whats the best thing to do with a small saving?

[bananacarnival]

In a dilemma. Went to see a guy at Nationwide about switching my e-saving account over to something like an isa. I've 25k saved up and it's currently in an e savings account earning 0.5% interest.

I do need it to grow but not at.the expense of ending up with less, as the guy at nationwide seemed adamant that I couldn't lose if I was investing 'low risk' in companies like Tesco , edf...

When I saw how much my money could have grown if I'd invested it in last 3 yrs, I was amazed.

But I know nothing, absolutely nothing about investment and wonder if anyone could warn me about this being a risk not worth undertaking.

As far as I could understand these are not 'stock shares'

No you can't lose buying direct shares in businesses. WTF ! ! ! ! ! OF COURSE YOU CAN.

Ignore him, he's a fool. What's gone is gone and 3 years in the past means nothing. Hindsight is the best investment.. for idiots. Frankly if you reported that conversation he would be in deep hot water.

Cash ISA would be my first suggestion (as you wanted). Secondly if you fancy a bit of upside but limited downside (you might only get your money back and no interest) have a look at:

www.investecstructuredproducts.com/advisers/products---downloads/deposit-plans.html

Closed now but they'll do something after April I'm sure.

From the limited amount you've said you don't want any risk. HOWEVER if you do want to save this money over a period beyond 7 years I would think about having an investment with a bit more inflation protection.

Sorry to be brief, but felt you needed to be clear that you spoke to an idiot!

I agree, you spoke to an idiot.

If you don't want to invest then an ISA is probably best but I think you may have more than you can deposit in one.

Here is some info on better savings accounts available to you.

Since the FTSE100 stockmarket plunged in 2009 but has since recovered then yes, he will be able to show you some amazing growth statistics for the past 3 years. Had you invested in 2008 though, you'd actually not be seeing much growth at all.

If you have a cautious attitude to risk, then a quick search on Moneysupermarket.com or similar will show you there are a number of deposit savings accounts with reasonable interest rates (say, 2.5% gross) available.

Think about how long you are happy to leave your money tied up for or whether you need to have instant access. There are other things you can do with it like a good structured product but these don't guarantee growth - just offer the opportunity for growth. They can at least protect your capital investment if chosen carefully.

Your ISA allowance is £11,280 this tax year but only half of that can be put solely in a cash ISA.

Many thanks for these replies .. I thought it seemed a bit too good to be true! ISA it is then. Thanks for the links, going to look them up now..

Keep in mind that the ISA allowance is for money going into the isa in the financial year. So you can open one now and pay in up to the limit, then in April pay in again up to the limit.
Shop around for best rate and also for best rate on the normal savings part. There is a website called Savings Champion which will help you track rates.

I like to have a spread, so I have some in ISA, some in corporate bond (high risk, could lose it all, but getting 6-7% return, eg John Lewis Partnership Bond, KoS Bond), some in premium bonds (no interest at all, but monthly opportunity to win prizes up to 1million), probably not the best portfolio but I like having a mixture of things rather than all eggs in one basket.

I second the idea of not having all your eggs in one basket if you want to make your money work hard for you. Cash ISAs and other cash deposits are a very safe bet for small amounts of money in the short-term and will generate you a small amount of interest. But, if you have a lot of capital, are relatively young, and you're happy to put a percentage of it away for the long-term (5 - 10 years or so), then investments that are stock-market based can really be worth looking at, even if they are rather riskier financially. 'Nothing ventured, nothing gained' etc.

If I had your £25k at the moment I would be using my 2012/13 and 2013/14 Cash ISA allowances, probably look at a fixed-term bond for another £10,000 and then I'd take a calculated punt with the remainder on a tracker investment that I didn't intend to touch for a long time.

Good luck

I would also be looking at an index tracking ISA but this does carry some risk. I have had one tracking the FTSE 250 for ten years and this is its performance over that time, albeit with the exact figures hidden. (You can see I started withdrawing money from it last year, but overall its value has stayed above the contributions I have made to it).

You can see that the last three years are not a very good indication of the overall performance over 10 years. The fund has grown sharply as the market recovered from the crash in 2009. For the vast majority of the time, the value of the fund has been higher than the value of my contributions (i.e. I've made money on it) but if I had needed to cash in in 2004 or 2009 I would have been buggered.

"but if I had needed to cash in in 2004 or 2009 I would have been buggered."

That's what I mean about money invested that way not being required in the short-term. It has to be cash that you're not going to need in a hurry and that, in the event of a dip, you can leave where it is until the market recovers. I've had various long-term investments over the last 25 years when there have been several big ups and downs in the market.... including the 2008 crash. The only time I've lost real money has been when they investment has been in a single company rather than a unit trust or tracker.

Yep, agreed, Cog. I would be very reluctant to use it for a savings goal with a definite time frame, say a big holiday. But even in 2004 and 2009, I would have got back nearly all the money I had put into it - which is not bad going for an investment vehicle.