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Which Index Tracker ISA ??

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I have currently got a mini ISA with the abbey national, but I have no money inside it.

Can I open up an Index Tracker ISA?

Presuably I'll be able to put £7,000 in it now, and another £7k in April 07 ?

Which Index Tracker do I go for? When it comes to savings accounts, it's reasonably easy to choose, - the best rate providing the customer service isnt too bad... - i'm a complete noobie when it comes to Index tracker ISA's though, i've been reading a little about them - can someone help me out? :confused:

Regards

Comments

  • dunstonh
    dunstonh Posts: 119,641 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Why do you want to go with a single tracker?

    What index/sector do you wish to track?

    What is your risk attitude and will the index you wish to track fit in with that? (think about the worst you would want it to drop in a single year).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • roswell
    roswell Posts: 2,447 Forumite
    You could set up a self select isa and track many index`s
    If it doesnt pay rent sell it.
    Mortgage - £2,000
    Updated - November 2012
  • Ian_W
    Ian_W Posts: 3,778 Forumite
    Part of the Furniture 1,000 Posts Photogenic
    PJD wrote:
    I have currently got a mini ISA with the abbey national, but I have no money inside it.

    Can I open up an Index Tracker ISA?

    Presuably I'll be able to put £7,000 in it now, and another £7k in April 07 ?

    Which Index Tracker do I go for? When it comes to savings accounts, it's reasonably easy to choose, - the best rate providing the customer service isnt too bad... - i'm a complete noobie when it comes to Index tracker ISA's though, i've been reading a little about them - can someone help me out? :confused:

    Regards
    Might be wrong about this but if you've opened a mini ISA I don't think you can open a Maxi in the same tax year and do you mean you've never deposited money into the existing mini or you have but you've emptied it? If it's the latter I'm fairly sure you can't now open a maxi until next year though you could put £4K into a mini s&s ISA.

    Personally I'm not a fan of trackers as they track down as well as up. Here's an example of a reasonable cautious managed over the last 4 yrs against the FTSE100:
    https://www.h-l.co.uk/fund_research/fund_performance.hl?x=55&y=10&sedol=3107481&timescale=4&timespan=60&chart_scale=R&compare_index=NUKX&compare_provider=&previous_compare_fund=&compare_fund=none&tr=

    Here's a good income fund against the FTSE250 index:
    https://www.h-l.co.uk/fund_research/fund_performance.hl?x=65&y=13&sedol=3303126&timescale=4&timespan=60&chart_scale=R&compare_index=NMCX&compare_provider=&previous_compare_fund=&compare_fund=none&tr=

    You need to do your own research using CityWire, Trustnet, Morningstar and the sites mentioned in Martin's articles about funds - that or see an IFA who specialises in investments.
  • PJD
    PJD Posts: 582 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    dunstonh wrote:
    Why do you want to go with a single tracker?

    What index/sector do you wish to track?

    What is your risk attitude and will the index you wish to track fit in with that? (think about the worst you would want it to drop in a single year).

    Hi,

    I dont neccesarily want to go with a single tracker???? Sorry, do you mean a single ISA, or a Tracker which just tracks one thing?

    I don't know which index/sector I wish to track, I would like one which has a moderate to low risk...

    I dont mind it dropping a grand in a single year.. - as long as it'll go up X-fold in the years after :)
  • PJD
    PJD Posts: 582 Forumite
    Part of the Furniture 100 Posts Combo Breaker
    Hi Ian,

    I opened up my mini years ago, and haven't put anything in it this year, - so presumably I can put 7k in a maxi before april and another 7 after...

    Both of those examples you've posted look quite attractive.

    Long & short of the matter is that i've come off the property ladder for a bit, - i've got 50odd K sitting in high interest bank accounts, - I think that 7k of that money would better off in a fairly low risk index tracker. But i have no idea which one to go for. I've been reading around on the Fool website, - they recommend L&G.

    Thanks for everyone's help so far
  • cheerfulcat
    cheerfulcat Posts: 3,400 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    Hi, PJD,

    Trackers which track equity indices are not low risk! They are excellent for long term investing with regular payments in, but over a shorter term ( less than five years, say ) and a lump sum they are too risky for novice investors, IMHO.

    Having said that, if you have decided that this is a long term investment, the best trackers IMO are exchange traded funds, or ETFs. They are traded like shares on the market and are available for many indices, including overseas and bond markets. They are free of stamp duty and, in a Selftrade ISA, purchase commission. More here on ETFs. You're better with a selection of trackers, rather than just the one.
  • dunstonh
    dunstonh Posts: 119,641 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Trackers track different indices. All the FTSE trackers (100,250 or all share for example) are all medium/high risk.

    The FTSE100 and FTSE all share trackers have not performed above sector average once in the last 13 years and future potential doesnt look great. The FTSE250 has performed much better but has the highest risk out of these three examples.

    People that tend to invest in trackers (within unit trusts and not ETFs) tend to be inexperienced investors who don't know better and understate the risk they are letting themselves in for and dont realise that the stockmarket isnt just one thing. They are looking for low costs rather than investment returns (the may be looking for investment returns but they arent getting it). What usually happens is a crash comes along and these people tend to pull out after the crash, lose money and swear that they will never invest in the stockmarket again.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Ian_W
    Ian_W Posts: 3,778 Forumite
    Part of the Furniture 1,000 Posts Photogenic
    PJD wrote:
    Hi Ian,

    I opened up my mini years ago, and haven't put anything in it this year, - so presumably I can put 7k in a maxi before april and another 7 after...

    Both of those examples you've posted look quite attractive.

    Long & short of the matter is that i've come off the property ladder for a bit, - i've got 50odd K sitting in high interest bank accounts, - I think that 7k of that money would better off in a fairly low risk index tracker. But i have no idea which one to go for. I've been reading around on the Fool website, - they recommend L&G.

    Thanks for everyone's help so far
    The original post didn't make it clear it was a previous tax year ISA so no probs with a maxi BUT how long do you intend to be off the property ladder? If "a bit" is less than 4 or 5yrs I don't think it is advisable to be in equity investments in case the market takes a tumble and doesn't recover before you want to buy again.

    I don't think trackers are low risk, so the fact it's an easy option and puts all your eggs in one basket makes it quite a higher risk particularly over a short time frame. I ran £7K through BestInvests portfollio builder on a moderate risk and they suggests funds in the following areas, slightly weighted towards the first 2:
    UK Other Bond
    UK all co's
    US
    Property [bricks & mortar, not prop shares]
    Corporate Bond
    Europe ex UK

    https://www.bestinvest.co.uk/planning/portplan/index.htm

    I'm sure experts like dh and cc will have their own views but in my, albeit also novice, view spreading it out and having a longish timescale reduces the risk whereas putting it all on a tracker of one UK index concentrates the risk - no matter how easy that makes it.

    HTH.
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