Investing my money

philyio

Hi,

I've got £17k that I've currently got in a very average online account.

Other than putting £3k in ISAs what should I do with it?

I don't want to lock it away for too long incase I decide to buy a house...but for the time being I'm waiting to see what happens to the market.

I'm going to be starting my first job in about a month, I should be earning a reasonable wage and I'm keen to save as much as possible -I'll be in rented accomodation.

Any suggestions?

Phil

deemy2004

Theres the shares mini ISA's £4k .... you don't need to buy shares i.e. the Index linked 2030 4 1/8% gov stock looks good

Good capital gain and tax free interest payments... returns about 7% a year, with far, far, far lower volatility than shares.

If you want ultra safe and index linking then theres the index linked nat Savings Certs... current yeild would be about 4.4% ...... So not great but your covered in case inflation takes off.

blinko

deemster where can i find out more about this

Theres the shares mini ISA's £4k .... you don't need to buy shares i.e. the Index linked 2030 4 1/8% gov stock looks good

thanks

deemy2004

If you tap in T30I Market C29 under comdirect and you'l get the price and specs

Remember to search under Bonds and not equities otherwise you will get the wrong price...

cheerfulcat

Deemy: can I ask how you get a 7% annual yield from a bond which has a coupon of 4 1/8 and trades at 185? Or am I looking at the wrong one?

http://focus.comdirect.co.uk/en/findit/secure/index.html

And I see a capital loss in there if held to redemption, not a gain. I don't really understand linkers, so would be interested to find out.

Cheerfulcat

plumb1_2

If you are interested in opening a Comdirect account,take a look at my offer
http://forums.moneysavingexpert.com/showthread.html?t=235

deemy2004

cheerfulcat wrote:

Deemy: can I ask how you get a 7% annual yield from a bond which has a coupon of 4 1/8 and trades at 185? Or am I looking at the wrong one?

http://focus.comdirect.co.uk/en/findit/secure/index.html

And I see a capital loss in there if held to redemption, not a gain. I don't really understand linkers, so would be interested to find out.

Cheerfulcat

You need to look at the pricing under bonds the price under equities is wrong (old) its curently about 211.

7% is not the annual yeild thats what I calc the overall average return, over the last 2 years its been nearer 10% per year...

The price of the bond is indexed as well as the interest so if held until maturity then it will have increased every year by the RPI or 3% and so will have the interest payments.

Your not going to get the 30% returns of the like you get with shell etc.. but its a nice 'safe' investment, a part of the portfolio that does not carry any worries when that damn FTSE drops 50 points in a bloody day !!!!!!!!!!!!!!!! :mad:

Apart from the RPI indexation there is also the pricing in of inflation expectation i.e. when inflation is expected to fall or trending lower than the price of the bond will tend to underperform, so you would have a lighter holding, when the expectation and trend of inflation is upwards then the bond pricing will reflect this by rising somewhat more than RPI per year i.e. pricing in to a degree future inflation...

So you can make a healthy return from a something thats pretty safe both the the medium and long-term as in the long-term no matter what you will have a capital gain.

As allways do your own research before commiting cash.....

cheerfulcat

Hi, deemy,

Thanks for the explanation but I'm still none the wiser! Surely one is paying £211 for a £100 unit which receives £4.125 annually, adjusted for inflation ( so the amounts are nominally larger but in real terms remain the same ). Is this not a running yield of ~1.9%? And even with the index linking, £100 now will become £209, so in fact a negative gross redemption yield? I don't understand how one could have a guaranteed capital gain...could you explain please?

Regards

Cheerfulcat

philyio

Thanks for the advice Deemy,

Could you possibly give a complete idiot's explanation of how these work?

What's the difference between these and normal ISAs? Can I only invest £3000 a year in them?

Where else should I put my money?


I'm just a little bit confused...

deemy2004

cheerfulcat wrote:

Hi, deemy,

Thanks for the explanation but I'm still none the wiser! Surely one is paying £211 for a £100 unit which receives £4.125 annually, adjusted for inflation ( so the amounts are nominally larger but in real terms remain the same ). Is this not a running yield of ~1.9%? And even with the index linking, £100 now will become £209, so in fact a negative gross redemption yield? I don't understand how one could have a guaranteed capital gain...could you explain please?

Regards

Cheerfulcat

£100 in 1992

£4.125 since 1992

deemy2004

philyio wrote:

Thanks for the advice Deemy,

Could you possibly give a complete idiot's explanation of how these work?

What's the difference between these and normal ISAs? Can I only invest £3000 a year in them?

Where else should I put my money?


I'm just a little bit confused...

The Gilt is a government bond you buy it through a stockbroker this can either be in an ISA or outside an ISA.

if its in an MIni Stocks and Shares ISA (£4k limit)

There are many online brokers you can use such as comdirect.com