Investing Student Loan

[mindgam3]

As a student, I have almost no clue about the details of how savings accounts, ISAs etc actually work and how I will get the best deal.

I'm in the fortunate position of having roughly £6k of student loan to invest (paid to me at regular intervals over the next 6/8 months or so).

I will be looking to invest it over the next 3 years (including the next 6/8 months) up until the end of my MSc, and hopefully the start of a new job.

Whats the best way to look at investing this amount safely?

[2 sMoKiN bArReLs]

Are student loans for investing then? I thought they were for lager?

[mindgam3]

2 sMoKiN bArReLs said:

Are student loans for investing then? I thought they were for lager?

I'm on an industrial placement year for my third year, so I'm working, but still enrolled at my University as its part of my degree and therefore technically a student and so entitled to a student loan

[BigAlinEmbra]

Depends what you think interest rates are going to do over the period.
In the short term they are looking like they'll go up, so some sort of ISA/National Savings instrument is probably your best bet.

If you think they might go down over the term then I'd consider gilts.

[jago]

you can put your 7k a year isa allowance into a pretty much anything. if you put it into a savings account you'll obv make the difference between the amount of interest you'll pay back on your student loan and the amount the account pays out, entirely risk free. The sum at the end of the day is not likely to change your life, but i guess it's still free money. If you want to be more adventurous google isa and see what funds are out there. You could invest with varying degrees of risk in commodities, natural resources, any types of stocks, bonds etc. etc. Most funds will have an admin/management fee, but in terms of setting up, don't take much more than a phone call. If you want to be certain the cash will all be there at the end, then premium bonds aren't that silly.

[Horse_Apple]

Low risk is to put it into a Cash ISA. Very dull but gives you base rate interest without paying basic tax on it.

The next step up is to make regular investments (cost price averaging to reduce risk) into an equity ISA. Pick one with a good name, avoid bank products as they are just someone elses, re-skinned, with the bank creaming a % of your investment and your returns.

Avoid funds with hefty annaul fees. Good website to use would be Motley Fool although, for just simple low cost products Virgin Money does have a good range.

Tim.