best place for 5k

[CreativeMumma]

good morning,

I have just over 5K which i would like to earn interest on, in the past its been in a fixed savings which has come to an end. I looked for another one but unsure if i should fix again now or wait a bit... i read interest rates will go up (will that mean savings rates will too?)

or would it be better to do a bond? if so how simple are they? i've only ever used savings accounts.

Thank you in advance for any help.

[JoJoSM2]

How long is it for? You could be much better putting that into a stocks and shares ISA, a pension or a LISA if eligible.

[CreativeMumma]

its for my kids so don't really need to access it for 5yrs +
i've never 'saved' with any risk before so would probably go low to maybe medium risk. 5k isn't an amount i could replace if the investment went wrong.

thank you for your help!

[JoJoSM2]

A stock and shares ISA sounds like the perfect investment. Looking at 5+ years, you could go medium risk.

Lifetime ISA could generate much more due to the initial government bonus but you need to be under 40 to start and can't cash in till 55 if you don't want to lose the bonus.

[Sloptart]

Good morning Mumma,

I personally would invest in Bushveld Minerals. Good chance to multiply your 5K a few times over the next few years. A stocks and shares ISA like JoJo mentioned will shield your investment from capital gains tax.

[CreativeMumma]

thanks for the input, i just had a look at MSE site & their guide stocks and shares ISA and my head feels likes it might explode! is there anywhere you would recommend that explains the process 'for dummies'?

I'm in my early 30's if that make a difference.

Again thank you for your wisdom.

[Sloptart]

Some brokers charge an annual fee to have one, this one for example is free:

www.x-o.co.uk/isa-information.htm

You can deposit up to £20k this tax year using your debit card once the ISA has been opened. Then you choose which shares to buy. You will never pay any capital gains tax or tax on dividends.

[JoJoSM2]

Well, a lot to navigate. I invest via the AJ Bell Youinvest Platform but I did read a few thick books to get my head around the basics.

If it all feels a bit much, have a look at Vanguard
www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds

I've got some money invested in their funds and have been pleased with the performance.

You can choose different levels of risk. The more risk you take, the more money you can make. But you need to balance that out with the amount of risk you're comfortable with.

You don't just 'lose all your money' - it's investing and not gambling.
Even if you go for the high risk option, your money is spread across hundreds/thousands of companies from around the world. Some might go bust but others will do very well so it balances out in your favour.

The realistic risk is that it all goes in cycles, so if there's a recession, you might lose 20% of your high risk investment. However, when things pick up, you might as well gain 50% in 3 years. Overall, you'll be set to make a reasonable profit (many times over what you'd get in a savings account).

You just need to make sure that there is some flexibility to when you pay the money out so you're in a position to wait for a year or two if the markets happen to be down. Or, if you know you'll need the money in June 2025 and things are doing very well in 2022, you can then move your money to a lower risk investment (won't make that much money, but won't lose much either).

[CreativeMumma]

That's brilliantly helpful thank you so much for holding my hand! I'm will have another look tonight once the kids are in bed.

[milkandcookie]

I would go the stock market route, focus on dividends which is basically the profits left over after a company has put aside what it needs towards running costs.

I find relying on things I know about helpful, i.e. as a parent products relating to children etc would be something you are in the know on. If you look on investopedia (sp?) itll talk you through the ins and outs