Where can I get the best return for my £20,000 nest egg?

 

Where should you put your nest egg? Obviously you want the best returns you can from your cash, but how much of a risk can you afford to take? That's the question Independent reader Adam Johnson asked.

"I have around £20,000 to invest and I want to look at mid-risk, mid-term investment options," the Londoner wrote. "I'm thinking of sticking the money in a managed fund, which begs the question, which fund? Any help you could give me would be invaluable."

There's no simple answer, of course. All of us want to get the best possible returns from investments but you will only know which funds have performed best in hindsight. Without a crystal ball that will tell you what the future brings, you have to take a bit of a punt.

Two factors to consider when choosing where to invest are time and risk. In short, how long do you want to invest and how much risk will you take? Adam says he's "mid-term, mid-risk". So we put his question to a number of financial experts. "Assuming he already has some low-risk deposit funds, then I would consider a multi-asset fund, which gives a good spread across a variety of investment types," suggests Alistair Cunningham of Wingate Financial Planning.

"Mid-risk and mid-term would tend to suggest to me no more than 50 per cent in stocks and shares with the remainder in less volatile assets, such as corporate bonds, and commercial property. In a lower growth, but still risk-on environment the only true certainty is cost – therefore a multi-asset passive offers market exposure at the lowest possible cost," he says.

The funds he suggests for Adam? "Standard Life Investments MyFolio Market II, Architas MA Passive Moderate, and CF 7IM Moderately Cautious.However, be careful as there are a lot of very similar sounding funds that have different objectives," Alistair warns.

Sally Greenwood, wealth manager at Pilling & Co, says: "Adam's question suggests he desires equity exposure with a propensity to favour the UK. Two investments with different styles and mandates would complement each other."

She highlights the J O Hambro UK Equity Income fund and Fidelity Special Values. "The Hambro fund seeks an attractive level of dividend income coupled with the potential for long-term capital appreciation. Fidelity Special Values invests mainly in companies listed on the London Stock Exchange."

Brian Dennehy of FundExpert.co.uk says: "As a relative novice Adam might simply want to invest into a very small number of funds, perhaps even just one fund which will have a mix of things into which they invest. Even if he's quite experienced, he may be content to invest into one or two outstanding funds with a wide spread of types of underlying assets.

"These sorts of funds fall within different sectors. The most popular is probably the 'Mixed Investment 20-60% Shares'. Such funds contain between 20-60 per cent in equities. In this category Jupiter Merlin Income and Standard Life Inv Dynamic Distribution are outstanding, based on consistent long-term performance."

When it comes to buying the funds you can use an expert -who will charge a fee for their advice - or do it yourself and buy investments through an online fund supermarket. Another option is Nutmeg.com, a new low-cost online service which builds a portfolio of investments for you based on the level of risk you are willing to take and how long you want to invest for.

Irrespective of the fund, ensure you use your tax-free allowance in an individual savings account. You can stash £11,520 in an equity Isa in the 2013-14 tax year and a further £11,880 in 2014-15 and pay no tax on the proceeds. Adam could shelter his £20,000 from tax by putting half in before 5 April with the rest afterwards.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
News
news
Arts and Entertainment
Nick Frost will star in the Doctor Who 2014 Christmas special
tvNick Frost, Natalie Gumede and Michael Troughton step up
Arts and Entertainment
Matthew Beard, Ben Schnetzer, Douglas Booth and Jack Farthing in ‘The Riot Club’
filmReview: Sheer nastiness of Riot Club takes you aback
PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week