£800/month to invest - ideas? high & low risk

evilplan

Hi everyone

I plan to save £800 a month. £900 if I get a good pay rise.

I've tried to get myself up to speed on ISAs, both cash and S&S.

I'd be interested in people's views on how to invest the money.

Should people *always* use up their cash ISA allowance first, or can it be beneficial to put more as a % into S&S?

I've got mixed views of risk. I guess I'd be happy to have £650 a month in fairly stable investments - cash ISA, solid S&S - and £150 in high risk investments. Of the £650, I'm going to put £200 a month into a job-specific savings scheme that pays 5% interest. That's on a 60-day notice period, and therefore is good liquid savings.

I don't really want to be stressing about actively managing my own S&S, but I'm happy to gamble on someone else's fund management.

I know that's not much information - if people can give me some thoughts, it would help me to tease out what I really want.

In terms of short/long term, the £200 a month will act as semi-emergency money, and the rest, I'm happy to leave for the medium-long term. So, a mix of stuff I can remove if need be, along with stuff that I'd be mad to touch, would be good

Thanks for your input.

MoneySaverLog

I don't believe S&S ISA's are secure, they are a risky investment as you can loose some or potentially all of your investment capital. The only safe bet is bonds, certificates, savings and ISA's but then the return on these is pittyful

I'm quite surprised at the number of people who choose a managed fund, as opposed to choosing which stocks, indexes to go for yourself. After all these funds are tied to specific sectors, e.g. a technology fund cannot put your money in a utilities fund even if technology funds are doing badly. They also feel that they cannot just hold cash and feel they should be 'fully invested' at all times. This to me sounds like madness, better off doing your own research in a self select ISA in my opinion, it's what I would do.

evilplan

Thanks MSL. Could I ask you, do you have a self-select ISA, and if so how much work do you need to put into the research, trading etc.? My instinct is to avoid doing it myself, as I don't think I have the mentality needed to do the research *and* monitoring.

I guess my ideal would be a "set it and forget it" type of investment for most of my money - either a mixture of cash savings, cash ISA and managed funds, and then, cos I can afford to take risks with some of my money, have an additional amount that I could play with in a riskier environment - be it self-select or aggressively managed.

I'm clearly not qualified to choose my own shares yet - I am actually overwhelmed by the number of funds, types of funds, types of invesment etc. But I realised, I need to start somewhere!

RobStaffs

evilplan wrote: »

Hi everyone

I plan to save £800 a month. £900 if I get a good pay rise.

I've tried to get myself up to speed on ISAs, both cash and S&S.

I'd be interested in people's views on how to invest the money.

Should people *always* use up their cash ISA allowance first, or can it be beneficial to put more as a % into S&S?

I've got mixed views of risk. I guess I'd be happy to have £650 a month in fairly stable investments - cash ISA, solid S&S - and £150 in high risk investments. Of the £650, I'm going to put £200 a month into a job-specific savings scheme that pays 5% interest. That's on a 60-day notice period, and therefore is good liquid savings.

I don't really want to be stressing about actively managing my own S&S, but I'm happy to gamble on someone else's fund management.

I know that's not much information - if people can give me some thoughts, it would help me to tease out what I really want.

In terms of short/long term, the £200 a month will act as semi-emergency money, and the rest, I'm happy to leave for the medium-long term. So, a mix of stuff I can remove if need be, along with stuff that I'd be mad to touch, would be good

Thanks for your input.

When I finished paying my mortgage of a number of years back,£800pm was the figure that was made available to me.Initially I looked to very stable investments such as cash ISA's and savings accounts.Back then you where still getting rather lucarative savings accounts such as the Anglo Irish Bank 1 yr fixed at 7%:beer:.Eventually I looked at Stocks and Shares ISA's.What is important is you maximise your tax free allowances for both you and your partner if applicable.These days interest rates are so low I would tend to take more risk and invest my full ISA allowance in Stocks and Shares.Also the NSI indexed linked certs are an excellent option in a period of high inflation.A good tax free return but probaby more suitable for lump sump investments.I use funds for my Stocks and Shares ISA's.Not quite built up the confidence to play the market just yet.

evilplan

Ah, MSL sorry, re self-select ISA - I should've read your signature!

