From: NC 
Newsgroups: uk.finance
Subject: =?iso-8859-1?q?Personal_position_for_managing_=A325k_-_advice_please_=3F?=
Date: 23 Apr 2007 01:50:50 -0700
   posting-account=W7_YEw0AAACgbe1smC1bUCp6w2l-yd7J

My wife and I will soon (2-3 weeks) receive a gift of =A325k from her
parents. I am 28, she is 29, we are both basic rate tax payers,
although I am hopefully heading into the top band in 6-12 months time.

We have a credit card debt of =A34.5k @ 3.9% until 2011, and no other
debts (apart from mortgage, which is fixed at 4.84% for another 4 1/2
years - changed the deal just in time for the rate rises!).

My wife needs a car, so we are putting aside ~=A36k for that. We have a
10month old daughter, she currently gets =A370 a month into her
Stakeholder CTF with the Childrens Mutual (ie Insight Growth Fund).
=A350 from us, and =A320 fro her grandparents.

=A325k minus the =A36k for the car leave =A319k to 'play with'. I will
likely keep =A32k in an instant access savings account (we have one with
Cahoot, who also provide our current account. Rates are quite high,
and transfers in and out are instant - that can be VERY useful!)

We dont want to invest more for our daughter at this stage - =A3~25k
from her CTF when she is 18 seems plenty, and we need to consider
having enough spare to invest the same for a second child. Although if
I get the promotion I am aiming for this year, I may start a pension
for her of about =A325 a month (scary thought when she's just 10 months
old!!).

I currently invest ~=A3100/month into work share schemes (I work for a
major telco), and we put about =A3100 each a month into our work pension
schemes.

If I become a higher rate tax payer, all savings outside of ISAs will
go into my wife's name.

A couple of questions:
1=2E I am looking long term, but is it a 'bad' time to be investing in
Maxi ISAs / investment funds ? With the rising interest rates, rising
inflation, questions over the UK economy, potential questions over the
world economy (ie will the US kick off against Iran ?!) etc, should we
stick with cash for the next few years and see what happens ? I dont
want to buy into a fund at the top of the market... and rising
interest rates are making cash look attractive (although inflation may
soon erode 'real' interest).
2=2E Should I pay off the credit card ? Doing so will free up about =A3100
a month, but the low rate tempts me to keep the cash in savings
instead. We would need about 5% gross to bring in more than we pay out
in interest on the debt. We could use the lump to pay off the monthly
payment each month, and so still 'free up' the monthly =A3100.
3=2E Depending on the answer to 1., we will put as much into the various
flavours of ISAs as we can. We currently have about =A3900 in an Abbey
ISA that is paying about 5.5%. We will move this if we open a new cash
mini ISA. Where is the best place to compare ISA rates, with a view to
which ones are fixed, and which will likely have their rates reduced
once they have snared their investors ?
4=2E What is the tax situation with fixed term bonds ? Is there such a
thing as a 1 or 2 year fixed return bond that is paid tax free ? With
the current trend in the rise in rates, I am nervous about locking
money into a bond unless I can get the return tax free (rates are
unlikely to rise by another 20%), or a high rate. We could put some
money into this in the short term, see what happens to the markets
over the next couple of years and invest the maturing balance into an
investment fund if appropriate. If we cannot get a tax free return, I
could lock =A36k in for the next 12 months and then put the maturing
balance into a couple of ISAs next FY.

Any thoughts ? Sorry for the long post - trying to answer the basic
questions before they are asked !