£500 a month

fatbeetle

If you had an incoming £500 a month to save/invest over the next 4 years, what would you do with it to get the best return?

Just to complicate matters we live in Australia but the money will be in the UK.

darkidoe

No one can predict the best return. You can only take a punt. Better way to think about it is to analyse your own risk profile first before you decide what returns u can realistically expect. Are you prepared to have less capital before you started? Do you want guaranteed preservation all of the capital?

fatbeetle

No one can predict the best return.

No, but people may have an idea of what they would do with this income. We aren't asking for guarantees, just some idea of what is possible.

Are you prepared to have less capital before you started?

Would prefer not to, obvs.

Do you want guaranteed preservation all of the capital?

Yes, I think so.

AnotherJoe

I'd pay off my mortgage

That's what you are currently doing isn't it ? That is just as much investing / saving as not paying it off and putting the money into a long term savings account or similar.

You can't divorce paying off a mortgage from saving or investing the money instead, so it also depends what your mortgage interest rate is.

It also depends what happens after four years. Do you then need that money immediately? Or is this £500 a month for four years and then used to pay off the mortgage? Or will it then be invested for longer term growth? Or income ? Looking at one stream in isolation is the wrong thing to do and the wrong question, to make reasonable suggestions people need to know the longer term goals and what else you have.

fatbeetle

Thanks AJ

We're just ready to be pay our mortgage off, the £500 will be the subsequent rent we'll receive on the property, (minus a little bit put aside for emergency.)

We won't need immediate access to the saved cash after 4 years.

jimjames

If you're not resident then an ISA is out.

Personally I'd invest it in something like Vanguard Ls100 as you asked what we'd do. But others may do differently. Bear in mind if you are putting money in monthly and the price drops then you are buying more those months when that's the case which is an advantage

george4064

Regular monthly investing, split the £500 into 5 lots of £100 going into 5 different investment trusts, which form a diversified portfolio. Re-investing dividends.

savings_my_hobby

You could start up a nationwide flexclusive regular saver (£500 per month) and a halifax reward account (pays you £5 per month)
if stocks and shares don't interest you.

This way you could still access money if you need to - although it's better if you just leave it.

After 12 months you would have saved around £6000 and gained and around £300 in interest if you meet the requirements.

More if you switch to Halifax Reward.

I have these accounts already but if I didn't and I had £500 per month to play with this would be what I would do, then in 12 months with the £6300 set up a Flex Direct and TSB Plus account and put the rest in a tesco 3% account and then review after a further 12 months.

bigadaj

savings_my_hobby wrote: »

You could start up a nationwide flexclusive regular saver (£500 per month) and a halifax reward account (pays you £5 per month)
if stocks and shares don't interest you.

This way you could still access money if you need to - although it's better if you just leave it.

After 12 months you would have saved around £6000 and gained and around £300 in interest if you meet the requirements.

More if you switch to Halifax Reward.

I have these accounts already but if I didn't and I had £500 per month to play with this would be what I would do, then in 12 months with the £6300 set up a Flex Direct and TSB Plus account and put the rest in a tesco 3% account and then review after a further 12 months.

From Australia?

AnotherJoe

george4064 wrote: »

Regular monthly investing, split the £500 into 5 lots of £100 going into 5 different investment trusts, which form a diversified portfolio. Re-investing dividends.

That would be paying 5 commission fees instead of one. It may also not be diversified, just diworsified, it depends what the funds are. Just because you choose five funds doesn't mean they dont overlap.

You also need to know what other investments they have since they may already be sufficiently diversified, and in any case why not select one fund that covers whatever the five funds would, and get the diversification in one, and likely better diversification since 5 specialist funds would not be enough to be really diversified?

This is why asking what you should save into without any background or knowledge of other investments* is an impossible question to answer. The OP says they dont need need the money right away in 4 years time, but are they happy for it to be invested for the next 24 years?

* The OP is currently in Oz. Maybe some at least of that money would be best spent by extra contributions to their Oz pensions for example.

JohnRo

AnotherJoe wrote: »

That would be paying 5 commission fees instead of one. It may also not be diversified, just diworsified, it depends what the funds are. Just because you choose five funds doesn't mean they dont overlap.

I agree about the commissions but not the "diworsification" comment.

Firstly it's a conceptual idea, I doubt anyone can measure "diworsification" in any meaningful way. I don't think overlapping is anything to do with the concept by the way and I'm not convinced it really applies to a portfolio.

Secondly, assuming it does apply and is the case, then it implies that some holdings will do less well than others at different times in the market cycle thus reducing the overall positive effect of the "winners" at any given point in time.

Far from being "worse" this would be desirable if you're investing monthly for the long term and presumably using an allocation model of some description and rebalancing accordingly with new money based on that.