How to invest £500 a month / short term / good return?
Discussion
Hi guys,
I've always been interested in investing, been meaning to do it for years... but i've never really followed through with it. Every time i looked into it I became overwhelmed and put it in the 'do it later' pile. Im 32 and i'm in the basic rate tax bracket. I don't think i'll be in the 40% rate for another couple of years.
I work for a large company and I put in 6% of my annual salary into the pension scheme, of which the company pays a further 12% on top. I'm also involved in a 3 year SIPP scheme for £500 a month which gives me a very good share option price, and also a further share scheme for £150 a month, which receives dividends as shares.
I'm not sure if I can change the SIPP to 5 years to avoid paying tax when I cash out?
I've just put £3000 into an AJ Bell Youinvest account, and I have the potential of investing a further £500 every month, but not sure where. I'd like it to go to short term investment(s) that have a good return. I hear 10%+ p/a is achievable.
I'd be grateful if someone could shed some light on this. Thanks!
I've always been interested in investing, been meaning to do it for years... but i've never really followed through with it. Every time i looked into it I became overwhelmed and put it in the 'do it later' pile. Im 32 and i'm in the basic rate tax bracket. I don't think i'll be in the 40% rate for another couple of years.
I work for a large company and I put in 6% of my annual salary into the pension scheme, of which the company pays a further 12% on top. I'm also involved in a 3 year SIPP scheme for £500 a month which gives me a very good share option price, and also a further share scheme for £150 a month, which receives dividends as shares.
I'm not sure if I can change the SIPP to 5 years to avoid paying tax when I cash out?
I've just put £3000 into an AJ Bell Youinvest account, and I have the potential of investing a further £500 every month, but not sure where. I'd like it to go to short term investment(s) that have a good return. I hear 10%+ p/a is achievable.
I'd be grateful if someone could shed some light on this. Thanks!
The pension and Sharsave sound v similar to the company I work for.
With regards tmyour investment, I woukd think you'd be hard pressed to find the magic triangle of short term, lowbrisk and returns you are hoping for.
To get 10pc, you would have to compromise on risk. For lowbrisk, you have to compromise on return. For liquidity, you have to compromise on return....
Sure a more educated person will be on and add more detail, but my thought is that to get a 10pc return you gotto give some slacknon thr other requirements.
At the moment the stock marjet is in a trough (although seeming to recover) so 10pc is possible, but there are risks associated and it could just as easily go the other way.
I think 2-3pc may be a more realistic potential return (if that) if you are not prepared to give up on the other criteria.
With regards tmyour investment, I woukd think you'd be hard pressed to find the magic triangle of short term, lowbrisk and returns you are hoping for.
To get 10pc, you would have to compromise on risk. For lowbrisk, you have to compromise on return. For liquidity, you have to compromise on return....
Sure a more educated person will be on and add more detail, but my thought is that to get a 10pc return you gotto give some slacknon thr other requirements.
At the moment the stock marjet is in a trough (although seeming to recover) so 10pc is possible, but there are risks associated and it could just as easily go the other way.
I think 2-3pc may be a more realistic potential return (if that) if you are not prepared to give up on the other criteria.
You say you haven't followed through with investing, but you actually have!
you have 18% of your salary being invested into a pension each month (which is excellent), £3,000 invested with AJ Bell and are considering adding a further £500 a month to this and £650 a month going into a Share Incentive Plan (I assume your meant a SIP, rather than a SIPP!).
Providing you keep the shares in the SIP for 5 years they are tax free. The time you spend contributing to the plan does not matter, just the time you hold it for.
You won't find a short term investment that will give you 10% though. Anything that offers to do this will be a scam.
You could luck out and get much higher returns than this (there are a lot of discounts out there), but equally you could lose the same amount.
You don't mention whether you are a home owner, but a a Lifetime ISA will give you a 25% government bonus and can be used to buy your first property (or for retirement), so this is a way to get a quick 25% return before you take into account the actual investments. AJ Bell offer these.
You sound to be in a very good position investment wise!
you have 18% of your salary being invested into a pension each month (which is excellent), £3,000 invested with AJ Bell and are considering adding a further £500 a month to this and £650 a month going into a Share Incentive Plan (I assume your meant a SIP, rather than a SIPP!).
Providing you keep the shares in the SIP for 5 years they are tax free. The time you spend contributing to the plan does not matter, just the time you hold it for.
You won't find a short term investment that will give you 10% though. Anything that offers to do this will be a scam.
You could luck out and get much higher returns than this (there are a lot of discounts out there), but equally you could lose the same amount.
You don't mention whether you are a home owner, but a a Lifetime ISA will give you a 25% government bonus and can be used to buy your first property (or for retirement), so this is a way to get a quick 25% return before you take into account the actual investments. AJ Bell offer these.
You sound to be in a very good position investment wise!
fiju said:
I'm also involved in a 3 year SIPP scheme for £500 a month which gives me a very good share option price, and also a further share scheme for £150 a month, which receives dividends as shares.
I'm not sure if I can change the SIPP to 5 years to avoid paying tax when I cash out?
If I'm reading you right, the 3 year scheme mentioned is a Sharesave not a SIPP. The contract period is fixed at the start so you wouldn't be able to extend it. After the 3 years you can exercise the Option and transfer the shares to an ISA, giving you associated tax shielding i.e. CGT. I'm not sure if I can change the SIPP to 5 years to avoid paying tax when I cash out?
Note that SAYE Options are free of income tax upon exercise after the 3 years anyway, but you'd face CGT if you sell them and the gain is sufficiently large.
The scheme you're paying the £150 is called a SIP, and like you infer becomes free of (income) tax after 5 years (though per month). It's completely separate from the SAYE.
Great. Thanks for clearing that up. I'd forgotten the exact details...
I'm not a home owner. I'm looking to enter into that by the end of the year (finances allowing). Not sure if the lifetime ISA would be of much benefit?
Investment-wise, I'm not scared of high risk. I'm capable of monitoring my funds to limit damage should things start to decline. I've read a few threads on here that mentioned investments with returns of 10%+, so I'm intrigued to find out what and how.
I'm not a home owner. I'm looking to enter into that by the end of the year (finances allowing). Not sure if the lifetime ISA would be of much benefit?
Investment-wise, I'm not scared of high risk. I'm capable of monitoring my funds to limit damage should things start to decline. I've read a few threads on here that mentioned investments with returns of 10%+, so I'm intrigued to find out what and how.
fiju said:
I'm not a home owner. I'm looking to enter into that by the end of the year (finances allowing). Not sure if the lifetime ISA would be of much benefit?
It is. If you end up not buying this tax year you will get the bonus. If you do there is a temporary exception the the penalty for withdrawing this tax year (or you could keep it in until retirement). https://www.gov.uk/guidance/lifetime-isa-withdrawa...
You should be looking at savings rather than investments for the house deposit since you won’t be in it for the long term. Given the state of things you will probably need a decent deposit to get a mortgage although the interest rates will be low.
Edited by colin79666 on Thursday 4th June 09:23
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