£1.5k where and what to invest?

dazanteney4

Hello,

I'm brand new to investments so my knowledge is very low.

I have £1500 to invest and my question is where to invest?
I have seen Virgin do a FTSE ISA, is this a good bet?

D

Rollinghome

dazanteney4 wrote: »

Hello,
I have seen Virgin do a FTSE ISA, is this a good bet?

It's a terrible bet, their 1% fee for a FTSE tracker is a blatant rip-off and many times what you'd pay for a better performing tracker elsewhere.

The other question would be whether you already have a decent sum as rainy-day money in a good savings account which would be sensible before you risked money in stockmarket investments.

jimjames

dazanteney4 wrote: »

Hello,

I'm brand new to investments so my knowledge is very low.

I have £1500 to invest and my question is where to invest?
I have seen Virgin do a FTSE ISA, is this a good bet?

D

I think you'd be hard pressed to find anything worse.

Virgin charge 1%, the best charge 0.06% annual fees. You might think 1% makes very little difference but you'd be wrong especially over the very long term.

dazanteney4

Rollinghome wrote: »

It's a terrible bet, their 1% fee for a FTSE tracker is a blatant rip-off and many times what you'd pay for a better performing tracker elsewhere.

The other question would be whether you already have a decent sum as rainy-day money in a good savings account which would be sensible before you risked money in stockmarket investments.

I have 4 months wages sat in two 5% accounts with TSB, we are trying to get this to 6 months.
Where would you recommend?

AlanP_2

I'd look at a broader spread tracker rather than just the UK (FTSE).

Maybe have a look at the Vanguard LifeStrategy funds (global coverage by investing in a number of sub-funds) and see whether one of those looks suitable?

Various other companies offer a similar setup - Legal & General and BlackRock for example.

Porcupine

dazanteney4 wrote: »

I have 4 months wages sat in two 5% accounts with TSB, we are trying to get this to 6 months.

Presuming you're keeping under the 5% threshold, that means you have about £4K?

It really depends, but I'd be tempted to think about the rainy day fund a little bit further, or perhaps dip your toe in the investment waters with a regular monthly investment (£100 or whatever). I can think of quite a few unexpected things (car, boiler, house, etc) that could eat up £4K and if it were me I'd be a bit nervous of being caught short. Of course you usually have the flexibility to sell your investment at any time, but there's still the risk of having to cash it in at a bad time.

colsten

The Virgin S&S ISA figures on the "50 ISA mistakes to avoid" list.

It, and its underlying fund, also figured in negative headlines a few other times, for eaxample:-

http://www.telegraph.co.uk/finance/personalfinance/investing/funds/11067889/Come-on-Branson-give-your-customers-a-better-deal.html

http://www.telegraph.co.uk/finance/personalfinance/investing/funds/11063058/Richard-Branson-criticised-for-promoting-rip-off-fund.html

http://www.telegraph.co.uk/finance/personalfinance/investing/11199253/I-dumped-Richard-Bransons-tracker-fund-to-save-2000.html

Lastly, and it pains me a lot to admit: I had some spare cash in 1999 that I wanted to invest for the longer term. The Virgin S&S ISA sounded good, I didn't have the first clue what I was doing, and I had no time to educate myself and do any research. I just picked the next best great marketing message like a sheep and became the proud (!?!) owner of a Virgin S&S ISA.

I cut my losses in 2007 as by then I had got a bit more clued up about investments and I had given up hope the Virgin S&S ISA would ever produce any growth. I am glad I got out back then because - unsurprisingly - I'd rather have money in my own pocket than in Richard Branson's. To this very day, he still got an amazing Marketing engine working for him, so fair dos and hats off to him on knowing how to make vast amounts of money but I am no longer one of the sheep he can live off, and I am warning all other sheep / lemmings / etc now whenever I can. Branson's got more than enough already, it's time the rest of us made something for ourselves.

DIY-style S&S ISAs are not difficult if you invest a bit of time reading things like monevator.com or the personal finance pages of the broadsheets. If you can't do that for whatever reasons (time constraints etc), you'd still be better off paying an IFA than putting your money into a Virgin S&S ISA.

jimjames wrote: »

I think you'd be hard pressed to find anything worse.

Agree, at first glance. But the "savings plan" ISAs of some of the so-called Friendly Societies are indeed even worse. Another chapter altogether.....

dazanteney4

Porcupine wrote: »

Presuming you're keeping under the 5% threshold, that means you have about £4K?

It really depends, but I'd be tempted to think about the rainy day fund a little bit further, or perhaps dip your toe in the investment waters with a regular monthly investment (£100 or whatever). I can think of quite a few unexpected things (car, boiler, house, etc) that could eat up £4K and if it were me I'd be a bit nervous of being caught short. Of course you usually have the flexibility to sell your investment at any time, but there's still the risk of having to cash it in at a bad time.

Yeah about 4k in tsb and I have a few hundred quid in a FD isa which the returns are shocking.
I was about to say because the amount of money I am investing would a 6% reg savings maybe be a better bet? I think you can pay a lump sum in and put in £50 a month?

colsten

dazanteney4 wrote: »

I was about to say because the amount of money I am investing would a 6% reg savings maybe be a better bet? I think you can pay a lump sum in and put in £50 a month?

The max you can open an FD Regular Saver with is £300, and each month for the next 11 months you can put up to £300 a month in again. After 12 months, your Regular Saver has matured and gets turned into a normal savings account that pays literally no interest. On current T&Cs, you can also commence another 12 months Regular Saver upon maturity of your previous Regular Saver.

A similar 6% offer is available at HSBC and M&S Bank, with £250 each max per month. I.e. you can put £800 a month into 6% Regular Savers if you want to (and if you get, and keep, accepted for the pre-req current accounts). Next best is the 4% Club Lloyds Regular Saver, which takes £400 a month.

Drip-feeding these regular savers from one or more interest-paying current accounts may be the most profitable way of saving cash, until you get to the most current annual ISA allowance (£15K now, £15,240 from April 6th 2015, etc etc). At which point you can reconsider your options. As of now, there are many better ones than cash ISAs, for most people.