MoneySaverLog

I have just opened one up with Interactive Investor, just not sure where to invest though. Only doing £50 a month to start, may be I will choose a index tracker

atush

I would put half each month into a cash isa, then half into a S&S isa, with 150 of that in a higher volitiliy risk area if that is what you want. Then everything retruned to you in interest, growth and dividends would be tax free.

If you keep doing this, at some point your cash holdings will become more than the 6 months of emergency cash you need. In which case you could direct some of that into the S&S isas or into the market another way such as investment trust savoings plans. Or into cash regualr savers to pay for new cars and holidays w/o finance.

I too am sceptical of 'managed funds' outside of maybe some of the famous contrarians such as Tony woodford etc. I would look at sectors rather than managed vs trackers and then choose your fund.

xrjtg

evilplan wrote: »

Should people *always* use up their cash ISA allowance first, or can it be beneficial to put more as a % into S&S?

The advice to always use your cash ISA first applies to people who are only looking at savings (and then not even in every case). By all means use your allowance for S&S investments if you're happy with the level of risk involved.

evilplan wrote: »

That's on a 60-day notice period, and therefore is good liquid savings.

Make sure that's not all of your cash savings, as the 60-day notice period may look a bit longer if you find you suddenly need money in an emergency.

evilplan

Thanks Rob - it does sort of feel like I need to know the answers to a few questions. Like, do I care so much about interest rates? Do I mind a bit of stress with the investing?

atush - that's useful advice. I suppose I also need to ask this: If I save cash for a year, that can become my emergency fund. But... what if I put that money instead into a low-risk S&S ISA for a year? If I needed it, I could sell it out for cash. I know that S&S is for longer-term, but is there a chance that even if I just have some low-risk investments, I would still earn more than I could with a cash investment?

Forgive me if that question doesn't make sense!

There's a part of me, the more I think about this, that would like to have a bit of fun while saving money. But it does seem like a lot of work.

In my mind at the moment, I've got this:

£200 into a bog-standard 60-day notice account at 5%
£150 divided over 3 funds in a S&S ISA. How does something like JP Morgan Natural Resources & First State China sound at £50 each? Any thoughts on a punt for the third £50?
£450-550 in a cash ISA

That seems a bit low-risk on the whole doesn't it? Perhaps it would be better to put £200 into the cash savings, £200 into a cash ISA, £150 into high-risk S&S ISA funds, and £250-350 into a balanced/cautious S&S ISA funds?

Of course, I may well be the worst-placed to make these decisions. I wouldn't know whether I'd be better off on X or Y type of fund. So far, looking at Hargreaves Lansdown's site, I can't make head nor tail of the advice they're giving - in some ways, that seems quite deliberate. Nothing on their website seems to just offer plain, simple information for a newbie. But that's cool - I'm happy to put it all into cash if I can't work out where to put it.

I may end up going to an IFA, and I'm not asking you guys to give me tailored advice. But it'd be good to know your own "what-if?" thoughts on the money I'm planning on investing: What would *you* do?

evilplan

xrjtg - I really do appreciate comments like yours. If you know very little about the subject, that kind of clarity is important.

For example, it's written *everywhere*: Use your cash ISA allowance. But, as you point out, what they mean is, "if you're saving cash, do a cash ISA first". I'd never really thought about what if you were saving into S&S too.

Similarly, thanks for the advice on the 60-day savings account. It didn't occur to me until I read what you just said. Luckily, as it's a work-related savings scheme, they place a maximum on what you can save - £200 is the most. So I'd need to get some cash elsewhere I think.

Cash-Cow_3

"Cautious managed" always makes me smile. Look at the historic performance of these and you will easily find years when they have lost 20% perhaps more. The FSA should look at the naming of these as they are in my opinion misleading.