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Are tracker funds safe/better than bank savings products?

So I'll graduate in June and will have around £5-7,000 in the bank.

Wanted to know if anyone could point me in a direction to increase my investment knowledge, any books anyone can recommend? Basically, with falling inflation, IR aren't gonna go up for some time and maybe I'm better off with a tracker fund, but I don't know much about them/the risks/the positives/the negatives or any alternative product which could meet my needs.

I wouldn't mind something with moderate risk as I'm young and wouldn't be devastated if the money vanished, but I don't particularly want something so low risk that I may as well keep my money in the bank.

Thanks
Safer? No, your investment can go down as well as up so you could lose it all and you won't be protected like you would if a bank were to collapse.

Do your research and decide whether you can risk losses.
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wannabeaca
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Original post by tehFrance
Safer? No, your investment can go down as well as up so you could lose it all and you won't be protected like you would if a bank were to collapse.

Do your research and decide whether you can risk losses.


Any sites I can research off?
Reply 3
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Reue
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Original post by wannabeaca
Any sites I can research off?


http://monevator.com/

Is generally considered one of the best beginner UK investment sites dealing with tracker funds.
It's a kind of meaningless question. A 100% US T-bill fund might well be safer than a British bank account. It's certainly safer than an Argentine bank account. Conversely a 100% world stock market fund is likely to be a lot more volatile in the short term, but give a much better in the long term.

So it's better to ask what you are saving money for, and how best to achieve it.
Reply 5
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wannabeaca
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Original post by Observatory
It's a kind of meaningless question. A 100% US T-bill fund might well be safer than a British bank account. It's certainly safer than an Argentine bank account. Conversely a 100% world stock market fund is likely to be a lot more volatile in the short term, but give a much better in the long term.

So it's better to ask what you are saving money for, and how best to achieve it.


I don't really have a goal in mind, maybe saving to pay for a house extension in a few years but that's not definite.

£10-15k would be nice but I'm going to continue to add to this amount in the coming years, I've always been one to have money left over from jobs, grants, pocket money etc.
Original post by wannabeaca
I don't really have a goal in mind, maybe saving to pay for a house extension in a few years but that's not definite.

£10-15k would be nice but I'm going to continue to add to this amount in the coming years, I've always been one to have money left over from jobs, grants, pocket money etc.


If you plan to spend the money in less than five years, and it's not a very large sum, I would stick with the banks. The stock market can easily go down and stay down for longer than 5 years. So can long term bonds.

I would say before you start thinking about saving for this sort of discretionary spending you should consider what you plan to do about your pension. Stock investments work best for pensions, especially for young people, because the time horizon is so long that the inherent volatility of stocks tends to be averaged out. Consider this for instance.
do you have employment and if so how secure s it? Will you need a depost for a flat/ want to buy a car? Everyone should have some money in the bank for emergencies and 6 months salary is a good rule of thumb. This sitehttp://www.fool.co.uk/ will give you a lot of advice.

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