Which investment opportunities?

Paulrm71

Hi,
I have some money that I wish to invest for the medium to long term, but I am a complete novice. I have done a lot of research over the last couple of months and have come up with the following

Premium bonds. £10000
Stocks and shares isa. £10000
Cash isa. £5000
P2p lending. £1000
Other. £2000

I am looking at reinvesting dividends in all shares, so would need a reasonable solid portfolio of perhaps 10 companies. The premium bonds and cash isa are my backup plans for emergency cash.

The p2p lending would probably be via rebuilding society.com, and I would spread the investment over 50 or so companies, again, reinvesting repayments.

I know that I would have to invest the isa funds over two tax years. Is it possible to open junior isas for my children (both under 16) without affecting my own tax free investments?

My question is, would this seem a sensible portfolio, and does anyone have any suggestions as to which companies offer good dividend potential?

Many thanks,
Paul

pip895

Personally as you are looking longish term I would ditch the premium bonds and put more in the isas including possibly for your kids. What is your pension position?

ChesterDog

I agree with Pip895. Premium bonds can be expected to give a pretty measly return of around 1.3% on average. It makes sense to keep a small holding just in case of a lucky win, perhaps £100-250, I would suggest.

As for the shares, personally I don't think ten or so companies is enough to provide diversification to mitigate the risk. Might be better to start with two or three mixed funds and/or index trackers.

innovate

The £10k in PBs is supposed to part of the emergency fund, so it it would not be sensible to put that money into any S&S ISA. Personally, I would put into a good current account or two (123, Vantage) since they pay more than any ISA - but if the OP wants to have a safe gamble, why not put it into PBs.

Other than that, I agree with previous posters.

As to using kid's ISAs - as soon as the money is in a kid's ISA, it belongs to the kids, not the parents. Also, we don't know the age of the kids so we can't say whether they are eligible for JISAs.

Paulrm71

Thanks for your comments. I have a separate private pension, and my children are both under 16. Are the risk factors with funds similar to those with shares?

I may also have the opportunity to increase my investment by a further £10000 after a year.

Thanks

Paul

ChesterDog

Well in part the risks of funds depend on the particular funds, but a fund is a conglomeration of shares and/or other investments and so the effect of a problem hitting any one factor within it is moderated and (hopefully) mitigated by the actions of the fund manager.

Using a cheap, index-tracking fund will produce - broadly - a risk level similar to having a holding in all of the shares within that index. So mimicking a very diversified (within that particular index) portfoilo of shares etc.