first time invester

atush

Onawingandaprayer wrote: »

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...

I agree 100%. Never go to your bank.

I still say the Cash ISAs you have planned (but you can do better than Natwest are offering) and then increase pension contribs. Then you can do the Investment trust thing as BLB adivised or some other combination (I love investment trusts in general and those are some excellent ones). Then look at the mtg as well.

AS long as you have other savings and investments (which you will) overpaying a mtg is a great idea. You can't be Screwed if you have other investments such as your Cash and other ISAs if you need them, but you will save a lot of interest. All that interest adds up, and if you pay it off sooner, you also have more money to save s you won't be paying a mtg.

VT82

Let me give some illustrations of the first product that might put you off.

The 5.75% will not be compounded, so the total return over six years will look like this depending on how many years the index level is lower than the starting level:

0 - 34.50%
1 - 28.75%
2 - 23.00%
3 - 17.25%
4 - 11.50%
5 - 5.75%
6 - 0.00%

And here is those expressed as an aer over six years:

0 - 5.06%
1 - 4.30%
2 - 3.51%
3 - 2.69%
4 - 1.83%
5 - 0.94%
6 - 0.00%

So even if it 'pays out' every year, you are only getting 5.06% for a six year deposit. It only needs to not pay out for one year before you are getting less than you would get GUARANTEED on a five year fixed term deposit.

They must have brainwashed you pretty well to come out thinking it might be a good deal.

I don't know about the second product, but if you don't understand it 100%, you shouldn't go for it. If you had the product specification, I'm sure some people on here could tear it to shreds in seconds to see what the catch was.

If you want capital security with the potential for upside if the market performs well, you should be able to find advice on the forum about creating your own structures by combining a fixed deposit and an index tracker. This could be achieved with your ISAs, and you could even invest a smidge more than £21,960 as you would be using some of your S&S ISA allowances as well as your full cash ISAs. It is also likely you would be much better positioned to access your funds for a smaller cost if you need them early, if you built the structure yourself. Although the usual caveats about ensuring you have a decent emergency fund would still apply.

The structured products are designed to be a cheap source of funding, so that there is enough commission to pay the sales people. Some of them will be OK, but for these you would need to see an IFA, who will have a better range and who might share the commission.

jimjames

If you want to invest in the stockmarket then do so. If you want security of cash deposits then thats fine. But mixing the two can be a bad idea that gets you the worst of both worlds.

If you think markets will rise then why not invest directly. If you don't think they will rise then why go for the tracker bond? It is a reasonable assumption for novice investors to think that they could lose all your money in the stock market. The reality can be rather different; even over all the rises and crashes in the UK over the last 12 years you would still be in profit if you had invested at the worst possible time compared to now. Other markets would be showing a substantial gain.

Remember that the tracker bonds are generally fixed term so if you need your money early for ANY reason they you may be hit with a big penalty or not be able to withdraw at all. Also trackers do not include dividend payments so you are immediately losing 3-4% of the possible annual gain by not having that.

xylophone

In your position I would be disinclined to take the Natwest product.
You seem to have a legacy of around £27000 and you are both very concerned about capital loss. Remember though that inflation is a stealthy thief of buying power.
One or both of you might might consider the five year Halifax cash ISA with this year's allowance - http://www.halifax.co.uk/savings/accounts/cash-isas/isa-saver-fixed/?WT.mc_id=78042329 - there's the comfort factor and it will get you into the draw?

You might consider making a lump sum investment into your pension - say £3000 and paying a couple of thousand off the mortgage.

One of you might consider opening a stocks and shares ISA with the likes of Hargreaves Lansdown as a way into investing - you might consider something like the Invesco Perpetual Distribution Fund (Acc) units with tax refunds automatically reinvested - it is a mid way choice with a mixture of shares and bonds.

You might keep the remainder of the money in an internet account until the next tax year when you could consider another cash or shares ISA - it is possible too that there might be another issue of NS&I index linked bonds?

loady

so...should i NOT be looking to lock up everything we earmarked to invest into ISA's ?..we will be left with about £5000 for back up but if we really got into trouble i have access to money we could borrow without interest, this is from a generous close family member that i would not call upon unless aboloutely needed..so really the money we have to invest we can happily lock up...im also worried about getting conned as well now..i certainly wont be googling for investments but i will take good advice from here and pointers to good places to go..please.

brasso

You can put about 21K into ISAs right now -- and that is what I would personally do. Exactly what you should invest in is something only you can decide.

Why not spend a month or two learning about your options? Two books I'd recommend are "Smarter Investing" by Tim Hale and "The Long and the Short of It" by John Kay. Not get-rich-quick books but good sensible information aimed at the layperson.

loady

time is running out for the isa which i can fund this year, its a matter of weeks, my wife doesnt work so she wont pay tax on savings ?..i have a limited allowance so its best to use her first in any isa ?...i was sent a pack today from my father in law who recommended fidelity investments to us, what are all your thoughts on them..are these the S&S sort of thing you are all mentioning ?

I have had a look inot a couple of reccomendations in this very thread, SIPPDEAL and INTERACTIVE INVESTOR, im confused..is sippdeal just a pension investment vehicle of is it catering for other things as well, obviously a pension is an investment but i cant get it untill i retire ?

atush

If you are unsure, open a cash isa for both of you asap- 3% interest.

you don't have to invest in a S&S isa right way- take a litel time for research and open one after april 6th.

Open a pension either now or later- jut because you have depostited the money doen'st mean you have to invest it immediately. you can take a few weeks or even more to plan and research.

DO NOT panic. Take a breath.

loady

Ok..thats what we are going to do, we are going to put this years allowance into a cash isa and then research about where to put the remainder....should i be looking online for for a cash isa as opposed to going to the high street bank ?..i was thinking of the halifax so we are in the draw..twice ! once for me and once for her:j

Totton

Some of the best Cash ISA deals are for online accounts, I think Coventry BS are offering just over 4% but that has to be locked in for 4 years which is a gamble on interest rates. I was in town the other day and Skipton had a decent offer in their window, just over 3% as I recall.

I'm afraid you will have to do some looking around to get the best deal but remember that unless you lock in for a number of years you can easily move ISA accounts between providers, the best bet is to get that cash into an ISA before the end of the financial year even if a non tax payer as those tax rules have a nasty habit of changing!