Investment in Australia

sundeep1984

Good morning all

total newbie question.
I have read forums and site but totally lost and confused.

I have around £2000 savings i want to invest in something. I cant keep it on my savings account due to less interest. So wanted to invest in something but not sure what!

I am not greedy to gain lot of money but something more than 1% interest from banks!!

I was thinking splitting the £2k with Shares and funds and units etc(still reading on what funds and unit and bonds is) and some money maybe do similar in Australia. As i read somewhere that returns are higher in Australia. My wife is from Australia and she has like 9000 AUD in her pension account there and they reinvest that money. from last year to this year she has gained extra 1200AUD within 1 year!

Is something like this possible?

or what ideas would you suggest to invest. i know some may say speak to a financial advisor but i am trying to understand things first then speak to one and trying to save money if i dnt have to see them lol!

ChopperST

£2000 is a little low to ensure effective diversification and investing in one area is high risk. Certainly wouldn't be worth seeing a FA for that amount and bear in mind they will generally be motivated by commissions which will eat into your hard earned even further.

The usual questions apply.

Do you have an emergency fund of 6 months income should the worst happen?
Do you have a pension?
What tax bracket are you?
Do you have a mortgage? If so what's its APR?
What is your attitude to risk? (Would you be happy seeing your investment lost 20% or more say?)
What timescale are you happy to tie the money up for?

sundeep1984

Hi

thanks for reply

sorry i meant i can get £2000 a month of savings from mine and my mrs savings after deducting all costs. so can put 2000 every month into this investment

Do you have an emergency fund of 6 months income should the worst happen? Yep i have 20k extra and i have another 500 a month being put aside for savings too for emergency.
Do you have a pension? I don't really believe in pension. we Indians usually have savings for lol!! I rather save money myself. I really dont think ill be alive post 60plus! lol
What tax bracket are you? I am on 20% bracket. Not reached 40k plus sadly
Do you have a mortgage? If so what's its APR? No mortgage. But will do in 3-5 years hence thoguht before i get mortgage i can do some investments which will help increase the money(hopefully)
What is your attitude to risk? (Would you be happy seeing your investment lost 20% or more say?) I am happy to lose money. as i know in investments its risk either can go up or down. thats why i was thinking split up funds in low risk medium and high if possible.
What timescale are you happy to tie the money up for? i would say 3-5 years. Only thing is i heard this timescale is not enough.

Linton

sundeep1984 wrote: »

Good morning all

total newbie question.
I have read forums and site but totally lost and confused.

I have around £2000 savings i want to invest in something. I cant keep it on my savings account due to less interest. So wanted to invest in something but not sure what!

I am not greedy to gain lot of money but something more than 1% interest from banks!!

I was thinking splitting the £2k with Shares and funds and units etc(still reading on what funds and unit and bonds is) and some money maybe do similar in Australia. As i read somewhere that returns are higher in Australia. My wife is from Australia and she has like 9000 AUD in her pension account there and they reinvest that money. from last year to this year she has gained extra 1200AUD within 1 year!

Is something like this possible?

or what ideas would you suggest to invest. i know some may say speak to a financial advisor but i am trying to understand things first then speak to one and trying to save money if i dnt have to see them lol!

You wife's investments gained 13% within a year. This sort of amount is common. An UK investment in the FTSE AllShare Index would have done much better - a rise of 21% in the past year. That is the good news. The bad news is that in some years you could see a fall by the same % or more.

This has 3 implications
1) You need a range of investments chosen so they dont all rise and fall at the same time - diversification.
2) For investing you need to be thinking long term. 5 years is often stated as the absolute minimum, 10+ years is more sensible. So an investment isnt an alternative to a savings account, its something rather different.
3) You must be able to live with the downturns and not panic and sell out.

With only £2000 diversification is awkward unless you buy a fund that holds a wide range of investments. If you can it would be sensible to drip feed your investments - eg £50/month or more.

