Re: help please!
Originally Posted by
kim1961
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Do you think investing long term is a good idea now? Are rates likely to rise ...I suppose its a guessing game isnt it?
Many thanks for your v full response
It is often a guessing game I think Kim and I'm certainly no expert.
Interest rates have been low for quite a while now, as have mortgage rates but If/when the bank rate and mortgage rates go up then savers will probably get a bit more, but savers' rates always lag behind borrowers rates. The problem is that because flexible saving rates are so very low at the moment it maybe a while before they get as high as 4% - everything is so uncertain these days. For example if you got 2% on a flexible rate it would have to go up 2%, but in the meantime you have been earning 4% on a fix all the time it is invested. Maybe a 3 year fix would suit better! Rates tend to go up .25% or .5% at a time so that would be quite a few hikes in interest before it reached 4%.
You could go to an IFA, but they are likely to charge a fee for their advice. You have to figure that into your calculations. Limited advice is available for free (you could ask the Halifax or any other institution - but they only recommend their own products so they are not independent but it might be useful to have an interview). Share based investments also carry an annual percentage fee and this percentage amount also needs to be figured in before you can earn anything from your investment). These investments are usually medium to long term (5 years is considered the minimum medium term). There are differing levels of risk associated with the investment funds but some will guarantee at least the return of your money plus maybe a small percentage.
£6,000 is a lot of money, but not a lot in investment terms and you could lose some of the money or just break even. I think the best way for ordinary folks to invest in stocks and shares is not with a lump sum, but by "drip feeding" monthly amounts into your selected fund - this way you spread the risk over the longer term.
As you will probably realise we have pondered over what is the best thing to do with savings and there is no easy answer - and I think it is complicated. I don't think one size fits all and individual circumstances, comfortable levels of risk, charges, etc. etc. have to be taken into account.
I hope this helps and good luck with what you both decide to do. Sorry I'm a bit long winded but there is quite a lot to think about.