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  • FIRST POST
    • d712
    • By d712 18th Jun 17, 6:20 PM
    • 196Posts
    • 14Thanks
    d712
    I'm assuming this is is possible - am I right?
    • #1
    • 18th Jun 17, 6:20 PM
    I'm assuming this is is possible - am I right? 18th Jun 17 at 6:20 PM
    Hello

    I have a stocks and shares ISA. If at some stage in the future I anticipated that the market was going to fall, I'm assuming I could sell all the investments and then hold them as cash and later on use that cash to invest again.

    For example, if I had £25000 worth of investments, I could sell them, hold the £25000 in cash and then use it to invest again at a time of my choosing.

    I wouldn't be restricted by the ISA allowance as I wasn't depositing new money.

    If I were to re-invest in the same funds I would then have a greater holding in each if the price of all of them was lower at the time of re-investing.

    Is that correct?

    Thanks
Page 1
    • george4064
    • By george4064 18th Jun 17, 6:23 PM
    • 768 Posts
    • 811 Thanks
    george4064
    • #2
    • 18th Jun 17, 6:23 PM
    • #2
    • 18th Jun 17, 6:23 PM
    Correct. Just remember to take into account dealing charges.

    Make sure you carefully think this through before doing it, what if the funds dont become cheaper until 5 years down the line? You would have missed out on loads of income and thus returns.
    "If you arenít willing to own a stock for ten years, donít even think about owning it for ten minutesĒ Warren Buffett

    Save £12k in 2016 - #045 £10,358.81/£12,000 (86%)
    Save £12k in 2017 - #003 £7,477.84/£12,000 (62%)
    • d712
    • By d712 18th Jun 17, 6:26 PM
    • 196 Posts
    • 14 Thanks
    d712
    • #3
    • 18th Jun 17, 6:26 PM
    • #3
    • 18th Jun 17, 6:26 PM
    Thanks for the response.

    This is just a hypothetical question.

    I doubt I would be able to anticipate anything like that and if my investments go down it just convinces me not to sell.
    • george4064
    • By george4064 18th Jun 17, 6:27 PM
    • 768 Posts
    • 811 Thanks
    george4064
    • #4
    • 18th Jun 17, 6:27 PM
    • #4
    • 18th Jun 17, 6:27 PM
    Here is a good visual display of the risks of 'selling everything' in hope of buying in at lower prices.

    https://qz.com/487013/this-game-will-show-you-just-how-foolish-it-is-to-sell-stocks-right-now/
    "If you arenít willing to own a stock for ten years, donít even think about owning it for ten minutesĒ Warren Buffett

    Save £12k in 2016 - #045 £10,358.81/£12,000 (86%)
    Save £12k in 2017 - #003 £7,477.84/£12,000 (62%)
    • Linton
    • By Linton 18th Jun 17, 6:30 PM
    • 7,892 Posts
    • 7,697 Thanks
    Linton
    • #5
    • 18th Jun 17, 6:30 PM
    • #5
    • 18th Jun 17, 6:30 PM
    Yes, you can sell your investments heeping the cash in an ISA and buy later without affecting your ISA allowance. This would give you a bigger or smaller holding than you started off with.

    There are several snags:

    What if your anticipated fall doesnt happen?
    How will you know when it's safe to reinvest?
    Wen you decide it is safe is it possible that the prices are higher than when you sold?
    While you are holding cash your returns would be nearly zero. If you had kept faith with the investments
    asuming they were sensibly diversified they would almost certainly recover having earned you dividends/interest in the meantime.

    The general view here is that on average the snags outweigh the possible gains.
    • d712
    • By d712 18th Jun 17, 6:43 PM
    • 196 Posts
    • 14 Thanks
    d712
    • #6
    • 18th Jun 17, 6:43 PM
    • #6
    • 18th Jun 17, 6:43 PM
    Here is a good visual display of the risks of 'selling everything' in hope of buying in at lower prices.

    https://qz.com/487013/this-game-will-show-you-just-how-foolish-it-is-to-sell-stocks-right-now/
    Originally posted by george4064
    Thanks, I like that game!

    I actually beat the market the third time round (by a massive $177) but I was just selling and buying at randomly chosen points.

    I'm glad they used the S&P 500 index. I recently invested in a S&P 500 tracker after reading that Warren Buffett would put 90% of his money into one.
    • eskbanker
    • By eskbanker 18th Jun 17, 6:46 PM
    • 4,740 Posts
    • 4,478 Thanks
    eskbanker
    • #7
    • 18th Jun 17, 6:46 PM
    • #7
    • 18th Jun 17, 6:46 PM
    I recently invested in a S&P 500 tracker after reading that Warren Buffett would put 90% of his money into one.
    Originally posted by d712
    That's not very diversified and I'm not convinced that he actually said that anyway (in that unqualified form)....

    Edit: his quote (in http://www.berkshirehathaway.com/letters/2013ltr.pdf) was more about a trust for his wife rather than what he personally does with his money while he's alive, so is potentially reflective of his views on her financial management skills rather than a generic recommendation for those in completely different circumstances:
    My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions Iíve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wifeís benefit. (I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to certain philanthropic organizations over the ten years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguardís.) I believe the trustís long-term results from this policy will be superior to those attained by most investors Ė whether pension funds, institutions or individuals Ė who employ high-fee managers.
    Last edited by eskbanker; 18-06-2017 at 7:02 PM. Reason: Sourced quote
    • d712
    • By d712 18th Jun 17, 7:29 PM
    • 196 Posts
    • 14 Thanks
    d712
    • #8
    • 18th Jun 17, 7:29 PM
    • #8
    • 18th Jun 17, 7:29 PM
    That's not very diversified and I'm not convinced that he actually said that anyway (in that unqualified form)....

