Stocks and Shares ISA

IainT_3

Hey guys,

I am happy to say that for the first time in my life I have a reasonable amount of money in my bank account, and I would like to save/invest in a way which isn't going to disappear if the world trundles into a horrific stock market slump over the coming months.

I was therefore wondering if any of you good people would be willing to offer me some advice.

I have about £30000 to play with (although play with does seem a strange term when I'm speaking about that amount of money) Currently I have a cash ISA of £3000, and in a couple of weeks I'll be adding another £3600 to that. Everything else at the minute is just going to be sitting in savings account until I work out something else to do with it.

I was wondering about the other kind of ISA which I know nothing about. Is there any way I can invest in stocks and shares ISAs where I am guaranteed a positive return on investment, and where I could potentially make more than in a savings account?

I realise that if such a product does exist then the rates probably wouldn't be great, but I was wondering if it might be better than a high interest account after the tax is taken into account.

I think I already know the answer to this reasonably stupid question, but I thought it would be worth checking with some sounder financial minds. If I'm missing a trick and there is some other safe way to build it up then I would be delighted to hear any ideas (the fact the money is secure is very important to me)

Thanks
Iain

nightwatchman

Ian

Regarding a stock and shares ISA’s with a capital guarantee their minimum return is ridiculously low. Many have a three year maturity term and other have punitive T&C if you take your money out early.

IMO I would stay away from the stock market at list until next October or November. Please though have in mind that I am not a financial advisor and in the past I have be proven wrong.
Out there however are some saving accounts that can offer significant benefits without the risk of the stock market.
I am in a somewhat similar situation like you. I have approximately the same amount of savings and I have managed to make them work very hard for me. Currently my savings are yield between 6.4% and 12% and that is guaranteed, no any uncertainty of the stock exchange here.
The way I manage it is by applying for the best regular savers available and splitting my savings between me and my wife.
A&L is offering a 12% regular saver, I applied for that and also my wife. You can save max £250 per month per person. At the end of the term we will have invest a total of £6,000.
Abbey is offering a similar regular saver at %10. So we will have another £6.000 there.
West Bromwich BS is offering the Magic 8 regular saver at £8.1 (aprox). However with this one you can invest £1,000 per month. So in theory we could have £24,000 invested by the end of the term. As I don’t have that much saved soon I will have to reduce my deposits to the minimum £25 that is permitted.
Also Abbey is offering a 8% current account on up to £2,500 investment. We have already max it up with £5,000.
As these accounts are drip fed we have kept the spare cash the ICICI which was 6.4% now is 6.1% aprox.
Soon we will be able to start our new ISA’s and some providers are offering a %6.5 tax free.
Also please remember that in Abbey and A&L you must have a minimum deposits of £1,000 and £500 every month so as to qualify for the good regular savers. If you don’t want to have any idle money sitting there you can bypass that by transferring the surplus to the account of your choice.
With a rough calculation I am expect to have a net after tax gain of approximately £1,600 to £1,700 possible more with the new 6.5% ISA’s. A +£1,700 from my £30.000 savings which is risk free is not bad at all IMO.
Maybe next autumn I will invest in the stock market.

nightwatchman

I also have to add that I started the above accounts aprox. six months ago. Today you can get better deals. A&L for example is offering a 10% ISA which is much better than their 12% regular saver. Unfortunately you can not have them both.
From my 12% regular saver as it is drip fed I will barely gain £150.
A 10% ISA on £3,600 will yields £360 (you will get also £25 bonus if you have a friend of yours recommend you to A&L).
My savings are already tide up on other regular savers and the 10% A&L ISA is for new customers only. So your gains could be far better than mine.
However in six months time they may be even better deals out there than today.
Money that is tied up on a regular saver can not be easily withdrawn without penalties, so you may not be able to snap a good deal.
On the other end in six months time they may be worst deals than today.
With this I only want to say that I do not have a crystal ball, and please do blame me if your money do not work as hard as they could.
You will need to do some research on your own.
However whatever the outcome you will never risk you capital.

IainT_3

Hey nightwatchman,

Thank you kindly for that. Some good advice there, and the A&L ISA sounds phenomenal - I clearly need to reread some ISA recommendations

I agree with you on the stock market thing - it's all looking a bit shakey at the minute - which is why I am keen on my risk free options.

I'll so some more reading. Thanks again.

Iain

dunstonh

You dont invest on the stockmarket for just a few months. You invest for a minimum of 5 years. Over the long term you would expect a bad year every 5 years or so.

Also, the markets have already dropped 20%. There could be more to come or we could have seen the worst. However, if these short term drops concern you then you really shouldnt be looking to invest 100% into the stockmarket. Also, risk is not on/off. it is a sliding scale and stockmarket investments can range from medium to high risk depending on the areas involved.

IainT_3

Thanks for the post dunstonh.

When I said

"I would like to save/invest in a way which isn't going to disappear if the world trundles into a horrific stock market slump over the coming months."

I didn't mean that I would only be wanting to invest for a few months (I plan on leaving this money untouched for some time I would hope). I simply meant that I didn't want to invest the money and see half of it disappear overnight because of a stock market crash.

Having looked into this a little more I think it's pretty clear stocks and shares aren't for me - I need a wee bit more stability. I think it will be savings accounts and cash ISAs all the way!

Cheers
Iain

nash0819

Useful thread, thanks people.

Nightwatchman, if I may, can I ask how much of your time does all this take up each month - including the basic admin on the accounts and your research in finding the best deals?

nightwatchman

Administration is not time consuming. The most is done by standing orders anyway. Only West Bromwich BS regular saver I will do manually with bank cheques as it is a large amount of money (£2,000 each month) and I wish to have a certain budgeting liberty. That will take approximately 25 min (the time will take me to walk to the bank)
I spent about three days researching for 45 min per day with moneysupermarket.
What was the most time consuming was to go through all this account applications, every bank was try to sell us: insurance, credit cards, fixed term bonds, managed investment plans :mad: ohhh God I am glad that is over.
My advice will be to arrange ASAP your A&L ISA as it has this 10% If you manage to start it before 5th of April you will be able to deposit there a total of £6,600 that is a £660 in a year.
Then apply online for your major saving account (ICICI for example) because all the other regular saver accounts are rather fiddly and time consuming. Do not wait for your main savings account to be ready start applying straight away for your other accounts.
The third account you should apply is the Magic 8, you can start it same moment you walk to the West Bromwich BS branch. Then do your other accounts whenever you have time.
ICICI take nearly twenty five days in my case, all the other regular savers (with the Magic 8 exception) will take well over a month as banks will start them only the month after your current account is ready.
As you want the bulk of your money to gain as much as possible push them in ICICI as soon as it is possible.
Try to have all your standing orders for your regular saver the same date approximately. Then arrange another standing order from ICICI to your favourite current account large enough to cover all the others. Make sure that you have given sufficient time to all the chain of standing orders. If not then you are in danger of using your overdraft or even worst going over your limit:eek: .
You will need meticulous planning to start with. However as soon as everything is in place you can stand back and earn:D .
All this accounts that I mentioned with the exception of A&L 10% ISA was the best I manage to find at the end of last October, today there may be better.