Advice on how to improve investment/savings

Cpu2007

Hello everyone

I hope someone can help me improve my savings and profits.

It's thanks to this forum that I came across saving accounts and other useful information that allowed me gain some profit and I thank all the users who for their advice.

I am now looking to my status and want to know if there are things I can change to improve on, so I'll tell you a bit about my situation:

salary: a bit over £1000(net salary)
saving isa: around £5000 in lloyds isa saving acccount
easy saving : around £1000 in a easy saver lloyds accounts
monthly saving: on average around £300

I have these saving accounts which are basically my emergency backup (the isa account) and the thing I like about it is that the IR is discreet and I'm allowed to withdraw money when I want without being charged(so far I never withdraw any money as I do this from the easy saver account and only when I'm sure I have excess money that I won't need, then I put that in the isa account).

The sort of advice I'm looking for is about how I can improve the profit on my saving by using these basic safe methods that do not cause loss(saving and isa accounts where you get little profit but no loss)

The second advice I am looking for is about using my saving (1/3 of isa only, the rest from easy saver and other savings) to make investments that can return profit; I understand that investments can return profit but also loss but I would like to know if there's any investment I can make that will give me more than what I get using saving accounts but the risk level isn't that high to put me bankrupt - obviously the main factor to consider here is that I don't have much money to invest and neither I have much income, so wondering if there's anything proportional to my status.

Thank you in advance.

dunstonh

The sort of advice I'm looking for is about how I can improve the profit on my saving by using these basic safe methods that do not cause loss(saving and isa accounts where you get little profit but no loss)

That one paragraph says you do not want to invest but stick with savings which are subject to inflation risk and shortfall risk.

I understand that investments can return profit but also loss

Savings may not fall in actual value but in real terms value they can and if you have a long term objective, the risk of using savings over investments can actually be greater and statistically more likely to suffer shortfall risk.

I would like to know if there's any investment I can make that will give me more than what I get using saving accounts but the risk level isn't that high to put me bankrupt -

Risk is not on/off. it is a sliding scale. Your example comment would require extreme high risk investing with gearing. The average consumer doesnt typically consider investments like that. You have described jumping from one extreme to the other.

Your capacity for loss is a problem with investing but if your objectives are long term and with a regular contribution then using investments could actually be the safer option.

Cpu2007

Thank you for the reply. I had the feeling that the profit gained by savings ultimately doesn't provide profit expected, I might not loose any money but the profit gained might be equavalent to nothing if compared to level of inflation and timeframe required to achieve it.

What do you think should be the requirements of a person wanting to make some investments? again, when I refer to investment, I refer to the lowest levels of investments(but not investing on savings)
How much do you think a person requires to make some *acceptable profit?
*how much loss should a person should be able to accept in accordance to the investment?

I've marked some statements/words in star(*) because I know these are variables that might differ from one person to another but i would like to have the general idea of it.

Thank you

dunstonh

I might not loose any money but the profit gained might be equavalent to nothing if compared to level of inflation and timeframe required to achieve it.

It depends on the timescale. Short term would see cash as the best option nearly all the time. Long term can see cash as the worst option.

Using cash savings for retirement planning that is say 25 years away is a really bad idea. The inflation risk and shortfall risk is guaranteed. Using investments for that is common sense. However, if its a house deposit to build over three years then savings are best.

So, we need to know objectives and timescale.

Cpu2007

Well my objective is basically to increase my capital; I am receiving a regular income but I would like to invest the savings into something to get as much profit as possible in the less time possible - I understand the more profit in a period of time, the higher this will make the risk. I would say that initially I'm looking to get some profit of 3-4k in a year time so that I can maybe get a better car or invest it to get further profit.

do you think is reasonable to ask for such amount of profit?if yes the how can it be achieved?

sharpe106

Do you mean you want to make 3-4K on your investments in a year?

badger09

On the figures you have quoted, you have savings of around £6k, to which you are adding each month, which is all good

The only way you could possibly make a 'profit' of £3 - £4k a year, (which is around a 50% increase) on that level of capital, is to take a huge gamble, and you could lose a lot :eek:

You need to be more realistic.

Build up your savings in the highest interest rate accounts you can find - have a look at regular savers and ISAs. If you are saving for a better car, or a deposit on your own home, you should stick to savings accounts. If you are thinking longer term, then you need to read up about investing in Stocks & Shares ISAs perhaps, or pensions.

Cpu2007

yes 3-4k in a year.

That's what I wanted to know; at the moment I'm not aware of what would be a realistic profit reason why I was wondering what sort of investment will allow me to achieve more profit than cash isa accounts in short term using 3-4k as an investment but with the minimum or acceptable loss margin.

marathonic

Cpu2007 wrote: »

yes 3-4k in a year.

That's what I wanted to know; at the moment I'm not aware of what would be a realistic profit reason why I was wondering what sort of investment will allow me to achieve more profit than cash isa accounts in short term using 3-4k as an investment but with the minimum or acceptable loss margin.

It's not a case of there being an investment out there with returns in excess of Cash ISA's which are of a lower, or equivalent, level of risk. Otherwise, there wouldn't be so many people scrambling to secure the Best Buy ISA deals before the new tax year.

Regarding an acceptable loss margin, it's different for everyone. For me, I might be willing to loss 40% in one year in a portfolio with expected returns, over the long-term, of 9-10% per year. For you, you might liquidate any investments at the sniff of a 10% annual fall.

Basically, if you want to aim for 8-10% average annual returns, you have to be willing to accept losses of 30% - 40% in any particular year. If you are looking for higher average returns of, say, 10-15% per year, you could reasonably expect your portfolio to drop by half, or more, in certain years.