic, buying in to those and holding for 5 years would have been a great idea because you should have expected a return of about 760%. Total net worth of such a purchase in 2011: zero.

There's a reason why past performance shouldn't be used as any guarantee of future performance.

Consumerist

Brendan_Ashford wrote: »

What about the wackly idea of buying Gold bar(s)?

I am inclined to advise your partner-to-be to keep your savings entirely separate and to disassociate financially from you.

leahciM

throwing in my 2ps worth - at a time frame of 5 years, it's not really long enough to invest in shares. Max out ISAs and go for Lloyds Vantage Account as mentioned above is my advice.