�1,000 to invest - whatcha reckon?

[Maggoty]

I am cashing in 25% of my private pension (now Ihave reached the ripe old age of 50), which will amount to nearly �11K. I have most of the money earmarked (new kitchen , roof repairs etc) but want to put �1K away where I can forget about it but have easy access to it if necessary. I have an ISA at the mo (with Northern Rock) which I put in �150 per month and don't touch (its my mortgage emergency money - in case of job loss etc). Now my question is : Should I put the �1k into my ISA or should I buy premium bonds with it? I have �200 worth of PBs but in the 2 years I've had them have not won a bean. My main concern is to keep the �1k safe in case I need it so don't want to put it into stocks and shares etc so came up with the ISA and PBs. Who would put it where? Cheers in advance xx

[danchip]

i would go with PB's i've had a couple of wins on it and know people who've won regularly,

i may be wrong but cant the money in an ISA go down as well as up

[Maggoty]

Oh Gawd - don't say that!! I assumed that the money you put into an ISA was safe its just the interest that goes up and down - will have to look into that as that is supposed to be my 'safety net'!!

xx

[Rollo]

Presumably your ISA is a "Cash ISA", not one invested in shares.

If I were you I would put the �1K into the ISA - provided you have not already invested the maximum - which is �3600 for the current tax year ending 5 April 2009.

A cash ISA is "safe". As you say it is only the interest rate that varies - the capital invested cannot go down.

[sandmaster]

A cash ISA is safe but the interest rates are appalling. I would be tempted to buy PBs. You can always cash them in and reinvest when interest rates rise.

[Rollo]

The odds against winning a PB prize in any month is currently 36,000 to 1.

You might be lucky one month, but the probability of your winning only one prize a year with a holding of �1,200 is very low.

At least youy do get a tax free return with the ISA.

[Naomicorlett]

Premium bonds..... you keep your capital and stand a ( small) chance of getting lucky with a win. I have had mine for some years now and have worked out that I am getting about 4% and no tax to pay. I also have automatic reinvestment of any wins so am not tempted to spend them but let them roll up as interest.

[Rollo]

You won't be getting 4% from now on if you have "average" luck with winning prizes.

The notional interest rate that National Savings currently use to calculate the prize fund has been cut and is now just 1.8%.

[Naomicorlett]

yes I know that they have cut prizes but I still like the idea that one day I will get a biggie. Dont do Lottery or gamble.

[dasherman]

Personally I wouldn't have taken the money out of the pension in the first place. Obviously I don't know what your other pension arrangements are,but if this is your only one, then a pension pot of �30k (aprox) at your age is very small.

[The Sherman]

Taking it out is a good move as its tax free. if you were going to keep it as income then a puchased life annuity would be better than keeping it in his pension.

I wouuld be speculative! its only a grand and your buying right at the bottom of the market! get some corporate bonds or an equity income fund looking to move it 100% in equities by the year end

[Ethel]

Premium bonds are not something I would usually recommend, preferring a guaranteed return in the form of interest.

However, the best rates I can find at the moment is 4.5%, which would give you �45 on �1000.

If you can afford to lose �45 buy the PBs. You may strike lucky and when the interest rates improve, you can reassess your options

[Ethel]

Of course, I have forgotten to take the tax off the �45, so your return will be even less. :(

Get the PBs

[Maggoty]

Just about to post my thanks when the last post popped up!!

It seems to be a 50/50 split at the mo

Without going into too much (boring) detail. My pension has annuity and although it only stands in at 30K I do have other irons in the fire. I had an endowment policy re my mortgage but have changed to a repayment mortgage so when the endowment policy matures (5 years) I should have enough to pay off the majority (if not all) my mortgage. Oh has kept his house and rents it out and we have also bought another house which is also rented out. Our plans are to sell all either 2 or all and live off the proceeds. Also I have this ISA which I don't touch and �1800 is added to it each year. I am (fairly) confident that all the above plus my state pension should keep me fairly comfortable in my old age!!

I certainly don't want to die with money in the bank but I don't want to live struggling either.

Gawd - am now tempted by The Sherman's idea of shares!!

Any share tips!! :-}

[danchip]

also by buying Pb's your helping the countries economy not the banks

[sandmaster]

With �1000 you could probably launch a takeover bid for the Lloyds Banking Group! Seriously - if you fancy a gamble I would be tempted to buy Lloyds shares. Their market share is large and with the overheads savings from depletion of staff should make them profitable in the not too distant future.

[The Sherman]

If you buy shres then we are definately at the bottom or very near the bottom!

As one of the most famous investors in the world says
"When everyone gets greedy be scared and when everyone else is scared be greedy!
"
I work in financial services and the general attitude of the everyday investor is all wrong. They always buy into the market at the wrong times!
I promise unless we are in financial armageddon then this year is definately the year to buy.