Very confused - where do you go for advice about saving?

lisyloo

Why would you save? saving means your money loses value.

Not always. NSI is an obvious example of a product that guarantees to beat RPI with no risk.

rainbow - you need a balanced portfoilo.
There are generally three types of risk.
Capital risk - you lose money in NOMINAL terms.
Infaltion risk - your returns are below infaltion so loses value in REAL terms.
Shortfall risk - you don't get big enough returns.

The way to manage these risks is to have a balanced portfoilo.
You need some cash ISAs for easy access. How much? well that depends on your needs.

NSI index linked savings certificates are linked to RPI so these will guarantee your money keeps up with inflation plus a bit more, it's also completely safe as it's back by HM treasury and tax free.
I would recommend them for some of your money.

Stock & shares may provide a higher return, but your capital is at risk.
There are 3 ways to manage this.
1) Get a spread of funds/shares (funds are safer than single shares).
2) Actively manage it or get someone to actively manage it for you (my advisor reviews mine regularly).
3) have them as part of a portfolil along with cash & NSI etc. etc.

You need to talk to a couple of IFAs but I also recommend doing your own research because you will know what to ask them and understand what they are saying.
Don't rush into anything, take your time.
Make sure the advisors you see are independent and generally bank products are a bad bet.
Kepp asking question on here - it's free.

rainbow143

rainbow143 wrote: »

Halifax told us about gilt bonds - from the government? Supposed to be very safe. Have read you can invest in them in ISA's. But how to go about that? I would need IFA I think. QUOTE]

Does anyone have any advice about these gilt bonds?
Firstly, are they as safe as we've been told i.e. the government would have to be bankrupt for them to fail.
Secondly, can they be bought as part of a S&S ISA.
Thirdly, can I do this myself?

So grateful for the advice here.

MoneySaverLog

Gilts can be put in a S&S isa appearently. You are effectively lending money to the government. So I would imagine you will only lose if they default on the loan which would probably mean the UK going bankrupt. Given that I have recently read reports in a number of newspapers that that indicate 12p needs to be added to income tax to avoid this and get the UK out of debt, spending cuts alone wont cut it appearently. It sounds like we're in for a bumpy ride for the next 50 years.

Linton

For Gilts to fail the government would effectively be bankrupt. When people are talking about Greece defaulting, the are talking about government bonds, the Greek equivalent of Gilts.

I believe you can hold Gilts in an S&S ISA but for the amateur investor its easier to buy a Gilt Fund (unit trust or possibly ETF). If you look on https://www.trustnet.com, under Sector you will see IMA UK Gilts which will give you a full list of what is available.

Note that Gilts do not normally give a very high return compared with shares, especially at the moment because people have moved from shares into Gilts whilst there is considerable economic uncertainty.

Ark_Welder

Any gilt or bond that has less than 5 years left until its redemption [edit] date cannot be held in an S&S ISA.

Referencing lisyloo's post, I would change Shortfall Risk to Income Risk, i.e. the total return on your assets does not grow sufficiently enough each year to be able to cover the income that you take from them - in other words, you eat into your capital. Just thought it helpful to expand a bit on that particular risk.

Another risk of gilts (and other types of bond), which is sometimes overlooked, is that they may be overpriced at a particular moment in time. This could lead to a capital loss if the bonds are held until redemption, or even if their prices drop before then and the bond is sold. Rising interest rates could cause prices to drop before the redemption date.

I would also suggest reading the Business sections of the weekend press to give a feel for the state of the economy both at home and abroad.

calypso_rhapsody

You mention that your husband will not be paying tax in the next four years ... so do put any savings that are not tax sheltered into his name (at least your 'emergency fund'). Gifts to spouses are tax free.

Timingthemarket

Personally i consider bonds quite risky. Riskier than what they seem to be. To little bang for the buck. All it takes is that the government decides that investors should pay as well. One country alone might not do that but on an international level.

After all at some point default is unavoidable. That´s just the nature of the exponential curve.


