Best way to invest small amount of money.....

kate1irwin1

I have around £1500 to invest and would like to add around £100/month to this.
Have looked at Zopa and considering this, like the idea of spread betting as I don't mind a little risk but nervous about the large potential loses and amount of research to do before I could invest.......ISA is a bit dull (I know that is a rubbish thing to say!)

Any ideas/advice gratefully recieved:)
Kate.

kidmugsy

Put your cash into ns&i Index-Linked Savings Certificates. Then if inflation runs away and interest rates are raised spectacularly to counteract it, withdraw the money from all certificates older than one year and put it into fixed interest gilts - if you can't choose which, use an ETF. They'll shoot up in value when interest rates are lowered again. If consistently high interest rates, or any other cause, leads equities to tumble, consider switching the investment into them: Investment Trusts are a good method. Take advantage of any tax shelter where the costs are less than the tax savings.

The beauty of this scheme is that while you wait patiently to try to time the markets, your money is anyway in a tax-free, minimum-hassle, secure bolt-hole that will protect its purchasing power. Judging by the graph in the blog post of 28th July at the link below, ILSCs have outperformed shares over the past decade.
http://broadoakblog.blogspot.com/

Or buy gold sovereigns and lock them up in a safety deposit.

kidmugsy

Mind you, ask yourself whether you really want the risk of "investing": would "saving" be wiser?

Ark_Welder

Spread betting is a lot of risk, not a little!

One point of view is that 'dull' provides a very stable platform from where more 'intereting' sallies can be made. All investments have their risks of one sort or another (including ILSCs), so don't rush in to anything until you have a good understanding of the product. And think of cash held outside your easy-access emergency reserve as being an investment too - a dull one, but a valid alternative to other types of investment.

If you are interesting in equities, etc, then look at collective vehicles first, i.e. unit trusts, OEICs and investment trusts. These will allow you to spread your investment across a greater number of companies, which reduces the risk of buying into a dud.

Then, if you are still intersted in something a bit racier, get an understanding of what your potential maximum losses are. If you are not prepared to take them, or (more importantly) you are unable to pay for those losses out of your other investments, then avoid completely.

Get rich slowly, don't get poor quickly.

Ark_Welder

SergeyLEM wrote: »

And way you didn't say anuthing about precious metals investing?

Precious metals investing is a lot of risk, not a little!

cyclonebri1

Put it under the mattress, twill be worth the same next week, other savings may not be. :A

marms

cyclonebri1 wrote: »

Put it under the mattress, twill be worth the same next week, other savings may not be. :A

Then every time prices go up you get poorer in real terms.

jamesd

Spread betting is high risk leveraged investing.

Zopa is high risk in part because the company that tells you what the credit ratings of the borrowers lent to are is also the one that sells you the packages of those loans, when even external ratings agencies weren't enough to prevent trouble with packages of mortgages. Similar for Lending Circle and any other peer site where you're taking the lending risk, not the place that does the credit rating. If hey aren't standing behind their ratings and taking the risk or sharing a substantial part of the loss with you, they have much less on the line than you do. That's part of why the meltdown happened in the US - the people making the lending decisions weren't exposed to the losses for getting it wrong, they just collected their fee up front. Sadly even in the UK this has gone wrong, with one sub-prime lender reporting big losses after its staff didn't even follow it's own internal lending controls - and that when the company's own money was at stake, not that of someone else.

For best long term results, start out with conventional unit trust and OEIC investments and learn how those work and how to exploit them. You can hold those in a S&S ISA.

cyclonebri1

marms wrote: »

Then every time prices go up you get poorer in real terms.

But every time your investments go down it's a double whammy;), (It was a comment by the way)

Ark_Welder

Ark_Welder wrote: »

Spread betting is a lot of risk, not a little!

also

jamesd wrote: »

Spread betting is high risk leveraged investing.

Looks like the post that these related to have been deleted.

SergeyLEM wrote: »

It seems to me unit trusts are more risker

Everything asset class has a risk, and different risks at different times. But unit trusts are not an asset class - they are funds that can contain different types of assets and so will have different types of risk.

jamesd

Ark Welder, my comments were a reply to the original post which remains.