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; request a free guide on NISAs from Hargreaves Lansdown

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
Arts and Entertainment
Beast would strip to his underpants and take to the stage with a slogan scrawled on his bare chest whilst fans shouted “you fat bastard” at him
musicIndie music promoter was was a feature at Carter gigs
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
PROMOTED VIDEO
News
Performers dressed as Tunnocks chocolate teacakes, a renowned Scottish confectionary, perform during the opening ceremony of the 2014 Commonwealth Games at Celtic Park in Glasgow on July 23, 2014.
news
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
Sport
Arsenal signing Calum Chambers
sportGunners complete £16m transfer of Southampton youngster
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

    Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

    £350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

    Java Developer - Banking - London - Up to £560/day

    £500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...

    HR Business Analyst, Bristol, £350-400pd

    £350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

    Account Manager - (Product & Account Management, Marketing)

    £26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

    Day In a Page

    The children were playing in the street with toy guns. The air strikes were tragically real

    The air strikes were tragically real

    The children were playing in the street with toy guns
    Boozy, ignorant, intolerant, but very polite – The British, as others see us

    Britain as others see us

    Boozy, ignorant, intolerant, but very polite
    Countries that don’t survey their tigers risk losing them altogether

    Countries that don’t survey their tigers risk losing them

    Jonathon Porritt sounds the alarm
    How did our legends really begin?

    How did our legends really begin?

    Applying the theory of evolution to the world's many mythologies
    Watch out: Lambrusco is back on the menu

    Lambrusco is back on the menu

    Naff Seventies corner-shop staple is this year's Aperol Spritz
    A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

    A new Russian revolution

    Cracks start to appear in Putin’s Kremlin power bloc
    Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

    Apartheid’s sadistic killer that his country cannot forgive

    The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
    Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

    Standing my ground

    If sitting is bad for your health, what happens when you stay on your feet for a whole month?
    Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

    Greene prays for chance to rebuild after injury agony

    Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
    Israel-Gaza conflict: Secret report helps Israelis to hide facts

    Patrick Cockburn: Secret report helps Israel to hide facts

    The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
    The man who dared to go on holiday

    The man who dared to go on holiday

    New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
    Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

    Best comedians: How the professionals go about their funny business

    For all those wanting to know how stand-ups keep standing, here are some of the best moments
    The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

    The Guest List 2014

    Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
    Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

    Jokes on Hollywood

    With comedy film audiences shrinking, it’s time to move on