What do you guys do to maximise your investments?

novadragon849

Hi I recently managed to secure a decent job with a decent salary (I think ) and I can afford to save up to £15,000 a year.

I was wondering how you guys go about saving and investing in order to get the best return.

For example I know that the ISA allowance for 2013/14 will be raised to £11,520. I can fill that quota quite easily with about £4,000 excess.

Now the question is whether ISA's really give you the best return?? I know they are tax free and what not but if the £11,520 I put in could be placed elsewhere to earn more then I won't bother with ISA.

Also for people that fill out the £11,520 quota do you guys do a 50:50 split between cash and S&S ISA or all into S&S ISA's and why?

I recently started saving for S&S ISA's after filling out my cash ISA quota and I hope this is a good investment...

Also once the ISA quota is filled out what will you guys suggest I do with the £4,000? I could place it inside a so called 'high' interest rate savings account but the return on that is poor (like 2% and minus tax probably leaves you with nothing ). Can I do something more productive than that. I thought about the stock market but £4,000 isn't nearly enough for anything especially if you consider all the fees involved.

I know in terms of investing, it will come down to risk as well. I am very willing to take moderate risk which I know is important if one wishes to place themselves on the stocks and shares playing field.

This thread in general is to gather experience from people that save over £10,000 a year and what they do to maximise their returns.

Thank you

gadgetmind

novadragon849 wrote: »

Now the question is whether ISA's really give you the best return?? I know they are tax free and what not but if the £11,520 I put in could be placed elsewhere to earn more then I won't bother with ISA.

An ISA is just a tax wrapper. There are limitations to what you can hold within a S&S ISA (no cash, no AIM shares, no property, etc.) but all the shares, bonds, etc. that you could hold outside the ISA can be held within it.

I thought about the stock market but £4,000 isn't nearly enough for anything especially if you consider all the fees involved.

£4k pa is plenty enough to start feeding money into shares, but you need to maybe do a little reading first. If you want a few books recommending then just ask.

However, it's important that you know why you're saving, what you intend to do with the money eventually, and what your timescale is. You also need to check your current pension situation as diverting some funds in this direction usually makes sense.

Jegersmart

Hi Nova

Everyone's circumstances are different so it depends on a lot of factors including but not limited to age, risk appetite, existing savings/investments, pension, dependents and whether you are a higher rate taxpayer. All these things will/could/should contribute to your decision making.

Ignoring all the above and just replying to your ISA related question, I always go for a S&S ISA, mainly because I am not interested in cash based investments (due to poor returns, but they have their place!) but also because I have been trading/investing for a couple of decades so I am comfortable with analysing markets and taking responsibilty for my mistakes and successes. You ask whether a S&S ISA will give the best return and from this question I would say that you have a lot of reading to do if you are going to control your own investments. This is because there are many many many ways to invest in a S&S ISA, whether it is in a number of the thousands of funds available, or in individual shares and so on. A S&S ISA is not just one product that you buy if you see what I mean? The good thing about an ISA is the tax-wrapper - the results you get out of the product though is dependent on what you invest in.

For example this year I haven't maxed my S&S ISA because I had a "pot" that I wanted to invest in a certain way and was far too big for the allowance and I wanted to keep them separate, but generally I max out every year. And to your point about potentially not using ISA - I agree, sometimes there are (at least seemingly) much better options out there but the point is that if you wanted to invest in some funds/stocks that you would invest ion anyway then an ISA makes it more tax-efficient up to the allowance level.

Don't forget pension contributions (and find out what you are/can invest in for that as well) and keep 6-12 months in cash (high interest account or whatever) for emergencies.

p.s. I think First Direct have a 8% (gross) regular saver account going that allows you to put £350 max per month into it, perhaps that could form part of your future plans (I think it is still open, and if so don't know for how long).

HTH

J

BLB53

I know in terms of investing, it will come down to risk as well. I am very willing to take moderate risk which I know is important if one wishes to place themselves on the stocks and shares playing field.

If you can invest for 5 yrs or more, then stock & shares isa would be a good place for some of your savings - maybe 50%. But first it would be advisable to spend a bit of time reading up on investing.

A good starting place would be www.monevator.com (investing tab).

