Best Place to save / invest for maximum of 2 years

Jakestar

Hi All,

A chat round a pint with a mate this evening has spurred me to post. He has been paying £300 per month into a S&S ISA for 18 months (managed by a high street bank) and has 50% in class 2 and 50% in class 3 risk fund (the bank rate the risk from 1-4). He says even though its only 18 months in, its doing very well.

I, on the other hand have saved about £5000 in cash ISAs and am currently saving £450 a month, the saving is for a deposit. I aim to be able to buy a house at the latest in 2 years time, so am wondering what the best option is for me!

Would it be worth transferring the £5k into a S&S ISA and paying the £450 into that each month for the next 2 yeards or are S&S ISAs really for the longer term?

I was surprised that his is working so well 18 months in, although he could be exagerating!

Thoughts much appreciated, cheers.

pressuredrop_2

March 2009 S&P 500 650

March 2011 S&P 500 1300

You couldn't fail to make money over the past two years.

That's the past. Who knows the future.

CLAPTON

maybe watch the news and consider whether the stock exchange will boom or bust over the next year or two

Loughton_Monkey

It would be a brave person to invest in equity funds for such a short time as two years.

Your friend has 'lucked out' and got himself into a short cycle of dramatic Stock Market recovery. These things do not go in straight lines, but in waves. For example, over the last 3 days alone he could have 'lost' £300 or so - and almost certainly has.

Many of us have significant sums historically saved in ISA's. Over 10 to 20 years, these have performed reasonably well, and better than 'cash'. I could sit over a pint with you and 'boast' about the tens of thousands I have 'made' over the last two years. It might make you choke!

But then if I told you how much I 'lost' in 2008, it would make me choke!

So for two year saving for a specific purpose, it is best to use whatever combination of savings you can get from all the 'offers' around.

If and when you do feel the need to pay into S&S ISA's for the longer term, then you can have the 'last laugh' on your mate by not going to a high street bank for it! Typically they offer the most expensive and very lacklustre funds.

Jakestar

Thanks for your thoughts, and that explains a lot, I've never really tracked the financial news.as I've not really been in a position to invest. Shame I didn't pay into a s&s isa at the time, but think i will continue with cash isas until I've bought a property, taking your thoughts into consideration!

I think he made quite a bit when he bought into bp pre successful cap, but apart from that he doesn't seem to know what's going on with it.. just that its going (well)!!

dunstonh

He has been paying £300 per month into a S&S ISA for 18 months (managed by a high street bank) and has 50% in class 2 and 50% in class 3 risk fund (the bank rate the risk from 1-4). He says even though its only 18 months in, its doing very well.

If your mate knew what he was doing and why then he would not have used a high street bank. You are hard pushed to find worse places to use for investments.

I was surprised that his is working so well 18 months in, although he could be exagerating!

he is right but for the wrong reasons (already covered on the thread).

calypso_rhapsody

Loughton_Monkey wrote: »

It would be a brave person to invest in equity funds for such a short time as two years.

Agreed - but maybe you can do better with your future savings than putting them in a cash ISA - look at regular savings accounts - they tend to have a limit per month and a great interest rate just for the first 12 months (there's good info elsewhere on this site). There are also products specifically aimed at those saving for house deposits - but watch the conditions. If you are a basic rate tax payer, many of these will pay better net rates than most cash ISAs - less clear cut if you're a 40% tax payer.

Sadly - you need to do some research and then keep an eye on rates!

BargainGalore

TraderAdvisor :spam: :spam: :spam: low life serial spammer