£300 per month investment ideas

daniel80

Just wondering what people think. My wife and I have £100000 invested in Scottish widows flexible option bond 80% in mixed stocks and shares 20% in commercial property. This was invested in 08 and will be used as part of her pension. We also have about £60000 invested in stocks and share isa`s approx 26% uk all companies
22% global emerging mkts
15% uk smaller companies
14% china/greater china
13% asia pacific ex japan
10% uk equity income

The question is I am thinking of feeding in £300 a month into top income funds reinvesting the income, either by buying individual shares or through a fund. My thoughts are this is a better option to save due to interest rates and would probably be better than any cash isa. I know there is still risk involved but over say 5 years I think this would be more profitable. I would love your feed back.

atush

Do you have cash savings as well (you didn't list any) if not I would start there filling your cash ISAs.

If you do (and have at least 6 months salary) then I like investment trust savings plans. You could invest in 3 or more with 300 a month so go for a good performing general trust to emerging markets, private equity- whatever you like and want to invest in. Many popular funds have a mirror investment trust.

daniel80

Hi atush

Cash isa full for this year, my wife could do one but I think this would generate better returns,could you explain what you mean by investment trust are these the normal income funds.

atush

Investment trusts are companies and you own shares in them as if they were BP or another comapny. But they invest in other companies, bonds, assets whatever. There is a difference between the price of the shares and the Net asset value ( which is waht the shares in other companies they own and is called the discount or premium). Sometimes a company that runs funds will run a mirror IT alongside (such as the well know Fidelity Special Situations). They tend to be cheaper than funds as they have lower charges so they can grow more over time.

Have a read:


http://www.thisismoney.co.uk/money/investing/article-1583988/Investment-trusts.html


You can buy them thru ISAs and stockbrokers, but in your case investing monthly I might go with a savings plan direct from the company. you pay very low charges to buy (or sell ) and you can reinvest the divindends just like shares. when you sell them you can stage sales so as to stay within any CGT exemptions. Or hold them in an ISA eventually but then you pay mroe in charges unless you hold the ISA with the company direct.

Look at companies that run a number of trusts such as Foreign and Colonial, Invesco Perpetual etc. Research trusts on trustnet and other websites.

daniel80

I have my investments with Hargreaves Lansdown and wanted to pay the £300 into my account with them each month.Rather than buy individual income shares each month I looked for a investment trust on their site but did not seem to find much[this would even out the investment between all shares each month] I hope this makes sense.

atush

HL charge quite a bit to hold ITs in their ISAs, but did hear that they will be changing this.

They may not support buying ITs monthly, which is why I said to go direct to the company. If you can hold regular stocks in your HL acct, then you can buy ITs just like any other company and pay the dealing charges. You just look of the LSE tag for the ITs you are interested in.

ITs don't pay commission to HL so probably aren't mentionned in literature.

DominicH

If you're a First Direct customer, I think their Regular Saver account (8% gross AER for one year, £300pm max) is unbeatable in terms of risk vs. return.

Meeper

Investment Trusts are generally not advised upon by many FA's, primarily due to their lack of commissions paid to the FA community. There has been some controversy in the past, particularly around split-capital investment trusts which were touted as being "safe" but were in fact anything but!

More open-ended options such as Unit Trusts or OEICs are preferred, as the managers of such funds can create additional units and shares on demand depending on the requirements, and can have a more flexible mandate in order to react to market conditions more appropriately.

In addition, by investing in an OEIC in the same company which holds your ISAs, the OEIC funds can "bed and breakfast" over into your ISA each tax year, automatically utilising your annual ISA allowance and ensuring the most is mad of your tax-free exemptions.

Totton

HL charge max £45 p.a. for IT's in an ISA, used to be £200. I wouldn't suggest monthly purchase of IT's as cost savvy unless buying direct from the manager in their monthly savings plan.

For an assessment of income funds, it is worthwhile reading the brief but informative 'White List' at http://www.whitelist.co.uk/_images/july_2011_WL.pdf

Hope that helps,
Mickey

gadgetmind

Meeper wrote: »

More open-ended options such as Unit Trusts or OEICs are preferred

I tend to prefer close-ended funds as they aren't forced to buy/sell underlying holdings as their investors panic and flip-flop, and because they tend to have a long-term view rather than a short-term fashion-oriented one. Most ITs are far older than the IFAs who are pushing fly-by-night funds and the latest trendy investment bond that some bright PhD has just invented.

I do hold some OEICs, and even some carefully chosen UTs, but am mostly in ITs, trackers and direct share holdings, and all are playing a different role in my portfolio.

gadgetmind

atush wrote: »

Do you have cash savings as well (you didn't list any) if not I would start there filling your cash ISAs.

Light on cash and bonds IMO.