money to invest

bill_rand

Hi im after a bit of advice. Ive never ha any money to invest but im going to acquire £45000 soon and im wondering how best to invest it to get the most interest per anum. Im going to take £5000 to pay some bills etc and keep me going, but other than that i dont know the best thing to do with it. I am mortgage and dept free

Thanks in advance for any advice

xylophone

You mean "per annum" - trust me..;)
Have you used your cash ISA allowance, especially if you are a taxpayer?
£5340 this tax year and £5640 next. You can then look for the best savings rates on other accounts.
http://moneyfacts.co.uk/compare/savings/accounts/search/

psychic_teabag

You need to give yourself an emergency fund, if you haven't already got one. Some suggest 3 months living expenses. That needs to be easily accessible.

First you need to decide strategy rather than tactics. You can get more interest by locking the money away for longer, so you need to decide if you can afford to put some into longer term accounts. Perhaps even investments on the very long term (10 years).

Once you've decided that stuff, you can think tactics : how to find the best rate for each slice of the money. ISAs are best used for the longer-term money that you don't expect to touch, rather than day-to-day money.

bill_rand

LOl yes "annum" it was late at night. Thaks for the tips folks so Isa for long term then maybe put rest in high interest accounts and take some out each year for the Isa and build that up over the years is the best option?

twinkle10

There are lot of various investment options which are available as per investment amount and financial requirement. Many people are investing in properties and commodities which are having high value in today's market.

Linton

Before you can decide what to do with it you need to decide what you want out of it.

Steady income or capital growth for the long term? Or just a large pot of cash for you to access for a new car or major house extension in the fairly near term? Or perhaps a mixture? If the latter, in what proportions would you want to split the pot?

If you want capital growth in what sort of timeframe will you want to access it as cash?

Once we (and you) know the answers then it's much easier to suggest appropriate investments/savings.

But first - as Psychic has said, ensure you have 3-6 months living expenses in a good easy access account for emergency funds.

IronWolf

What is your attitude to risk? Do you want you're money to be 100% guaranteed or are you happy for some of it to be in riskier assets like the stock market or bonds?

atush

We dont really know enigh abt you (such as age, dependants, pension etc) that would affect the recommendations. I certanily would never recommend (esp if you didn't have any other investments ) to leave it all in cash as you will easily lose ground to inflation over the years (even though it is now starting to drop it is still higher than savings rates). But if you were already 65 then even that would change.

I do agree that 6 months spending in cash easy access and fill this years and next ISAs. I would also top up a pension (unless you were already a pensioner maybe). And then I would suggest equtiy investments.

But only you know your true situation and goals for the money.

bill_rand

ok guys thanks heres some more info/ Im 47, single and self employed but work has been terrible lately and am basically broke so im cashing in a low cost endowment policy which would give me the £45000, I own my own home and as i say debt free. At the age of 55 i will receive a pension of £500 p/m. I guess im looking at investing £40000 to provide interest prob on a monthly basis to top up the monthly income

So any input on that scenario would be greatly appreciated thanks folks

atush

Also, as you are broke, look at the debt free and budgeting board. will help you trim spending to save more.

Also, you don't have enough pension provision if you want to retire at 55. given tax relief I might put some of the 40K into pension. If you are broke now, how will you retire on 500/month???

Linton

For monthly income you could buy a range of 15-20 dividend paying shares in large global companies and get a tax free income of 5%-6% annually. Or there are funds that can provide similar or better returns. With this strategy you should get some degree of inflation proofing because company profits and therefore their dividends broadly increase with inflation.

However this appears to be your only wealth. Any investment in shares has a risk. Companies, even large ones, can go bust. If you had followed this strategy before the credit crunch you would have been badly hit when the banks failed.

That's the dilemma, you either go for what you can get from banks deposits, perhaps 4.5% or so for long term fixed accounts that are as guaranteed as anything in this life can be or you aim for more and take some risk.

As well as taking dividends or interest of course you could steadily use up the £45K, but the more you use the less you get in dividends/interest. £45K sounds a lot of money but I fear that it is not sufficient to fully solve your problems as you describe them.