mid 20's with 30000 to save/invest

earthlover

I'm trying to help my mid-20's son invest 30000 wisely.

What do folks think to this?

Obviously max out cash ISA. I was thinking the N. Rock 3-year 4.26% fixed. Quite a good rate and not too distant if rates do start to rise in the next few years.

15000 into index-linked certs.

Maximum allowed into a S&S ISA. Any advice on this would be welcome as I know nothing about the best way to invest in shares and do not want him to be stuck with high fees from managers etc.

The rest in stocks and shares lile utilities, supermarkets, telecomms, oil, gas. water companies in uk.

Does this sound reasonable.

He earns 16000 per annum, no pension scheme.

He lives in rented accommodation.

Suggestions please.

Lokolo

Does he not want to think about putting a house deposit down?

As for mid 20s, he really should be contributing to a pension.

eleanor.

Agree - your son should start a pension, and think about a house deposit.

earthlover

Thanks for your replies.

He doesn't earn enough to buy a property. That would be a big financial commitment and he is not ready for that yet.

As for the pension, by the time he comes to draw on it, I wonder what will be left. My husbands pot seems to be shrinking each year.

Anyone have any advice on Stocks and Shares and the NS certs.

Jegersmart

A pension is a must because your son's contributions are not taxed, and most companies have some scheme where they pay in as well which is free money. If your husband's pot is going down every year then that may be because it is poorly managed and has nothing to do with pensions not being a good thing. EVERYTHING has gone up massively since late 2008 - and I mean everything. There is no excuse for his holdings to be worth less over that period tbh......

Lokolo

NS&I is fine, you can withdraw after 1 year, but it's a 5 year term.

S&S ISA you may as well start a pension. The investments inside a S&S ISA can be the same as a pension. Or he can start both. As for the actual investments, none can be recommended on this forum.

atush

I don't know the details of your husbands pension, but it shouldn't go down every year. Mine have been going up year on year. they drop when the market tanks but hten shoot up when it does. And new payments in when markets are down bouy more investments than when it is going up.

He should start a pension, the Cash and S&S isas, the 15K index linked cert and put the rest in savings acct bond-1 yr. So that he can put the rest into ISAs next year too.

Make sure you advise him to not tell any mates or GF he has this money or he will be hit up for 'loans' which will turn into gifts when they don't pay it back.

earthlover

Thanks again all for your replies.

Should he put a lump sum in a pension or just so much a month? He has got a stakeholder from when he was a student working in the summer hols. Got about 60 quid in it.

I'll find out more about the index-linked certs. I find them a bit confusing but lots of people on here seem to think they are worth doing.

atush

I had been wondering whether to save some cash in a short term a/c for exactly that reason. But
I also thought some stocks and shares over long term in big companies might be more lucrative.

JoeCrystal

Well, I originally opened my pension scheme with a lump sum of £3,600 (which became £4,500 due to tax relief) [I decided I need to catch up since I did not bother to pay into one for sometime] and monthly payment afterward. So yes, you can.

It is vital that your son need to find out if his employer does have a pension scheme and more importantly, if his employer pay into it as well.

Maybe he should ask Pension forum instead

Lokolo

earthlover wrote: »

Thanks again all for your replies.

Should he put a lump sum in a pension or just so much a month? He has got a stakeholder from when he was a student working in the summer hols. Got about 60 quid in it.

I'll find out more about the index-linked certs. I find them a bit confusing but lots of people on here seem to think they are worth doing.

atush

I had been wondering whether to save some cash in a short term a/c for exactly that reason. But
I also thought some stocks and shares over long term in big companies might be more lucrative.

Remember the BP oil spill?

Their share price dropped from 600p, to 300p over 3 months.

Shares aren't the only type of investments, but investments should be considered 5-10 years minimum, so depends if your son wants to tie up for this sort of period as well.

But yes:

1) Index Link (you want cash to stay in line with inflation)
2) Cash ISA
3) Pension
4) Other emergency savings
5) Investments

Ark_Welder

Emergency savings first, for me. Assuming maxing-out an NS&I and cash ISA, that would leave about £10K for other uses - including the emergency [edit] savings. Whether the excess is put towards pension and/or S&S ISA, I would avoid individual shares until more experience is gained and the size of the investment pot has increased.