Where should I invest my savings?

A mix of stocks and other less volatile assets may  be the right portfolio for you, writes Simon Read

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 asked by  i reader Adam Johnson.

“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. Meanwhile 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 horribly named ‘Mixed Investment 20 to 60 per cent Shares’. As the name suggests, such funds contain between 20 to 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 therefore shelter his whole £20,000 from tax by putting half in before 5 April with the rest afterwards.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Jemma Gent: Management Accountant

    £230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

    Day In a Page

    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?
    How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

    Time to play God

    Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
    MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

    MacGyver returns, but with a difference

    Handyman hero of classic 1980s TV series to be recast as a woman
    Tunnel renaissance: Why cities are hiding roads down in the ground

    Tunnel renaissance

    Why cities are hiding roads underground
    'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

    Boys to men

    The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
    Crufts 2015: Should foreign dogs be allowed to compete?

    Crufts 2015

    Should foreign dogs be allowed to compete?
    10 best projectors

    How to make your home cinema more cinematic: 10 best projectors

    Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
    Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

    Manchester City vs Barcelona player ratings

    Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
    Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

    Monaco: the making of Wenger

    Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
    Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

    Chris Gayle: The West Indies' enigma

    Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
    In Ukraine a dark world of hybrid warfare and murky loyalties prevails

    In Ukraine a dark world of hybrid warfare

    This war in the shadows has been going on since the fall of Mr Yanukovych
    'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

    Homage or plagiarism?

    'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
    Broadchurch ends as damp squib not even David Tennant can revive

    A damp squib not even David Tennant can revive

    Broadchurch, Series 2 finale, review
    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

    Inside the mansion of Germany's 'Bishop of Bling'

    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower