New(ish) Investor

General_Accident

I've managed to accumulate just under £3000 (and will probably top it up to £3k before I make an investment decision). I'd like to make an investment that helps me put together a deposit on a house (I am a first time buyer).

My investment criteria are:

1. must be able to be withdrawn at relatively short notice
2. should be able to add anything between £200 and £1000 a month
3. ideally pays interest above the base rate on an ongoing basis (rather than annual, as the money may not be left in situ for a year)
4. minimses risk

So far I've looked at:

• Premium Bonds
• A High Interest Savings Account
• A Mini ISA

Premium Bonds don't attract interest. The High Interest Savings Accounts want at least a 12 month committment and penalise you if you withdraw early. The mini ISA's don't seem to offer a particularly good return.

Advice?

jem16

The top paying Mini ISA with no strings attached is NS&I at 5.8%. However it's not taxable so you get the full rate.


Icesave offer a no-notice instant access account at 5.7% but you will lose tax on this if you are a taxpayer.

Anything above this, as you say, requires the money to be tied up for at least a year.

The only way you will get a better return than this is to invest (not save which is what you really want to do) the money. However this really needs to be for a longer term, typically 5-10 years.

tom188

So you are looking at savings rather than investments????

What time scale are you looking at?

Premium Bonds don't attract interest.
Personally I think they are a waste of money, what is your tax situation. If you win great, and in this case they create their own positive publicity. Otherwise your money is losing purchasing power and may as well be under your bed

The High Interest Savings Accounts want at least a 12 month committment and penalise you if you withdraw early.
Not necessarily true, IceSave pays 0.45% above base rate, AL 0.55% (with getroundable penalty). FR bonds rates are a bit higher but the indication is that rates may continue to rise

The mini ISA's don't seem to offer a particularly good return.
You can get 5.8% or over 6% on a fix, you wont do any better without looking at investment options

tom188

3. ideally pays interest above the base rate on an ongoing basis (rather than annual, as the money may not be left in situ for a year)

Interest is calculated daily but credited annually. However if you close the account you will get the interest due.

ReportInvestor

Kent Reliance BS Direct Variable mini-cash ISA pays 5.71% gross, is totally flexible and also has good windfall potential if KRBS gets taken over by a larger building society.

It's like investing in premium bonds but with interest as well.

General_Accident

ReportInvestor wrote:

Kent Reliance BS Direct Variable mini-cash ISA pays 5.71% gross, is totally flexible and also has good windfall potential if KRBS gets taken over by a larger building society.

It's like investing in premium bonds but with interest as well.

Is there something rumoured in this respect?

I should also mention that I burnt my fingers badly on a PEP several years ago. I got back what I'd put in but in real terms it was worth less as the investment hadn't kept pace with inflation.

ReportInvestor

You haven't asked about stock market investments - so why raise the issue? A cash ISA is a cash savings accoung & remains so whoever owns the original company you saved with. [Investment / Investor is actually the wrong term to use as our IFAs keep reminding us.]

No immediate rumours. Just that the KRBS boss himself doesn't think there is room in the UK for more than four or five building societies in the long term.

dunstonh

I should also mention that I burnt my fingers badly on a PEP several years ago. I got back what I'd put in but in real terms it was worth less as the investment hadn't kept pace with inflation.

How did you manage to lose money on an investment within a PEP? Had you held on to it, virtually all cautious and medium risk funds would have gone on to give you above inflation returns (and above savings account rates) with only some high risk funds potentially creating a loss. Perhaps you invested above your risk profile?

Entertainer

dunstonh wrote:

How did you manage to lose money on an investment within a PEP? Had you held on to it, virtually all cautious and medium risk funds would have gone on to give you above inflation returns (and above savings account rates) with only some high risk funds potentially creating a loss. Perhaps you invested above your risk profile?

What if he invested in 2000 when the FTSE touched 7000? (it is still 15% below that today after having nearly doubled in 4 years.)

What the noughties have shown is that it is possible to lose 30% over a 5 year period in the stockmarket against a positive economic backdrop to boot. Everyone considering investing in the stockmarket should be aware of this fact.

General_Accident

I've been looking at the Premier ISA for Alliance & Leicester. What do people think of that? It's 8% and instant access, although you have to open a current account with them?

Views?

dunstonh

What if he invested in 2000 when the FTSE touched 7000? (it is still 15% below that today after having nearly doubled in 4 years.)

You forget the dividends. FTSE100 funds have broken even again.

Anyone investing 100% into FTSE100 needs to get professional advice quick or do better research.