I would suggest maybe looking at investment trusts - here is a good article today on another decent website - http://www.retirementinvestingtoday.com/2013/01/investing-for-income-via-investment.html - the theme is 'save hard, invest wisely, retire early'.

Just a couple of pointers which may help you decide.

Good luck!

innovate

I'd probably put some more into my pension provision - either via the work scheme or a SIPP. That's assuming you haven't yet maxed your tax relief for pension contributions, and that you are happy to lock the money away until at least age 55.

Also, do you have 3-6 months worth of disposable income in a readily accessible cash account? You never know what's round the corner and whether you might need extra liquidity for an emergency.

novadragon849

Thanks for all the help guys!

I got one question though, what do you guys think of products that do the investing for you? What I mean is that I am relatively new to the stock and share world and I will do a lot more reading. But do you guys think its better to choose funds to invest by yourself personally or let other people do it for you?

On moneysupermarket.com under their stocks and share isa section, they have a list of different fund such as liontrust special situations and M&G corporate bonds which one could invest into via cofunds as part of their S&S Isa allowance.

Is it wise to use these or should I invest individually (I read about the index tracker fund and grew quite interested in it so I may give it a shot).

innovate

I personally love "products that do the investing for you", i.e. trackers. That's because I like to keep my risks relatively low, and I don't want to have to regularly track through reems of papers and charts and gaze into crystal balls. Very much a passive investor, me but it's a personal choice.

Linton

novadragon849 wrote: »

Thanks for all the help guys!

I got one question though, what do you guys think of products that do the investing for you? What I mean is that I am relatively new to the stock and share world and I will do a lot more reading. But do you guys think its better to choose funds to invest by yourself personally or let other people do it for you?

On moneysupermarket.com under their stocks and share isa section, they have a list of different fund such as liontrust special situations and M&G corporate bonds which one could invest into via cofunds as part of their S&S Isa allowance.

Is it wise to use these or should I invest individually (I read about the index tracker fund and grew quite interested in it so I may give it a shot).

If you want to be a successful investor you need education. A good way of getting that education is to start choosing your own investments and understand why they succeed or fail. Back this up with extensive reading of both books and investment websites/forums - eg MSE and Motley Fool. In the early days the education is more important in my view than any return so dont give up when your mistakes give rise to large losses.

If on the other hand you feel your life is busy enough without taking on something new then stick to portfolio or balanced funds.

dunstonh

I'm doing three things currently and have been for the last 5 years.

1 - Maximise the ISA (note gadgetminds post on it being a wrapper as that is key)
2 - overpaying my mortgage (technically not the best thing to do from a rate of return point of view as interest rate is so low but financial decisions are not all about getting the best return. They are about being comfortable with your decisions as well and not taking unnesseary risks when you dont need to)
3 - been paying more into the pension. 40% tax relief whilst we can still get it and despite the pension wrapper not being the be all and end all, it is still one of the best options available to most people (and recent changes made it better)

The investments I use are varied but structured.

On moneysupermarket.com under their stocks and share isa section, they have a list of different fund such as liontrust special situations and M&G corporate bonds which one could invest into via cofunds as part of their S&S Isa allowance.

Is it wise to use these or should I invest individually (I read about the index tracker fund and grew quite interested in it so I may give it a shot).

Single sector funds are designed to be used with other single sector funds to build into your own portfolio. If you use a single sector fund without others then you are only limiting yourself to that particular area. If you dont have enough to build your own portfolio then there are portfolio funds that can be used to to that. Either passive versions (which are technically a form of management) or active management.

atush

Trackers and general investment trusts are certainly a way to start, while you do your learning and researching. Then perhaps you could spread your investing wings wider.

But I agree with having 6 months spending in cash, and perhaps increasing your pension provision on top of your S&S isas.

gadgetmind

novadragon849 wrote: »

Is it wise to use these or should I invest individually (I read about the index tracker fund and grew quite interested in it so I may give it a shot).

If you do go for a tracker, then please make it a global one rather than just sticking to the FTSE.

And if you read only one book, then I'd suggest "Smarter Investing" by Tim Hale. A smart chap like you should be able to read it at a single sitting and it will tell you pretty much everything you need to know.

Others rate "Slow and Steady Steps" and this is an ebook so you could start tonight.