Investing

[riwiho]

Sorry if this is the wrong place to post this, I was not sure if it should be posted in this section, the Lounge or Business. If a mod feels it would be better suited elsewhere feel free to move it.

If, for example, I take home £100 (after tax, NI & pension deductions) pcm and roughly 60% (£60) of this goes on my outgoings (food, bills, mortgage etc) what would you recommend the split be on the remaining 40% (£40) for the following:

- Fun money (eating out, material consuming, beer etc)
- Savings (ISA)
- Investing (Shares)

Currently I have the following split:
- Fun money: 20% (£20 pcm)
- Savings: 15% (£15 pcm)
- Investing: 5% (£5 pcm)

I would like to start investing more but do not know what sort of balance I should have between monthly cash savings and investments (shares). I'm aware there is no finite rule for this but I am interested to hear how other people have approached this and their justification.

[Gaspode]

Only you can understand what your risk appetite is. Money that you invest in shares is money that you have to be prepared to lose. Even if you don't lose it, then you have to be prepared to stick with it long term.

I would only ever advise people to put money into low-risk investments, but then that's because my attitude is pretty risk-averse. I work bloody hard for my money, I don't want to risk some overpaid corporate tosser pissing it all away because they don't know how to run a business.

Put your money into Mutuals, Gold, or good old National Savings. That way you can be sure of it still being there when you need it.

[Mclovin]

http://www.marketoracle.co.uk/Article16741.html

[Mclovin]

build up the isa, thats what i am doing because i'm expecting massive tax raises...

i reckon we are heading for stagflation so if i had load of cash i'd be investing with that in mind...

[riwiho]

Mclovin said:

http://www.marketoracle.co.uk/Article16741.html

That's happy reading.

[rs1952]

Mclovin said:

build up the isa, thats what i am doing because i'm expecting massive tax raises...

i reckon we are heading for stagflation so if i had load of cash i'd be investing with that in mind...

ISAs are one of the biggest con tricks being perpetuated by the financial institutions. Look behind the "tax free interest" headline to look at the interest rates actually being paid. And also don't forget that many of these products have an introductory interest rate to hook you, which then falls to virtually sod all after a short period of time. Examples follow:

Bradford & Bingley standard a/c 1.3%
Bradford & Bingley ISA 0.6%

You are actually better off paying your money into a standard account and paying tax on 1.3% interest (so you get 1.04% net as a standard rate tax payer), rather than get 0.6% tax free.

For the average bloke or blokess, who hasn't got a fortune to invest but has a mortgage, start paying that off. The best mortgage interest rate you're likely to get at the moment is 2.5%, and you have to pay tax and NI on the money you use to pay it off. Taking that into account, paying off your mortgage gives an equivalent return of about 3.6% as a standard rate tax payer, or 4.25% as a higher rate tax payer. There are not many investments around at the moment that will give you that guaranteed rate of return.