What to do with our money?

[lljkk]

We are in the lucky position of having no debts and about 50k in savings. It's earning paltry interest, and I'm afraid the govt. will encourage high inflation to run down interest rates. We keep looking at various investments but aren't enthused about any of them:

Shares: don't have the know-how/temperment/enthusiasm to manage them actively, and don't want to get burned (have been burned in the past).

Property: Don't want to rely on rising property prices, and can't see how BTL can be profitable otherwise. Don't have time and energy to actively manage a property, either.

Solar PV: DH doesn't like the uncertainties, long return time, or sinking the money beyond use for so long.

I-shares: can't figure out how to buy or sell them!!

Gold, gilts, fine wine, fine art, bonds: not sure about these either. Seems like it could be really easy to make a big mistake.

Not sure why I'm posting, but seems a shame to leave the dosh where it could so easily depreciate, and can't seem to find an investment we're comfortable with, either!

Thoughts?

[starmucks]

High inflation normally results in high interest rates: the more expensive it is to borrow the less cash there is around resulting in deflation.

Why don't you put it in part into ISA - that way at least you have a tax advantage. If you don't want to actively manage what you do they are probably your best bet.

[Lauriefairycake]

Have you entirely paid off your mortgage then?

If so I would probably buy premium bonds as rates are so low - my friend has £30k of them and she has made more in 'winnings' in the last 2 years than if she had put it in a bank account or isa.

your money is safe in premium bonds and then when interest rates pick up you can just sell them again and put it in a more long term investment vehicle.

[lljkk]

Yeah, no mortgage at all, we have it stuffed to the gills in cash ISAs atm -- though I'm a non-tax payer, anyway.

Did you mean shares ISAs? Again, that's how we have lost money in the past (oh dear, hand-wringing pathetically now I am!)

Will look at premium bonds, I thought that the realised gains on them was very poor, though, meaning very low interest and very few wins in reality.

[Lauriefairycake]

On £30k of premium bonds my friend 'won' £550 last year - my maths is rubbish so what's that in percentages? And there's always the chance of winning more.

[BeenBeta]

If you have any debt, pay that off. That means mortgae, car loan, and all credit cards.

Then put 6 months of your post tax earnings in National Savings. Thingd like the Direct ISA yields a tax free 2.5% return. the 3 Year Index Linked Savings Certifiats yield RPI +1% and are tax free.Although this will not earn not much interest far too many people have no back stop emergency fund to cushion job losses or emergency repairs to house, etc.

If you have any left after paying of all debts and putting away your rainy day fund then think about drip feeding a regular amount into a self select equity ISA that you manage yourself. Just buy a basket of FTSE 100 shares. Be prepared to lose 50% of it though.

[hunkermunker]

Become a lender on Zopa?

[notcitrus]

Insulate your house as much as possible?
Put into a pension?
Good to have some money in a cash ISA - I think the annual putting-in limit is £7000 each now.

[starmucks]

I know you mentioned you've been burnt on equity ISA previously, but given the alternatives you've ruled out and talk that capital gains tax is about to rise massively, it may be your only option. If you spread it around you distribute the risk, it could work out well for you. I'd look at a mix of Asia funds and US funds - both Sterling and the Euro are going to be weak for a long time given the structural deficits that need to be addressed, so I'd advoid anything European at the moment.

[lljkk]

Ta.
I'm kind of embarrassed to admit this, but we really do have no debts.
We have a reasonable amount going into pensions already, but could up that, really.

What is going to happen to CG Tax?

[backtotalkaboutthis]

hth

In the meantime, call up the bank and ask for a better rate than published on your savings accounts or you'll take your money away. Like haggling. It can definitely work ahem.

[BeenBeta]

The talk is that CGT will rise from 18% to 50% except on legitmate business assets owned and operated by entrepreneurs and family businesses.

The talk is that the £10k CGT allowance will be scrapped and also that it will be imposed on holidays homes, buy to let and second homes.

[PigletJohn]

luckily (?) Capital Gains Tax is not charged on investments within an ISA. So this is the place to invest if you are going for equities, investments trusts or OEICs. But be aware, and beware, of charges. Although some investment funds want you to think that an ISA is a tool for holding investment funds in, this is not true. You can get low-cost independent ISAs and can put any shares or funds you want into it. But unless you are a higher-rate taxpayer it will not save you any income tax, as dividends in ISAs are still taxed at the flat 10% rate.

If you are still working, it makes sense to invest in a pension, especially if you are a higher-rate taxpayer now, but will be a standard-rate taxpayer by the time you are drawing your pension.

If you have cash savings, then although (ATM) interest rates are very low, you may as well have it in a cash ISA so that the tax will not be a concern when things change. You can also transfer a cash ISA into an Equities ISA if you want to (but not the other way round).

Beware of the Amateur Investor's most common mistake: "Shares are cheap now so I won't buy any. I'll buy them when they're more expensive". Is there anything else you'd buy like that?