40k to invest, whats best?

mush1234

Hi I have about 40ks worth of cash in a 2 basic currect account...very little intrest.

I have a 60k mortgage that I cannot pay off for a few years (long a dull story, which I wont get into)

Me and my wife have no Isas, we have no debts at all other than the mortgage, we have no credit cards, or store cards etc..

Baicaly I have the cash but I cannot spend it for a few years, so Im looking for the best options as to what to do with it in the meantime.

Also...could someome please explain how to calculate bank intrest...I see loads of figures (4.5% etc) but have no idea how to calculate what the means tto say 20k?

cheers n advance.

Lokolo

Ok to work out what 4.5% on £20k is you do:

20000 / 100 * 4.5

(/ 100 to get 1%, then * by 4.5 to get 4.5%)

If I were you first things first, look around for some cash ISAs, find one you want both you and your wife wants. Put £3600 in both, thats £7200 all done and dusted.

Now the rest - invtesments can be done, but these are usually longterm, say 5+ years, would you want this? Or would you rather go short term?

mush1234

Lokolo wrote: »

Ok to work out what 4.5% on £20k is you do:

20000 / 100 * 4.5

(/ 100 to get 1%, then * by 4.5 to get 4.5%)

If I were you first things first, look around for some cash ISAs, find one you want both you and your wife wants. Put £3600 in both, thats £7200 all done and dusted.

Now the rest - invtesments can be done, but these are usually longterm, say 5+ years, would you want this? Or would you rather go short term?

cheers for that, can I not invest more than £3600 each in a isa? ...or am i thinking of a tesa/pep. Im pretty clueless sorry!

In about 2 years I hope to put the 40k + next years wages to paying off the mortgage..so im looking for 1-2 year investment only

dunstonh

You can "invest" a further £3600 on top of the £3600 "savings" element.

However, with a timescale of 1-2 years you shouldnt be investing. You should stick to savings.

Lokolo

dunstonh wrote: »

You can "invest" a further £3600 on top of the £3600 "savings" element.

However, with a timescale of 1-2 years you shouldnt be investing. You should stick to savings.

Just to explain a bit more on this:

Everyone can have an ISA. From today there are 2 elements:

A cash ISA
A Stocks and Shares ISA

Each weighting at £3600 each. A cash ISA is what it is, a savings account. A S&S (stocks and shares) means you invest in something.

YorkshireBoy

If the sole purpose of the money is to repay the mortgage, and because you've just missed getting £6K of it into 07/08 ISA's, have you considered switching to an offset mortgage?

After all, you'll possibly be paying savings interest tax on the other £32.8K of savings once you've each filled up your 08/09 cash ISA's.

mush1234

my mortgage is intrest only at the moment, and Im quite happy with the low payments....even though im not paying anything off i can pay it off in a few years.

will an offset work and can I still keep it intrest only?

i have about 55-60k left

I will pobably call them on Monday

jamesd

An offset mortgage is a different type of mortgage product. You can have it interest only if you wish. Switching to one will probably involve paying any penalty charges that apply for ending your current mortgage deal early.

If either of you isn't a tax payer it's worth considering regular saver accounts in that person's name.

You might consider using the BlackRock UK Absolute Alpha fund for some of the money. It's not guaranteed that it will not fall in value but it does have a good record of steady upwards performance. It returned about 10% last year and pays as growth in the capital value. With a capital gains tax allowance of over 9,000 per person that means it's effectively free of tax whether it's inside or outside an ISA.

Ximian

mush1234 wrote: »

Hi I have about 40ks worth of cash in a 2 basic currect
Also...could someome please explain how to calculate bank intrest...I see loads of figures (4.5% etc) but have no idea how to calculate what the means tto say 20k?
cheers n advance.

Keep in mind that the figures displayed are probably the APR interest figures, 4.5% isn't that great, you could get 6.1% at Icesave or 6.5% at Kaupthing and most banks display just the interest figures without mentioning Tax on any savings made:

4.5% = 0.045 (assuming this is a full year's worth of interest... APR)
20 0000 x 0.045 = £900 (interest only)
BUT if you are a taxpayer you will need to pay tax on your savings @ 20%
£900 pure interest x 0.20 = £180 Tax
Total interest earned after tax = £720

Having an ISA makes sense

Good luck

A.Jones

While you are waiting to decide what to do, at least open a internet savings account - this can usually be done in minutes with your current account bank- and stick your money in there. You will probably get somewhere between 5.0 and 6.5 %. At least that way, if it takes you a while to decide, you are still getting a decent rate of interest while you decide, and not losing money (compared to inflation) by keeping it in a current account.

belto

Hi
after reading all the posts on prememium bonds I too am disilusioned by this investment and looking for places to increase the value of £30K.

I can invest in a £7200 cash an Investsment ISA but am I correct in stating that Investments should only be considered for 3-5years. being 70 years nearly I don't think this would be a good idea.
What other options should I choose