Investment / savings advice for £50,ooo please?

irishjohn

Hi folks
Any advice from you investment gurus would be much appreciated.

Gave up full time work a year ago and now working part time for minimum wage - approx 21 hrs a week - while taking care of elderly mother.

I am 56 in July and have pensions due to start when I am 60 - along with 2 Legal & Endowment policies maturing in 2011 and 2012. Not too sure how well off all that will make me but not planning to spend spend spend!!

Its the period between now and then I want your advice on.

Earning approximately £150 a week net

I need approximately £700 a month to get by - no luxuries in there - just food, household bills, utilities and car.

I am mortgage and debt free.

Savings are as follows

£24,000 in cash ISAs - which includes full 2007 - 2008 allowance. (17K in IF, 3K in NS&I and 3K in Barclays Tax beater.
£60,000 in Nationwide E-savings account at 5.30%AER

I have two main requirements

Am about to change my car to have a more suitable one for Mother's needs - from VW Polo to one a bit higher off ground - Maybe a Honda Civic and I plan to spend around £8k - £10K on that

I need to have some accessible money (£800 per month) to live on if the work diminishes or dries up - but dont expect it to in the next 12 - 18 months.

So if I keep my ISAs in place and spend a max of £10k from my Esavings - what would you recommend I do with the rest (£50K)

Thanks for the help. Location is N Ireland if that matters.

John

EdInvestor

You probably need to consider some higher risk investments, as everything is in cash.Over the long term inflation will eat away at this capital, and income, halving it in value in 20 years.

The "other half" of your annual ISA allowance is apparently not being used - the 4k mini investment ISA. Maxing that out with 4 separate funds would be the way to go.

Have a look here for some ideas:

https://www.h-l.co.uk

codetown

Assuming your risk-taking level is medium-low I would also suggest to opt for a start with 4k ISA allowance and 4 funds for this year. Looking trough them and with the initial investigation work you might be encouraged to continue and increase in that direction or to leave it alltogeter if you feel it overcomplicated or overrisky.

If yoru don't want (almost) any risk and wish to keep on simple savings, then I would suggest:
a) transfer some of your 50k pounds to an easy access but better paying account. I would go for ICESAVE for hassle-free and simple experience. With the 0.65% more they pay, you will get an extra 260 pounds net a year (assuming you are a 20% tax payer: more if you are not!).
Even if the transfer is not instant as with your esavings, ICESAVE is still only 2 days away with the free BACS, so probably worth for the extra cash you get.

b) If you wish to minimise exposure to inflationary rises, then invest a sum (I would say 15k) in the NS&I: Index Linked Certificates. They offer an excellent return which is linked to RPI (the effective index of real inflation) and add 1.1% on top of that! This is great to keep the value of your money in any case.

The scope for other 'safe' operations is a bit limited in my view and would need creativity to get extra money in (e.g. think about: have you got an extra room in the house that you could try renting out for some extra cash? have you got a garage you could rent? Some storage space? Do you have some passion/skills that could help you with raising some extra money?)

irishjohn

Thanks guys
Well I guess my maxi isa which is sitting at 20% of its original investment gave me a mental block about S&S mini ISAs. Didn't realise i could split it into 4 funds - but have no idea how to go about choosing which !! How should I set about this?

So start moving 4K into S&S each year and carry on with my annual cash ISA - Maybe an immediate £15 K into the NS&I index linked savings (3 years or 5 years?)- so still just over £30k maybe in a few instant access savings accounts until i can move more into ISAs and maybe another NS&I issue next year?

Keep up the good work guys

John

dunstonh

Well I guess my maxi isa which is sitting at 20% of its original investment gave me a mental block about S&S mini ISAs.

ISAs are just a tax wrapper. They dont make or lose money. Its what you place inside them that does. You have tens of thousands of options ranging from very little risk to very high risk. Something sitting at 20% of its value suggests you went into an very high risk area.

