HBOS ISA Investor

Kermit1

Last March I opened an ISA Investor plan with HBOS in an attempt to save towards buying my first property. I've been drip feeding that plan with regular monthly payments but even though it was low/medium risk it's nearly £700 down to date (credit crunch I know). I was considering increasing my monthly investment to take advantage of lower share prices but given the gloomy news this week and talk of continued decline I'm wondering if I risk throwing good money after bad? Anyone have an opinion on whether I should look to increase or decrease investment at the moment? The alternative is to use more of my cash ISA allowance and wait until the next financial year to see how things stand with shares. I'm in this for 5 years I guess although I'd like to think it won't be sitting at a great loss for the first few of those.

dunstonh

I've been drip feeding that plan with regular monthly payments but even though it was low/medium risk it's nearly £700 down to dat

A regular contribution after just 15 months shouldnt be down £700 unless its medium risk or higher. (assuming your regular contribution isnt some rather large figure).

I was considering increasing my monthly investment to take advantage of lower share prices but given the gloomy news this week and talk of continued decline I'm wondering if I risk throwing good money after bad?

There is always good news and bad news and the markets will zig zag every year. Sometimes more than others. Its a good time for regular payments at the moment but only if you have the time to leave the money in there.

However, movements on the markets will only impact on your ISA if you are in those markets. If you are 100% equity invested then that is medium/high risk and that may be too high for the timescale you have in mind.

I'm in this for 5 years

When you use medium/high risk investments you should be in there for around 5 years after you make the last contribution. The investment ISA is quite possibly the wrong product for you unless you are very high risk.

jamesd

What investments are you using inside the plan? What was the regular monthly payment? The ISA bit says nothing about what's happening with your money, it's the investments inside it that matter.

Kermit1

dunstonh wrote: »

A regular contribution after just 15 months shouldnt be down £700 unless its medium risk or higher. (assuming your regular contribution isnt some rather large figure).

I've been making contributions of £333.33 a month to date and a one-off payment of £179. I reviewed my plan online this morning and it's current value is £570 less than investment so not quite as bad as I thought.

jamesd wrote:

What investments are you using inside the plan?

Current breakdown of the plan:-

UK Growth Fund - 3,650.12 shares
UK Equity Income Fund - 1,699.237 shares
Corporate Bond Fund - 3,700.972 shares
UK FTSE All Share Index Tracking Fund - 5,527.901 shares
International Growth Fund - 71.71 share

If I'm looking to have the funds accessible by the end of year 5 of investing should I look to move to a low risk category?

Thanks for any comments.

obsessed_saver

You seem to be only investing in the UK. You should look at diversifying out to European and Global funds.

For comparison, my Pension portfolio is split: 45% UK, 30% European, 25% Global.

UK Mid Cap 10.00% Schroders UK Mid 250
UK Equity 10.00% Newton Higher Income S2
UK Equity 25.00% Schroders UK Alpha Plus
European Equity 15.00% Norwich Union Sustainable Future Europe
European Equity 15.00% INVESCO European Equity
Global Equity 25.00% Norwich Union Sustainable Future Absolute Growth


I should split it up more, really.

Edit: Not that I've done any better. It's currently 9% down, but it fluctuates quite a lot from month to month so I'm not particularly worried.

dunstonh

If I'm looking to have the funds accessible by the end of year 5 of investing should I look to move to a low risk category?

I would consider moving to cash personally. However, if you are an experienced higher risk investor you may consider the risk acceptable. Your spread is medium/high risk and your choice of provider indicates you are an investment novice (no experienced investor would use HBOS). So, based on that, I think cash would be best for you.

Kermit1

dunstonh wrote: »

I would consider moving to cash personally. However, if you are an experienced higher risk investor you may consider the risk acceptable. Your spread is medium/high risk and your choice of provider indicates you are an investment novice (no experienced investor would use HBOS). So, based on that, I think cash would be best for you.

Indeed I am a novice investor, the main reason for selecting HBOS was for the safety I perceived in having them manage the fund, even though I knew it may not see the same growth as it would elsewhere. I guess at my age (27) I consider my funds more fragile now than I did back in March 07 when the markets were still good. I'm not really keen on the idea of living at home with the folks to my mid-thirties cause I've tied all my cash up in a loss making share plan.

I'll have a chat with the PFA at the bank today as I do consider my attitude to risk as changing. We had met last month with a view to increasing my contributions but I'm having serious reservations about that now. If I opt to increase my deposit in the cash ISA do you reckon it's worth me just sitting on the current ISA shares and holding them until the economy is doing a little better, hopefully by which time they'll recover some loss?

dunstonh

the main reason for selecting HBOS was for the safety I perceived in having them manage the fund, even though I knew it may not see the same growth as it would elsewhere.

There is absolutely no safety using a bank. Infact directly the opposite. Bank sales reps are tied agents of the insurance company and cannot portfolio plan. So, at the first level you are getting lower quality investment advice. Then you have the investment fund managers but the banks often use computers rather than real managers or use inexperienced, unproven managers. If they do well they will often get poached by the big fund houses as no fund manager really wants to work for a bank.

do you reckon it's worth me just sitting on the current ISA shares and holding them until the economy is doing a little better, hopefully by which time they'll recover some loss?

They could get worse before they get better and that may not fall within your timescale. You now have less than 4 years. Money you pay next year has less than 3 years and so on.

Kermit1

Based on what's been said I opted to take a free consultation today with an IFA about my HBOS plans and he's going to prepare a report of recommendations.

Kermit1

Update:

Well I was hoping by now to say I'd found the magic answer but as things stand my loss is now at £2,000 across my 2 funds with HBOS. I did meet with an IFA 2 months ago who requested information from HBOS about transferring out my plans. Since then I've had a further meeting where we discussed a transfer of the ISA fund to the following:-

75% low/cautious
25% medium

As far as I know his intentions are to go UK but perhaps with a tiny amount in the Asian market. He's pretty much established that my risk level was wrongly assessed by HBOS and that they've been rather optimistc in thinking I could get my cash out in 2012 (a 5 year investment). Our last conversation (Monday) was that he thought it might be a good idea to wait until the FTSE picks up to around 5,000 points before making the transfer. Question is, would I be better to cut my losses, withdraw both funds and stick it in the best cash savings account I can find? I'd probably have around £8,000 from that and a further £7,000 from elsewhere that could go into savings. My priority now is really to make back my loss and have some safety going forward (I'm feeling the stress just now ).

Asking for any advice just now is difficult I know, my IFA has pretty much told me he doesn't have a crystal ball! In hindsight I'd have cashed in my loss of £700 2 months ago but as a novice investor I really thought things couldn't get this bad. Each day seems to be greeted with bad news for the markets and the end still isn't in sight as far as I can tell.

shaf00uk

HBOS is in all the seach engines re ISA investor type products. Are there any providers that don't charge management fees (most do NOT charge setup or exit fee at the moment!) or at the very least is very very low?

HBOS charge 1.5% for 10 years then 1.0%
Abbey National 1.1% plus audit and depositary fees
Barclays stockbrokers charge £50+VAT up to 3599.99 then £30 over that

I'm speaking to a HBOS sales rep and an Abbey rep but can't make heads of tails. With Barclays because the charges are fixed they may not be an incentive for them to work hard for my money?

Which banks are best for ISA investment fund managers or is another cystal ball scenario?

Help!

PS Kermit1 - don't look at the prices everyday as you looking for the longer term e.g. 5+ years at least and markets will pick up eventually.