How to put £500 in FTSE for 1 year?

creasechris

Hi all, been looking into this but I'm getting a bit lost.

I'm 20, at uni, have had a summer job, and besides £2000 that I've ringfenced I have £500 (possibly up to £1000) just to play with for now. The money's not important right now, and if I lost 10%+ it wouldn't really impact me.

I've decided it would be nice to put this in a tracker fund for FTSE - it would be good experience to wake up, see how the market's doing and think "that's my money too!". I'm aware that a good savings account is a safer bet, but if I can use one of the tracker funds with ridiculously low charges, I figure it's a decent risk!

Thing is, all the websites I've been looking at seem to strongly imply that I'd have to be in it for the medium-term, but I'm not! I'd like a one-year investment term, or even six months if possible.

Is this even possible? I'd prefer one of the big fund companies (e.g. Vanguard..?) but their sites are so confusing!

Many thanks for reading

dale_cotterill

You can put in for as long, or little as you like (sell it a day later if you so wished)

The concept of medium term is that over a decent amount of time, equities are generally up regardless, particularly with dividends reinvested.

You can access all the same tracker funds just for one year, but you have to consider the possibility that you could lose a lot more than 10%, maybe even 40-50% over such a short time frame. Of course it is also possible for it to go up a significant amount though they generally go up a lot slower than they crash.

You can cycle your £500 in a TSB current account for 12 months and get 5% interest risk free.

creasechris

dale_cotterill wrote: »

You can put in for as long, or little as you like (sell it a day later if you so wished)

The concept of medium term is that over a decent amount of time, equities are generally up regardless, particularly with dividends reinvested.

You can access all the same tracker funds just for one year, but you have to consider the possibility that you could lose a lot more than 10%, maybe even 40-50% over such a short time frame. Of course it is also possible for it to go up a significant amount though they generally go up a lot slower than they crash.

You can cycle your £500 in a TSB current account for 12 months and get 5% interest risk free.

Ah, interesting! Thanks! Is there a difference between investing it as an ISA or as an "Investment Account" on these sites (looking at BestInvest)?

Also, since you mention it, that TSB account - would I be able to dump in £1500 from my 0% NatWest Student overdraft (hehe) and set up standing orders to e.g. send in £500 on the 10th of each month and send out £500 on the 12th of each month, and just bounce it back and forth automatically for a year, earning £100 in the process?

dale_cotterill

creasechris wrote: »

Ah, interesting! Thanks! Is there a difference between investing it as an ISA or as an "Investment Account" on these sites (looking at BestInvest)?

Also, since you mention it, that TSB account - would I be able to dump in £1500 from my 0% NatWest Student overdraft (hehe) and set up standing orders to e.g. send in £500 on the 10th of each month and send out £500 on the 12th of each month, and just bounce it back and forth automatically for a year, earning £100 in the process?

Yes. It's basically the same as stoozing which you can read about in great detail on this website.

The £2000 with the student overdraft is a very good idea if you don't intend on using it.

I have £2000 in a TSB account which I have SO's set up to cycle a £500 in on the 2nd and back out on the 3rd.

__

The different between the Investment ISA and Investment Account is the ISA Wrapper. If you don't have an ISA already, there seem no logical reason not to choose an ISA over an Investment Account. (Though the details are really not relevant to your amount of money at the moment)

creasechris

dale_cotterill wrote: »

Yes. It's basically the same as stoozing which you can read about in great detail on this website.

The £2000 with the student overdraft is a very good idea if you don't intend on using it.

I have £2000 in a TSB account which I have SO's set up to cycle a £500 in on the 2nd and back out on the 3rd.

__

The different between the Investment ISA and Investment Account is the ISA Wrapper. If you don't have an ISA already, there seem no logical reason not to choose an ISA over an Investment Account. (Though the details are really not relevant to your amount of money at the moment)

OK that's great thanks, I know what to look into now!

Final question - if TSB detects that I'm paying in automatically from the same account I'm paying out to, can they do anything about it? It just seems like such a silly simple thing to do to earn £100, feels like it should be illegal! :rotfl:

kidmugsy

creasechris wrote: »

Final question - if TSB detects that I'm paying in automatically from the same account I'm paying out to, can they do anything about it? It just seems like such a silly simple thing to do to earn £100, feels like it should be illegal! :rotfl:

We went into a TSB branch, and the very helpful lassie suggested the back-and-forward standing orders and set them up for us. She used the same day of the month for both.

At some point we probably shall use these accounts as genuine current accounts but for the moment they're effectively savings accounts.

If you're not a taxpayer be sure to complete an R85 form so that you get the interest gross (otherwise you'd have to claim tax back from HMRC which would be a nuisance.)

9_inch

Could be safer in bank account.

Eco_Miser

creasechris wrote: »

Final question - if TSB detects that I'm paying in automatically from the same account I'm paying out to, can they do anything about it? It just seems like such a silly simple thing to do to earn £100, feels like it should be illegal! :rotfl:

Many people have two TSB accounts and bounce £500 between the two. If TSB didn't want you to do it, they'd say so in the T&Cs, like Nationwide and Santander do.

BTW, since your interest won't compound, you won't get the full £100.