Where to invest?

fbrander

I have recently been lucky enough to be given a sizable cash sum. For the first time in my life I can invest some cash. Trouble is I dont know where to start. I am terrified the money will disappear if I dont move it soon! I want something risk free that will earn me a decent amount of interest but I dont really want to be able to get at it too easily either. Should I spread it around or invest it in one place? What about premium bonds too? Cheers.
Fiona.

Ps- I will have about£10000 when I've paid off my debts

wombat42_2

RIsk free means "savings" not "investments" o syour question is wrong, You need to stick £3000 in a cash ISA (NS&I currently the best). The rest in hi interest imediate access cash savings (Sainsburies, ICESAVE, ICICI or B&B). You can shift another £3600 into a cash ISA in the next tax year.

dunstonh

premium bonds are a lottery and run the risk of inflation eating into the capital.

Aegis

You might want to consider index-linked savings certificates. They're tax-free, like ISAs, they lock up your money for 3-5 years (unlike ISAs) and they are guaranteed to beat the RPI by a fixed level with your capital fully guaranteed.

You don't get as good a rate on them as you do on ISAs at the moment, and they're somewhat harder to get your money out of in a hurry by all accounts, but they might be a good idea for saving money in the medium term if you're risk averse.

Cash ISAs are a must have for emergency funds and low-risk growth, so you probably want to get the maximum amount into one each year if you can.

Personally I think the cash ISAs/normal saving account combination is a good plan, as by mid April you can have £6600 locked up in an ISA or two, but I thought you might want to look at the certificates if you already have an ISA for this year.

Primrose

If you want TOTALLY risk free, you are talking about a cash savings scheme, rather than stocks and shares, units trusts, etc. I certainly recommend you use this tax years ISA allowance of £3000 and take out another ISA after April 5th 2008. If you don't want to pay any tax, you can get National Savings Certificates which you have to hold for five years to earn the full promised interest rate. If you're going to be tempted to break into the money, you could lock some of it up in a One Year Fixed Rate interest bond. Several building societies are offering them at competitive interest rates at the moment. Check around on the internet (moneysupermarket.com). However cash savings, whilst risk free, don't protect you against inflation in the long term and if you can bear to think in terms of 5 years, perhaps a good equity income unit trust, protected by an ISA tax-free wrapper could be used for a small proportion of your windfall.

fbrander

thanks everyone. You've given me a lot to think about

Aegis

fbrander wrote: »

thanks everyone. You've given me a lot to think about

Be thankful you're risk averse! The options if you wanted to invest instead of saving would be a lot more varied!