5K to invest...

A question about : 5K to invest...

Hi everyone,

What can I do with 5K - with a mind to investing... My aim (typically ) is to gain the highest possible return. At the moment the money just sits in an 'instant access savings account'

Thanks in advance.

Nids.

Best answers:

• Depends on how much risk you are willing to take.
  Highest possible return is the lottery, but risk may be unacceptable.
  Lowest return is a current account paying 0.1% -- very safe.
  An entire range of risks/possible returns in between. No one can answer your question without an idea of how willing you are to risk losing your money (or part of it) to gain a higher return.
• Point taken and in that case i need to break my request down:
  1. How can i gain max return by not taking any risk (i.e. not willing to lose any money)
  2. Or alternatively what can i do if i'm prepared to lose SOME of my money (but no more than say a third)
  Cheers
  Nids
• No risk options:
  1. Cash ISA. !4.85% Abbey Postal. !Tax free. !Maximum investment Ј3K/year per person (so if married, can put it all in ISAs).
  2. Cash ISA fixed rate. !Not sure what the best deals are here.
  3. Savings. !6% is the highest, but this is taxable. !So unless you have a non-taxpaying spouse whose name you could put it in, this is not as good as the ISA.
  4. Fixed rate bonds. !Ties up your money for 1-3 years.
  5. Premium bonds. !No risk of losing your money, but there is the risk of not getting any return at all. !Also the chance of getting the big one.
  6. NS&I GEBs. !Martin's article:
  https://www.moneysavingexpert.com/cgi...1137796,10029,
  (Requires locking up your money for five years.)
  
  Others will probably have other suggestions as to safe places to put your money, and I'll leave the risky ones to someone else as well.
  Suggestion: !You could put the third you are willing to lose on the lottery and the rest in one of the safe options above. ;D ;D !(That is NOT a recommendation, I never gamble myself).
• nids
  it gets even more complicated.
  You say you are prepared to risk a third.
  Does that mean you are prepared to take a third of your money and put it into an investment where you COULD lose the lot?
• Erm yes I would, but obviously, would want to invest in something with considerably better odds than, for example, winning the lottery
• Certainly an option would be a shares ISA, maybe an index tracker that just tries to match the index (low fees, you won't beat the market, but you won't do worse than it, either).
  A FTSE100 tracker is not likely to lose more than 1/3, and could do quite well. FTSE250 or all shares might carry a slightly higher risk (and potentially higher gains).
  You could also track the US market, although risk is higher because of potential currency fluctuations. Based on past history, the US$ is low compared to the pound right now, so if you bought in now presumably currency fluctuations might work for you rather than against you -- although past history on currency rates is no guarantee of the future.
  For a little more risk, and again potentially higher returns, you could invest in Japan.
  A step further out (and nearer the edge) is to invest in a Far Eastern fund -- investing in places like China, Korea, Singapore, Indonesia. You could make a killing here -- or you could end up dead meat yourself. This is probably beyond the 1/3 risk threshold -- you could easily lose 1/2 or more of your money investing here. And likewise you could double your money quickly.
  You could invest in Russia if you really feel adventurous. Lots of money to be made here -- unless Putin decides he doesn't like the people running the companies you invested in, throws them in prison, and slaps creative taxes on the companies. The key is to get out at the right time and buy an English football club.
  You could put half of your money in a mini cash ISA (safe) and half in a mini shares ISA in one of the adventurous places. Or you could put it all in a maxi shares ISA in one of the "safer" places -- there is plenty of risk in shares, but you are not likely, IMO, to lose more than 1/3 in an index tracker in the UK or US markets.
• dont rule out life bonds. With no initial charge, increased initial allocations and may be more tax efficient than an ISA depending on circumstances. Many life bonds are showing lower reduction in yields than an ISA over 10 year periods. Also, depending on your age, it cannot be forced encashed to pay for nursing home fees, unlike an ISA. It can be used in IHT planning as well. And HRT payers can potentially avoid high rate tax on these if they expect to be basic rate taxpayers in the future
  Its all about matching it with your circumstances.
• Thank you so much DiggingOut and all others who responded to my post.
  I've decided to put 3K away in an abbey postal Cash ISA and the remainig 2K into a shares ISA - not sure which/ what etc yet - any recommendations will be much appreciated.
  Thanx.
• ohmygod. I've just been reading ' ISAs, Toisas, Peps and Tessas' chat forum and well I'm a little confused now. Earlier i wrote (the post before this) that i wanted to invest 3K in a Cash ISA and the remaining 2K into a shares ISA - now I'm uncertain whether it is possible to do this in the same tax year - is it? Please help.
• Nids
  It is possible to do this in the same tax year. Max 3K in a cash ISA, and max 3K in a shares ISA. Both don't have to be with the same provider, so shop around for the best deals.
  Darryl.
• Just in case it isn't clear, you can either have a maxi ISA or mini ISAs (but not both) in any one year.
  A maxi ISA is shares, with a Ј7K limit. If you do this, you cannot do a cash mini-ISA.
  With mini-ISAs, you can do up to Ј3K in a mini cash ISA, up to Ј3K in a mini shares ISA, and up to Ј1K in an insurance ISA.
  So you can do exactly what you want in mini ISAs. Just make sure when you open the shares mini ISA that you specify that it is a mini ISA you want, not maxi ISA.
• I am a Filipino living in the UK. (British)
  I have been told that if I am prepared to lock away my money in a 5 yr time deposit in Manila I can get rates with certain banks of up to 10%.tax free.. The problem is that my money would only be insured for up to Ј1000 or the equivelent. (in case of bank bankrupcy ect}
  I would be in the position of being able to invest Ј150,000 so you see why I may be nervous..
  Also,I would have to change my precious Ј`s to peso`s!! Frightens me to death!!
  Is there any investments in the U.K that come`s anywhere near 10% (tax free) ?? If so..Is the interest available to me on lets say a monthly basis??