You can actually go more than 4 funds with some providers. Some have no minimum whilst others have a £500 minumum or £1000 minimum. Just make sure the spread matches your attitude to investment risk.

irishjohn

unfortunately - my first bit of spare cash - the big sell for technology stocks and i was hooked

Since then have steered clear - so if i want to invest 4K in a mini isa - how do i do it ? I have no idea what my first step should be

EdInvestor

It amazes me how extreme people are when it comes to money.

Many people seem to keep all their money in cash and then go completely mad at intervals, punting cash on the highest risk investments around, eg technology, commodities/oil, China,foreign buy to let property, etc. completely ignoring the many lower risk ways of investing money in between.



I just don't get it.It's a ridiculous approach which guarantees failure.

Why do people do it?

irishjohn

This was my first opportunity to invest in a maxi ISA as a result of changing jobs, and the Technology ISA was recommended by a Financial Advisor - before that I have had no money to save at all as I was tied into Mortgage debt _ however I appreciate your "ticking off" EdInvestor for making this mistake through naivety and I will creep back into my safe mode of savings accounts where I know I have been languishing since.

Everyone else thanks for your advice - EdInvestor - its easy to be smug in your area of expertise but believe it or not some of us realise we have made a mistake and don't need our noses rubbing in it.

dunstonh

Oh no, now I am sticking up for Ed. What is wrong!!!

Ed wasnt being smug but just highlighting what is a very common occurance. The country is full of people who have no investment experience but then decide to jump in at the deep end and pick a high risk investment which usually ends up losing money and putting them off the stockmarket altogether.

If you take a risk scale of 1 to 10. They seem to jump from their savings accounts in risk 1, invest in funds at risk 10. Lose money, pull out and go back to risk 1 again and miss out on all the options in between.

cheerfulcat

irishjohn wrote: »

This was my first opportunity to invest in a maxi ISA as a result of changing jobs, and the Technology ISA was recommended by a Financial Advisor - before that I have had no money to save at all as I was tied into Mortgage debt _ however I appreciate your "ticking off" EdInvestor for making this mistake through naivety and I will creep back into my safe mode of savings accounts where I know I have been languishing since.

Everyone else thanks for your advice - EdInvestor - its easy to be smug in your area of expertise but believe it or not some of us realise we have made a mistake and don't need our noses rubbing in it.

irishjohn, don't take Ed's little outburst to heart; I don't think that it was really directed at you personally. If you hang about these boards for a while you'll see an awful lot of people saying that because they have had their fingers burnt ( frequently with tech shares...), they don't want to have anything to do with equities. I think that possibly Ed was alluding more generally to those people.

if i want to invest 4K in a mini isa - how do i do it ? I have no idea what my first step should be

Your first step is to decide whether you want a packaged product from a fund house or a self-select ISA. The packaged product is easy to buy but can be expensive. The self-select ISA is generally a cheaper route but it's only the wrapper - you have to decide what goes inside. There are plenty of brokers who provide the wrapper - you can ask around to see which one would suit you.

Then you can look at the actual investment. I would look at something which provides an income, like an equity income fund or a gilt/bond fund ( not a high yield bond fund, though; they're a bit risky right now IMHO ). Another thing you might consider is a generalist global growth or growth and income investment trust. ITs are investment funds run as companies; when you buy, you buy shares in the company rather than units in a fund, so the price doesn't always reflect the value of the underlying assets. The advantage of a generalist IT is that it can hold almost any investment - cash, bonds, gilts, shares, other ITs, property - with a view to preserving capital.

You can read more about different sorts of investments on Incademy ( LINK ). The Motley Fool is also a good place to have a nosey ( another LINK ). Make sure to visit the discussion boards there!

HTH

Cheerfulcat

irishjohn

I got the required result - guidance from someone who knows a lot more than I do igiven in an encouraging manner - not someone stating the bleeding obvious - that those of us who don't understand the whole picture get swayed by the hype and make a mistake, and pay for it - it just seems that ed didn't really ready my OP - "advice required" maybe if ed gave advice instead of the "tut tut why doesn't everyone realise !!" I asked for advice not a sermon,