As Chopper has said your lump sum is too small for an IFA to be justifiable. What you can do is to sign up for an online brokers account and with a bit of research manage things yourself.

Linton

sundeep1984 wrote: »

Hi

thanks for reply

sorry i meant i can get £2000 a month of savings from mine and my mrs savings after deducting all costs. so can put 2000 every month into this investment

Do you have an emergency fund of 6 months income should the worst happen? Yep i have 20k extra and i have another 500 a month being put aside for savings too for emergency.
Do you have a pension? I don't really believe in pension. we Indians usually have savings for lol!! I rather save money myself. I really dont think ill be alive post 60plus! lol
What tax bracket are you? I am on 20% bracket. Not reached 40k plus sadly
Do you have a mortgage? If so what's its APR? No mortgage. But will do in 3-5 years hence thoguht before i get mortgage i can do some investments which will help increase the money(hopefully)
What is your attitude to risk? (Would you be happy seeing your investment lost 20% or more say?) I am happy to lose money. as i know in investments its risk either can go up or down. thats why i was thinking split up funds in low risk medium and high if possible.
What timescale are you happy to tie the money up for? i would say 3-5 years. Only thing is i heard this timescale is not enough.

Ah, with that sort of money an IFA becomes more worthwhile.

I think you need to think through a pension a bit more. They have significant tax advantages and these days you can manage your investments much the same as a non pension portfolio. When one is young its difficult to believe one will ever reach that advanced age, but I am afraid you almost certainly will. Living a moderately healthy UK lifestyle, current statistics suggest someone in their 20s now could reasonably expect to live to around 90. This isnt to say you should put everything in a pension, but some reasonably provision would be sensible in my view.

3-5 years is too short for serious investing as it could leave insufficient time to recover from a a major stockmarket fall.

ChopperST

If the money is to be used as a deposit on a house I simply wouldn't risk investing at this stage.

Have you identified what amount you can afford / want to pay on a mortgage and what level of deposit you want to put down. If so perhaps you could do a little of both depending on the amount of your deposit and invest some of the funds over a much longer timescale to achieve compound interest. Also if you have a reasonable deposit saved up does it not makes sense to buy a property now to take advantage of low interest rates and fix in?

Obviously there may be other factors at play such as job and needing to move round etc but with that sort of spare cash then buying a home would be the top of my priorities...

vigman

Sorry to break in on the subject, but my query would have had the same heading!

My son gets 7% interest in his Australian bank account.

What, if any, are the UK rules that stop me putting my money in his account to get that rate of interest, please?

TIA

Vigman

Linton

vigman wrote: »

Sorry to break in on the subject, but my query would have had the same heading!

My son gets 7% interest in his Australian bank account.

What, if any, are the UK rules that stop me putting my money in his account to get that rate of interest, please?

TIA

Vigman

There is no UK problem, but it might not be a good idea. What if the exchange rate goes 10% the wrong way? Are there any Australia tax implications?

jimjames

vigman wrote: »

Sorry to break in on the subject, but my query would have had the same heading!

My son gets 7% interest in his Australian bank account.

What, if any, are the UK rules that stop me putting my money in his account to get that rate of interest, please?

TIA

Vigman

You may get 7% but in AUD. What is the commission to transfer that to GBP? What is the cost to exchange the initial amount to AUD and then back again to GBP once you need to spend it. There may be restrictions on accounts for non-residents too.

Having said that if you are prepared to take those kinds of risks with your money then you are probably better of just investing in a balanced portfolio in S&S ISAs.

IronWolf

vigman wrote: »

Sorry to break in on the subject, but my query would have had the same heading!

My son gets 7% interest in his Australian bank account.

What, if any, are the UK rules that stop me putting my money in his account to get that rate of interest, please?

TIA

Vigman

Exchange rates are heavily affected by the difference in interest rates because a lot of people have the same idea.

The GBP/AUD is currently at record lows, and by the time you want to change your money back you may find the exchange rate has moved against you. A 7% change in exchange rate can happen in mere months.