first time invester

loady

Hi

We recently came into a sum of money, an inheritence to be precise. We are basically looking to tie up £21.960 which give my wife and i our £5,340 allowance each for this year and also we are allowed to fund next years ? at a total of £5,640 each..this is what we were told by our bank natwest when we went in to pay the cheque in, as you can imagine they pounced on us !!, we currently have a mortgage with them which is fixed rate and not due to run out untill may this year and the rate is favourable @ 3.69% so offsetting would not be benifecial at this time.

We dont want to risk our capital first time round and we dont mind locking the money up for 5 or 6 years, a few of the offerings they have given us are...

index isa bond which is linked to the FTSE index and on your anniversary date each year for six years if the FTSE rate is higher or equal than the rate of your start date then the 5.75% is locked in for that year, if it is below then it is not applied, my capital will allways be safe but i am gambling on the performance.

The they offer another scheme called auto pilot which is capped at 7% max monthly return but this product tracks certain markets, if those markets do not do well then it tracks your cash reserve or momething like that....

I am a sceptical person, i always think there is something better out there, i do not want risks yet..should i take natwests advice or can anyone give me some really good deals ??

DiggerUK

loady wrote: »

.....we currently have a mortgage with them which is fixed rate and not due to run out untill may this year and the rate is favourable @ 3.69% so offsetting would not be benifecial at this time.

...... but this product tracks certain markets, if those markets do not do well.....

Guess what happens "if those markets do not do well" if you like the gamble, then play it.


As to your mortgage; it would be impossible to get a cash ISA paying 3.69% net for now. It appears you would be a lot better off paying down the debt, especially if the rate is greater than 3.69% after May.
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atush

What other savings and investments do you have? Do you have pensions?

loady

We have no other saving appart from £5000 left over which we intend to put into halifax to get into thier monthly draw..i have a pension which my employer pays £48 a week into

loady

DiggerUK wrote: »

Guess what happens "if those markets do not do well" if you like the gamble, then play it.


As to your mortgage; it would be impossible to get a cash ISA paying 3.69% net for now. It appears you would be a lot better off paying down the debt, especially if the rate is greater than 3.69% after May.
..._

But surely thats the beauty of the autopilot, it tracks certain markets, if those market are not doing well it pulls out from them and and back in as they track equally 25% four markets

atush

Do you won your home or rent? Do you have any debt?

Generally, it is recommended to hae 6 months of spending in easy access cash accts (ISAs if you are a tax payer) so 5K may not be enough as an emergency bumper. And debt is paid off first.

Then you need to think of long and short term goals. If you have a home, what is your mtg? If your partner doesn't have a pension opening one could be a priority. As could putting more into yours- with tax relief you get an automatic boost to your investments equal to the basic rate of tax (and you get further tax releif if you pay HRT).

The plans you are talking about may be good for you, I don't know. What I DO know is they pay a high rate of comission to the guy that signs you up. And NEVER go to your bank for any investment advice as they only push the high cost items.

You could be better off with a combo of cash ISAs, S&S isas in a good income fund, and a pension for your OH or paying down your mtg.

DiggerUK

loady wrote: »

But surely thats the beauty of the autopilot, it tracks certain markets, if those market are not doing well it pulls out from them and and back in as they track equally 25% four markets

Question I want you to face up to, is what happens if the autopilot keeps taking you in to bad weather fronts on all markets?
If it was that easy to make money we wouldn't be in the economic mess we are in now...would we?
Down paying the mortgage is a win-win in my eyes. It's a debt after all....did you never think you would need to pay it back?
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BLB53

Whatever the bank are offering, you sort of know it will definitely be of benefit to them and may or may not benefit you.
My advice FWIW, open a S&S isa with an online broker like Interactive or Sippdeal and buy 2 or 3 investment trusts - City of London, Murray International and Aberforth Smaller Companies would be my personal choice. I don't think you will go far wrong if you hold and reinvest dividends.

loady

The banks offer is secure no ?? s&s carry risk, i could lose money ?... as for the statement about paying mortgage, I know what your saying and it makes sense but if in 5 years we need that money we are screwed

Moist_von_Lipwig

As your mortgage is coming to an end soon, you should start shopping around to find the next best deal on that. You should also work out how much of a difference paying off £15,000 of the mortgage is going to save you over the term of the new mortgage. Is that saving worth the risk of investing in the stock market (yes - even the natwest product carries a risk). Only you can make that decision.

Onawingandaprayer

As a general rule, I'd never ever ever ever ever ever ever ever go to a high street bank for investment advice.

But that's just me...