The most boring topic. Help with investments please!

[ripax]

I would like to invest £3000. i heard that i should invest in something linked to the stockmarket as i would get a better return than just putting in a savings acount.

I know there are some clever people here. please can you help?

ISAs are best for that sort of sum as they are tax free.

You can have cash or shares type ISAs. Have a look at www.moneynet.co.uk

Sorry should point out that I am in NO WAY qualified to give financial advice! Just a suggestion.

ripax - the stock market has been up ands down in recent years - you may or may not make a better return - it's a gamble - look at all he people who have shortfalls in their Endowment policies - which includes me

Also consider might you need access to this money or do you want to lock it away for a period of time?

You need to decide what your investment goals are first of all ie do you need to get at this money quickly, want to save up for a holiday in a few years or invest for the long term. The longer you invest, the more risk you can afford to take. If you are a basic-rate taxpayer there is no longer a tax advantage to investing in an stockmarket ISA as that was withdrawn last year, so you can go for anything, but look out for charges etc. If you are investing for the short term a cash ISA is still a good option and you do get the tax advantage with this. Try www.moneyfacts.co.uk for best buy savings accounts.

I do not need to get at the money quickly - maybe a 5 year investment?

I'm not qualified as a financial adviser either. I've had some very bad experience of people who are qualified Before you consider any sort of investment you need to have emergency money somewhere you can get at it easily - an ISA is ideal for that as you not only get tax breaks but it doesn't have to be included in income for tax credits. Personally I'd stick to a building society if you only have £3k to invest. However you could consider prefefrence shares - less risky than ordinary shares but if you use a convertible one some prospect of growth with the market. Beware people who try to sell you stock market linked bonds.

You now need to think about your attitude to risk and whether or not you could afford to lose this money. Five years is the minimum time it is recommended for a stockmarket linked investment, but if you don't want to take any risk with your money you may still be better off with a savings account of a bond of some sort.

I coulnt afford to lose the majority of the money. is isa the the choice then?

sounds like it would be the best thing for you, ripax. I meant preference shares, I just can't type. They are like ordinary shares in that you get a dividend but if the company goes bust you're ahead of ordinary shareholders in the queue to get anything back. There are some investments where you can protect against losing your money in exchange for not getting the full amount of growth (if any) in the stock market. I'd still go for the ISA though.

Could I recommend that you spend time looking at The Motley Fool website? They have a Learn to Invest section, as well as an Investing for Beginners discussion board.

Their advice is a refreshing change from that of financial advisers and product providers who get rich by selling you financial products that may or may not be suitable for you.

FWIW in your situation they would probably recomment paying off all non-mortgage debt first, followed by making sure that you have a rainy-day cash fund, and only then looking at long-term share-based investments, probably in the form of a UK index tracker held within an ISA. It helps if you think of an ISA as a sort of financial invisibility cloak it's a device to make various different kinds of investment effectively invisible to the inland revenue. You still need to make sure you get the right kind of investment inside the cloak not all ISAs are created equal.

hth

It sounds as if you've made your choice. Cash ISAs are paying good rates at the moment. You can check out the best buys \link{http://www.moneyfacts.co.uk/savings/charts/savings_mini_cash_isa.htm\here]

Abbey do a postal ISA offering 5.35%, Halifax a 5 year one at 5.7%. You'd need to look at the Halifax one carefully to check whether you could get access if you needed it. Tesco were offering a stock market linked investment with protection against loss of capital but its sold out. Worth checking that in a few days.

I would second what Frogs is saying about debt. You are unlikely to make more on a savings investment than you are paying in interest on any debt (many mortgages included). So if you have more negative debt interest than positive savings interest, your savings are wiped out instantaneously. I am always surprised by people who have money invested in ISAs but still have a mortgage or other debts outstanding. Of course, you may not have any debt, in which case, invest away!!

Jan - it's always a good idea to have a few thousand tucked away but accessible for a rainy day

Iota you are absolutely right!

If you've settled your debts and have a rainy fund I would personally, if I didn't need the money for a good few years (like 5) go for an index-tracker share ISA with low fees (Legal & General and Virgin do pretty good ones, but I haven't looked at the market for a long time as no longer have any spare cash )

I'm also not a financial advisor BTW

I'd put it in Premium Bonds. You don't get any interest at all BUT 1) it's a secure placement (you are guaranteed to get back what you put in, it's a state scheme, has been going on for decades), 2) you have easy access to the money should you need it (within a few days or a week) and with no penalty, 3) you get a chance to win some money every month in the monthly draw (it can be as little as £50 or as much as a million - or zilch, obviously), 4) you can top it up with other savings each month or whenever you have £100 or more to put in.

We used to have money in Premium Bonds and although we never won the million we won the odd £50 or £100 often enough to have made up for any interest we might have otherwise got from keeping the money into a riskier form of investment. Worth looking into IMO.