I live in the UK. How should I invest £20,000?

September 12, 2007 7:28 AM

I live in the UK. How should I invest £20,000?

My partner and I have £20,000 sat in the bank (earning around 6.5%) that we'd like to invest over a period of around 10 years. We also have £800/month to invest.

I know nothing about investing but have done some reading, and Index Trackers (along the lines of the Vanguard 500 that everyone seems to rave about) look like something that would interest us in terms of low overheads/maintainance.

We both have cash ISAs, but no shares ISAs. We have an emergency fund separate to this £20k. We also have a £70k mortgage which we are making extra payments on, but we don't want to plough this £20k into it. We have a one year old child.

Can anyone recommend Index Trackers that we could use with a shares ISA? Should we both invest in different trackers to diversify? Would you invest in a tracker in the current climate? Or how else would you invest this money?

posted by anonymous to work & money (6 comments total)

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posted by zackola at 8:04 AM on September 12, 2007

I would say get hold of a local IFA who works on commission and see what they say. No risk , no cost to you
posted by rus at 9:04 AM on September 12, 2007

I've found the L&G range of index trackers good. Low fees and a good range of funds. If it was me I would sit on the cash until the current unstable market conditions settle a bit. You could do a lot worse than 6.5%, and in the meantime you could learn more about investing. The first thing I think you should think about is: what are you trying to achieve with that money: steady growth? maximum possible upside regardless of risk? are you comfortable with the idea of losing it all?

Once you know that, you'll have a better idea what you should invest it in.
posted by crocomancer at 9:12 AM on September 12, 2007

If you are looking, as you said, to put your money into investments (as opposed to paying off your mortgage), you should first max out your ISA allowance. Any opportunity for your money to grow tax-free should be fully utilised. Though you currently have cash ISA's (hopefully maxed at £3000), you can still put a max of £4000 in stocks and shares ISA's.

Beyond that it is hard to say how you should invest without much more information on your current situation, which is where an IFA could help you. You can find out all you need to know about IFA's here.

If you don't want to do that, at least visit The Motley Fool, which has a lot of good information. I've linked to the page on index trackers, but the whole site is good. There is also a section where you can compare index ISA's.
posted by triggerfinger at 11:34 AM on September 12, 2007

Have a look at iShares Exchange Traded Funds http://www.ishares.co.uk/. They do a range of index trackers which cover FTSE 100 , 250 and international stocks. Low expense ratio.

You can buy and sell these like a normal share within a ISA wrapper. I think you can convert the cash ISA to a maxi ISA but not sure on that. One idea might be to buy over a period of a couple of exposure to reduce your market risk "dollar cost averaging".
posted by laukf at 1:20 PM on September 12, 2007

We have a one year old child.

Have you got a Child Trust Fund?
posted by Lebannen at 2:08 PM on September 12, 2007