Advice needed re investment

Lezanne26

Hi y'all,
I've been reading the advice re investments on this site and I am still unsure which is the best way to go for me.

I have approx £30,000 to invest (never had this much money before!) for up to 3 years (I am a non taxpayer) - would I be better investing in NSandI 3yr index linked bond or in a high interest savings account, or in a 1yr bond such as Derbyshire @6.45% and re-investing once the year is up.

Also, where would be the best place to invest £4,000 for my 13 year old - for at least 5 years?

Any advice much appreciated - thanks!

Rhino666

Hi

As a non taxpayer with use of this money for three years, I think your idea of the one year fixed rate bond at 6.45% is as good as any at the moment which is why I invested recently. May be worth waiting a couple of weeks to see if the base rate goes up in July, as is widely predicted but at this moment in time the 6.45 % rate is good and rates for longer terms are not that good. I think the advice for your son is similar.

As the investment time is limited and cash ISA rates are not competitive with gross rates, not worth considering.

Even if you are not risk averse, I would avoid the stock market at the moment if I were in your position - 6.45 % return is a great return - most of us would be more than happy to settle for that over the year. As a taxpayer I only get just over 5% :-(

amcluesent

You could look at lending Zopa, gross yields are averaging about 7% but at a higher risk than NS&I.

debbie42

I certainly wouldn't rule out ISAs, even as a non-tax payer.
The difference between the bond and the M&S fixed ISA at 6.16% on £3K would only be £8.70 over the year.

You never know when your circumstances may change.

poppy10_2

NSandI 3yr index linked bond is a bad idea unless you are a higher-rate tax payer. It wouldn't be competitive in your situation.

nilrem_2

A fixed rate bond seems a good option but I would wait until the 5th July for the BOE to make it's decision on base rate before investing in fixed rate, if the rate goes up wait a few days to see what you can get, if it stays the same just go ahead and invest, if you wait to long keeping it in a lower interest account waiting for the 'magical' top rate you will lose out.

Stick it in an instant access account for a few days till the BOE statement if it's not already earning some interest.

IMHO it's still worth using your £3000 cash mini ISA allowance.

Biggles

poppy10 wrote: »

NSandI 3yr index linked bond is a bad idea unless you are a higher-rate tax payer. It wouldn't be competitive in your situation.

I think that should just be 'unless you are a taxpayer', shouldn't it?

The present return is 5.65 tax-free, equal to 7.06% before basic rate tax.

I know rates may be beginning to peak (though not yet) but even if you only allow 1% on top of RPI for the index-linked certs (instead of the present 1.35%) you have to go back to the beginning of 2003 before the before-tax equivalent return failed to exceed the BoE rate by more than a full 1%. I doubt there have been many variable-rate savings accounts that could beat that, and I wouldn't really want to go down the fixed-rate route right now.

Lezanne26

Hi,

Thanks to everyone for their advice. I have maxed my ISA and intend to get dh to open one too (he is a tax payer).

Is the NSandI option really that bad - being a very 'risk averse' person it sounded quite good to me and although I don't pay tax at the moment my dh does (not higher rate tax tho').