    Edit: his quote (in http://www.berkshirehathaway.com/letters/2013ltr.pdf) was more about a trust for his wife rather than what he personally does with his money while he's alive, so is potentially reflective of his views on her financial management skills rather than a generic recommendation for those in completely different circumstances:
    Originally posted by eskbanker
    Youíre missing my point.

    I was only able to marginally beat the market and that was by blind luck at the third time of asking.

    The market example was the S&P 500 index, which is one of my investments.

    The conclusion therefore is that itís a very risky game trying to choose a time to sell and then buy, re-affirming the advice given in the other responses.
    • Glen Clark
    • By Glen Clark 18th Jun 17, 7:33 PM
    • 3,706 Posts
    • 2,695 Thanks
    Glen Clark
    • #9
    • 18th Jun 17, 7:33 PM
    • #9
    • 18th Jun 17, 7:33 PM
    Are our life savings safer in Sterling cash, or in a tracker divided between thousands of the world's biggest companies each possibly more solvent than the UK Government?
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • eskbanker
    • By eskbanker 18th Jun 17, 7:39 PM
    • 4,740 Posts
    • 4,478 Thanks
    eskbanker
    Youíre missing my point.

    I was only able to marginally beat the market and that was by blind luck at the third time of asking.

    The market example was the S&P 500 index, which is one of my investments.

    The conclusion therefore is that itís a very risky game trying to choose a time to sell and then buy, re-affirming the advice given in the other responses.
    Originally posted by d712
    No, I agree with your main point (and that of others) that trying to time the market is a mug's game!

    I was just picking up specifically on your reference to investing in the S&P 500 on the basis of what WB said - I was under the impression from the question in your OP that you're not an experienced investor, so assumed that the S&P was your sole investment, but apologies if that's not the case....
    • d712
    • By d712 18th Jun 17, 7:56 PM
    • 196 Posts
    • 14 Thanks
    d712
    No, I agree with your main point (and that of others) that trying to time the market is a mug's game!

    I was just picking up specifically on your reference to investing in the S&P 500 on the basis of what WB said - I was under the impression from the question in your OP that you're not an experienced investor, so assumed that the S&P was your sole investment, but apologies if that's not the case....
    Originally posted by eskbanker
    No worries.

    It wasnít clear from my other messages but I do have other investments.
    • AnotherJoe
    • By AnotherJoe 18th Jun 17, 10:05 PM
    • 6,508 Posts
    • 6,922 Thanks
    AnotherJoe
    Are our life savings safer in Sterling cash, or in a tracker divided between thousands of the world's biggest companies each possibly more solvent than the UK Government?
    Originally posted by Glen Clark
    Is that a rhetorical question ? If not you'd have to define "safe" and over what timescale. The fact it's your life savings is somewhat irrelevant, it's what you plan to do with them and when that matters when answering questions like that.
    • Glen Clark
    • By Glen Clark 19th Jun 17, 8:22 AM
    • 3,706 Posts
    • 2,695 Thanks
    Glen Clark
    The fact it's your life savings is somewhat irrelevant, it's what you plan to do with them and when that matters when answering questions like that.
    Originally posted by AnotherJoe
    No it isn't a rhetorical question. The fact that its life savings is relevant in that we can't plan what to do with them because we could be dead tomorrow or live another 50 years.
    We can only hope for the best.
    Holding all your savings in sterling feels to me like holding them all in one company.
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • AnotherJoe
    • By AnotherJoe 19th Jun 17, 8:51 AM
    • 6,508 Posts
    • 6,922 Thanks
    AnotherJoe
    No it isn't a rhetorical question. The fact that its life savings is relevant in that we can't plan what to do with them.
    Originally posted by Glen Clark
    That still doesn't help. Do you need to live off this money for 50 years ? Or would it be icing on the cake money for holidays and such, or needed to provide basic income?

    Is it money to bridge between being retired and pensions coming on stream in 5 years, or does it have to last you all 50 years providing an income ..The point being, if its short term then Sterling risk by which you really mean inflation risk, is irrelevant. Long term, being invested in the stock markets is really the only way to cope.

    No it isn't a rhetorical question. The fact that its life savings is relevant in that we can't plan what to do with them because we could be dead tomorrow or live another 50 years..
    Originally posted by Glen Clark
    Well,the fact it's your life savings is irrelevant to what you decide to spend the money on over what timescale. It could equally have been a lottery win or an inheritance.
    As to your comment that you might die tomorrow or in 50 years that equally applied whilst you were saving it, so what's the difference now? What were you saving it for ?

    Holding all your savings in sterling feels to me like holding them all in one company.
    Originally posted by Glen Clark
    well in that case invest in multiple global companies, e.g. put the money Ina global fund. Though that still doesn't help unless you decide what your aim for the money is. Is it for descendants or meant to provide income but retain the same size or will you gradually spend it down?

    Bottom line what matters is your goals.
    .
    Last edited by AnotherJoe; 19-06-2017 at 8:54 AM.
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