£5k for 2/3 years. Thoughts?

[TT1138]

Financial noob here seeking some advice. Any thoughts on where to put £5k plus £250 a month for the next 2/3 years?

I usually change motorbikes fairly frequently (no finance) but at the moment very content with what I have. I’d like to put the money I would have spent upgrading somewhere efficient, so I can reconsider in 2/3 years time. When I can I’ll add approx £250 a month to the pot. It would be nice to increase the pot through investing, but equally I’m happy if it just keeps pace with inflation.

This is separate to my emergency fund savings and an NS&I pot. I also have a very small ‘emerging markets’ ISA I add a bit to each month with HL more for fun than anything else.

Is the default answer open another S&S ISA? Or just stuff it under the mattress?

[Zoon]

Casino?

Vanguard S&P 500 fund would be my bet.

[xeny]

Rule of thumb is 5 years minimum for S&S, so that argues for under the mattress.

[Mr_Megalomaniac]

TT1138 said:

Any thoughts on where to put £5k plus £250 a month for the next 2/3 years?

Personally I think the tech sector still has more room to run in the non-FAANG stocks so I'd be inclined to give that a punt. Alternatively property and infrastructure.
Marko has a few tips on his preferred ETFs: https://www.youtube.com/watch?v=PuQpF5sBWb0

[xeny]

TT1138 said:

Is the default answer open another S&S ISA?

Just to mention no need to open another ISA (in fact if you you want to continue adding to the existing one you should not), simply pick another investment in the same ISA, just remember the total invested in any one tax year must be £20K or less.

[Jiebo]

xeny said:

Rule of thumb is 5 years minimum for S&S, so that argues for under the mattress.

5 years seems overly risk adverse. What you’re effectively mitigating is a significant drop in the market, which doesn’t recover back to your average for up to 5 years.

If you’re diversified in a global tracker, the chances of a recovery taking 5 years seems highly unlikely. 2 years yes totally agree, but not 5.

[xeny]

If the significant drop comes shortly before you need the money, you need to have held long enough before the drop that after the drop you'r not left with less than you started with. Two years isn't long enough for that.

Take a look at https://www.morningstar.com/articles/972119/3-char... (which admittedly is for the S&P500). There are several periods in there where the market was falling for around 20 months.