£40k to save

mpg

Hiya guys
If I had 40K to save/invest but may need to withdraw it or take a bite every now and then what would be the best way to make it work for me.

Bit vague I know but I havn`t a clue there are so many different ways

jamescredmond

there are more qualified people than me who post regularly but I have to ask: what isa options have you taken?

phlash

Max out your ISA - money you can dip into.

Put some in premium bonds ~ 10%

5% Gold

5% Silver

20% Euros.

The reason I say this, is because the £ is and will be taking a hammering. The 10% invested in precious metals, will at least hedge your funds. If they rocket then you have guarded your assets (currently held in GBP), because at the moment GBP is being inflated away.

For instance, 18 months ago the price of an average house was 600oz of gold, it now stands at 350oz.

Just thought I would get you thinking outside of the box, GBP is a fiat currency and therefore highly at risk of being inflated away. Putting some of your funds in Euros may not be a bad idea.

Aegis

phlash wrote: »

Max out your ISA - money you can dip into.

I agree with this... Maxing out the ISA is always a good start.

Put some in premium bonds ~ 10%

This is mostly a waste of interest. Probably better to avoid them unless you're a higher-rate taxpayer and have exhausted other tax-free options. The overall interest you're likely to receive is probably around 3%, which you can beat with instant access (taxed) savings.

5% Gold

5% Silver

Quite a high percentage when you don't know how much risk the OP is willing to take.

20% Euros.

Again, very high percentage if the OP has a low risk profile. ForEx is a very dangerous game to be getting into without a lot of experience and research!

The reason I say this, is because the £ is and will be taking a hammering. The 10% invested in precious metals, will at least hedge your funds. If they rocket then you have guarded your assets (currently held in GBP), because at the moment GBP is being inflated away.

And if the bubble bursts and commodity values plummet, then the investment portfolio is badly impacted.

For instance, 18 months ago the price of an average house was 600oz of gold, it now stands at 350oz.

And in another 18 months, who knows what 350oz of gold will be worth. If people knew that, they'd all buy/sell at the right time and make fortunes.


Certainly these are options, but they're by no means catch-all solutions that everyone needs to get in to.

Instead of direct investment in commodities it might be a better idea to diversify by buying a fund of ETFs that a fund manager can sort out for you. In fact, I much prefer collective funds to direct investments anyway just because of the large number of investments each fund holds.

mpg

I havn`t taken any ISA options yet the money isn`t with me yet.

Dont want to give too much(none would be ideal) to the tax man.

Everything is up in the air with the impeding recession posse and the house price crash gang

spalding

Have to echo what others have said , max your ISA allowance to keep the tax man away don't forget your allowance for this year ends 5th April so if you can get it in before then you can then top up with your 2008/09 allowance

phlash

All points noted, but why is there a mentality that anything other than GBP is inherently risky?

By diversifying his portfolio into other currencies and commodities I would suggest he is lowering his risk.

Just because GBP is our currency of trade in this country, does not mean it is the strongest or least risky. This is just a common misconception.

May I suggest it is far more likely for the GBP to go pop in this environment than it is for commodities.

OP I am sure has the presence of mind to interpret ideas and others opinions.

10% in commodities is not a high percentage.

Aegis wrote: »

I agree with this... Maxing out the ISA is always a good start.



This is mostly a waste of interest. Probably better to avoid them unless you're a higher-rate taxpayer and have exhausted other tax-free options. The overall interest you're likely to receive is probably around 3%, which you can beat with instant access (taxed) savings.



Quite a high percentage when you don't know how much risk the OP is willing to take.



Again, very high percentage if the OP has a low risk profile. ForEx is a very dangerous game to be getting into without a lot of experience and research!



And if the bubble bursts and commodity values plummet, then the investment portfolio is badly impacted.



And in another 18 months, who knows what 350oz of gold will be worth. If people knew that, they'd all buy/sell at the right time and make fortunes.


Certainly these are options, but they're by no means catch-all solutions that everyone needs to get in to.

Instead of direct investment in commodities it might be a better idea to diversify by buying a fund of ETFs that a fund manager can sort out for you. In fact, I much prefer collective funds to direct investments anyway just because of the large number of investments each fund holds.

mpg

phlash wrote: »

OP I am sure has the presence of mind to interpret ideas and others opinions.

I wouldnt count on it:rotfl:

I wish i was in this position a couple of years ago. now it looks like were heading for a recession the pound is going to be worth 50c and my house is going to be worth 50% of what i paid 2 years ago;)

Aegis

phlash wrote: »

All points noted, but why is there a mentality that anything other than GBP is inherently risky?

When you invest in UK stocks and bonds, you only have to contend with risk specific to the sector you're in as well as general market sentiment. When you invest outside the UK you have to worry about currency risk as well.

Personally I like stocks outside the UK at the moment, but it's important to highlight it as higher risk than equivalent investing within your own currency.

By diversifying his portfolio into other currencies and commodities I would suggest he is lowering his risk.

True enough, but investing only in gold, silver and euros wouldn't be enough diversification for 30% of someone's investment portfolio if I were looking for risk mitigation.

Just because GBP is our currency of trade in this country, does not mean it is the strongest or least risky. This is just a common misconception.

The reason it's less risky is the currency conversion added to the other investment risks. It doesn't mean it's the strongest at all, nor does it mean that you'll earn less by investing in currencies other than GBP. In fact, when risk increases so does opportunity. However, it all boils down to how much relative downturn someone would be prepared to accept.

May I suggest it is far more likely for the GBP to go pop in this environment than it is for commodities.

Possibly. I'm certainly not the world expert on the value of currency at any time. However, if the pound does die off, then my global equities will increase in value due to investing in foreign concerns. At the moment commodities and foreign equities probably make up over 50% of my portfolio, so if the pound plummets I should do ok

OP I am sure has the presence of mind to interpret ideas and others opinions.

Probably. However, I think it's only fair to highlight any potential downsides too. As I've mentioned, my own investments at the moment are quite heavily weighted in global equities. In addition, I have specific investments into emerging markets, commodities (physical) and commodity-producing companies.

10% in commodities is not a high percentage.

To me it is if you focus that 10% into just 2 commodities. If you went for a larger number, I'd be much happier to agree that for a fairly adventurous portfolio, 10% in commodities wouldn't be too bad.

phlash

All very sensible Aegis.

When I say 5% Gold, that could mean stocks as well as physical.

Anyway, just trying to get him to think outside the box as I mentioned.

My break down into just a few things, is still better than 100% GBP. For the simple investor with just 40K its a starting point.

Its obvious that many more decisions would need to be made, and I think Aegis you make excellent points. I hope the OP takes it all into account.

jamescredmond

mpg.

I reviewed this thread and noted the advice, which is mostly good.

but not once have you bothered to hit the 'thanks' button for those who responded ( you don't have to do this for me btw).

courtesy helps, even if you disagree.

regards,