Money - advice!

[SallyAnne]

This is really for the richer among you

Me and my other half are wanting something to invest in to ideally give us a big bulk of cash in 10 years. And we suffer from half-wittery, so we're not sure what we're after.

We dont have masses of cash right now (else we'd probably invest in property), but we have a load each month that we'd like to put somewhere and watch it grow.

Everyone seems terrified of endowments these days...but I guess I was thinking of something along those lines.

Any advice/tips?

Cheers,
Sal
xxx

[rootsnall]

Pay off your mortgage, it's a hard to beat investment strategy especially if you are paying higher rate tax.

[XTC]

This is really for the richer among you

Me and my other half are wanting something to invest in to ideally give us a big bulk of cash in 10 years. And we suffer from half-wittery, so we're not sure what we're after.

We dont have masses of cash right now (else we'd probably invest in property), but we have a load each month that we'd like to put somewhere and watch it grow.

Everyone seems terrified of endowments these days...but I guess I was thinking of something along those lines.

Any advice/tips?

Cheers,
Sal
xxx

Well you've got various bonds/isas etc, but looking around the returns aren't that great. They are around 5% which is pretty similar to a good savings account. How much are you thinking of investing?

[swissmike]

Sounds like an index tracker would do the job.

You pick say the FTSE 100 and your fund tracks that - no fund managers involved and low fees. Take a look on fool.co.uk for recommendations.

Good thing with them is if the FTSE goes down you benefit in the fact that your monthly contribution buys even more units of the tracker.

[oxtailsoup]

Pay off your mortgage, it's a hard to beat investment strategy especially if you are paying higher rate tax.

Why is it an especially good strategy if you are on higher rate tax? You don't get any tax relief do you?

Just checking I haven't missed something here!

[Numptycorner]

I wouldn't invest in anything that ties capital up for a long time at the mo. Keep liquid then if an opportunity arises...

I've got 30k in Premium bonds, which is liquid and so far has given me 6% in 8 months and better still, Gordo gets FA

[TheRightStuff]

Pay off mortgage is always good.

ICESave for a good savings account (5.9%). In wifes name and she isn't working = no tax payable.

Legal & General Maxi ISA Tracker Fund or go for the ishare ftse 250.

ishare if you want to put a large sum in 1 go or the L&G tracker fund it you want to put in a monthly amount.

250 performing alot better then the 100.

If you fancy a volatility then ishare china and/or brazil. Expect a roller coaster ride with the latter.

[King Cnvt]

Why is it an especially good strategy if you are on higher rate tax? You don't get any tax relief do you?

Just checking I haven't missed something here!

Because you are paying your mortgage interest out of taxed income, and most savings (except pittance of ISA allowance) is taxed at your highest rate, reducing the actual return to about 3% which is not even beating inflation.

The moral of the story is to pay off your mortgage to massively increase your disposable income later rather than rely on some dodgy investment to bring you cash in the future.

HTH

[DaveB]

Talk to an IFA, they will be able to give you a far better picture of what your options are.

Otherwise, as has been said, pay of your mortgage as fast as possible. If you do it in 10 years then you'll effectively have the value of your property available as a lump sum - Sell up then and realise the value or just sit on it mortgage free and let it appreciate in value all on its own. And you'll have extra money every month that would have been used to pay the mortgage that you can re-invest if you want to.

Over the life of a typical 25 year mortgage you pay out approximately twice the purchase price of the property. The earlier you pay it off the less it costs you and the more money you will make out of it

And yes, I know, if there is a price crash in the meantime the house won't be worth as much, but neither will anyone elses and you'll minimise the potential effects of negative equity to boot.

BTW, interesting piece on R4 this morning. US bonds are taking a dive and the knock on from that could well mean further interest rate rises here and a nasty knock on effect for the stock market. I'm predicting 7.5% base rate by year end.

[Numptycorner]

Yes, Pay off the mortgage

100k mortgage = £600 a month at 5% over the term, 7,200 a year

that's effectively >7% cost per year for the near future

You can't get 7% on savings