Here´s one example of the tricky curve i found online:

"Suppose I had a magic eyedropper that could dispense a drop of water with a most unusual trait – it will double in size every minute – and I place a drop of water in your hand. At first you’d just have a lonely drop of water sitting in your hand, but after one minute it would double in size, and after six minutes you’d have a blob of water that could fill a thimble. Do you have a sense of that growth? Now, follow me to Fenway Park, where I am going to place a drop from my magic eye dropper on the pitcher’s mound at 12:00 pm on January 1st of 2008. To make this interesting, let’s assume that the park is water-tight, and that I’ve handcuffed you to the highest row of bleacher seats. Way down there, on the mound, I bend over and plop a magic drop of water, so small you could not possibly see it from where you are sitting, and it begins to double. My question to you is, at what date and at what time would the park be completely filled? That is, how long do you have to escape from your handcuffs? Days? Weeks? Months? Years?

The answer is this: You have until 12:49 pm, on that same day, before the park is completely filled. You have only 49 minutes to escape your handcuffs. And at what time do you suppose that the park is still 97% empty space (and how many of you will appreciate the seriousness of your predicament)? The answer is that at 12:44 pm the park is still 97% unfilled. The first 44 minutes filled just 3% of the park, while the last 5 minutes filled the remaining 97%."

rainbow143

Well, all I can say is thanks to you all for responding to my question.
I had a little knowledge of what I thought would be our best way forward and I would say it's been pretty much confirmed today with all the information I've gleaned from here today.
I have had my fingers burnt with shares before, therefore am not prepared to risk anything even for a greater chance of profit and I do not really want to pay tax if at all possible.
So I think we will go with the NS&I ILSavings Certificates this year and keep filling our cash ISA's when we can.
Funny, my first question was really about the advice given by Banks. When I approached Halifax for advice, they recommended Gilts. So, judging by the comments I've read today about them, that advice probably wasn't the best. Why am I not surprised??
Can I just confirm, that the NS&I certificates are issued fairly regularly and we can put in £15,000 for both me and hubby. If another issue is announced we can then save another £15,000 again? Please correct me if I'm wrong.
Thanks again. :T

Bloomberg

rainbow143 wrote: »

Hi there,
I will soon have a reasonable amount of money to save, but don't know where to go to get some advice.
Having read Martins Facebook page about how banks are only there to make money out of you, I am reluctant to go to my bank.
But I'm unsure about Financial Advisors - aren't they about making money for themselves too?
Can anyone advise on where to get advice!? There is so much information in this forum, but I'm afraid of making a bad decision.
Many thanks.

My advice would be to educate yourself as mentioned in another post. Then you must decide which things you think are a good investment. If I was telling you what to do then I would advise you to invest in a natural resources fund. J P Morgan have a good one which only takes one percent commission from the money that you invest and there is also a small annual management fee.



The fund invests in oil, gas and food as well as base metals. These things will be in demand for the foreseeable future. When you pay into this fund the fund managers then use the money to invest where they see the highest returns. There are a multitude of other funds which they offer such as an emerging markets infrastructure fund. By investing in a fund you have a say where your money is invested and you also have the expertise of the fund managers.



It is my belief that with a natural resources fund you will only lose if you are forced to sell at the wrong time. Therefore if you have money to invest every month you should look at splitting the money between investing into a fund and also building up a cash reserve so that if one day you do need money then you will not be forced to into possibly pulling money out of your long term investment at the wrong time.



I do NOT work for J P Morgan and have nothing personally to gain if you follow my advice. The important thing is that you really take time to investigate all options. All the best.

gadgetmind

rainbow143 wrote: »

I will have about £70,000 to put somewhere!! I would like this to make me a little bit of a return.
I have no mortgage and we retire this year with just about enough pension to get by on. So some of the money must be accessible just in case we need a top up.

Perhaps split it between a cash account (usual trade off between access and interest rate), NS&I bonds, and some high income funds or investment trusts. If you ensure the funds/trusts pay dividends rather than income, there is no additional tax for a basic rate tax payer.

Yes, your capital is at risk with fund/trust investments, but the value of gilts can fall and be eroded by inflation.

Regards NS&I, you can each hold £15k in your own names, and £15k with the other as beneficiary, so £60k in total.