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
Apple has been hit by complaints about the 1.1GB download
Liam Neeson's Downton dreams
Thriller is set in the secret world of British espionage
Bomber jacket worn by Mary Berry sells out within an hour
Much-loved cartoon character returns - without Sir David Jason
Actress to appear in second series of the hugely popular crime drama
- 1 Thailand beach murders: Thai PM suggests 'attractive' female tourists cannot expect to be safe wearing bikinis
- 2 Scottish independence: Five reasons Salmond is secretly hoping for a 'No' vote
- 3 Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
- 4 Scottish independence: Andy Murray backs Yes campaign in eleventh hour decision
- 5 Have you heard about the film Singapore has banned its people from watching? Well, you have now
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Portuguese academic says British are 'filthy, violent and drunk'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
iJobs Money & Business
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£70-90,000: Saxton Leigh: Our client a London Market Insurer are seeking a Pro...
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
Day In a Page
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony