Should I change or stay?

Langkawilady

I have £7.75K in a Virgin PEPs. I first invested £6K in 1998 and a couple of years later the interest rate plunged and it went down to £3.5K and has taken this long to built up to £8.25K. It has gone down £500 in value over the last twelve months. Should I think to transferring the money to another type of ISA as I do not want to lose this money again? Can any one help please?

dunstonh

I have £7.75K in a Virgin PEPs.

oh well, never mind.

Should I think to transferring the money to another type of ISA as I do not want to lose this money again?

Its a bit late now isnt it?

Virgin only retail medium/high and high risk funds. Seeing as the typical UK consumer is cautious then there is a good chance you are invested over your risk profile.

Now you have to decide if you wish to crystallise the paper loss you have or decide to see it through. Or you could tweak the investments to keep the same risk level but give yourself better potential than that offered by the Virgin funds.

Langkawilady

Sorry if I sound a bit thick when it comes to money matters. What do you mean by tweak the investments and does seeing it through mean waiting another 5 years as I am planning to retire at Xmas 2009. I used to work for a trade finance company and when it went down to almost half I was advised to leave my money there to build up again - which it has done. We have savings in other ISA's and saving plans and these are doing OK. Should I cut my losses and just transfer them to these.

Langkawilady

Thanks for your reply by the way.

dunstonh

What do you mean by tweak the investments

There are over two thousand unit trust funds out there offering investments in all sorts of areas ranging from very low risk to very high risk and in between. Virgin is not a good provider as it doenst offer much of a range and is mostly medium/high risk. So, if that worries you then switching funds to a fund supermarket and adjusting the spread to suit you risk profile would be a better option.

and does seeing it through mean waiting another 5 years as I am planning to retire at Xmas 2009.

When you retire you dont have to go cashing everything in. Especially ISAs. You can "tweak" the investments and switch to income funds and take a tax free income or keep it for growth as you still have around 25 years or so to live statistically.

The recovery period is likely to take at least 18 months though.

If you are struggling to understand the investment side then you can ask an IFA to look at it for you. That will give you whole of market access and the option to move it to a spread based on your risk profile and a good IFA will be able to spend time to explain it a bit more to you. Understanding the basics a bit more will probably make you feel a lot more comfortable.

Langkawilady

Dear Dunstonh
Thanks a lot for your help, it is much appreciated. Would Moneyspider.com be a good site to use as an IFA?

dunstonh

Would Moneyspider.com be a good site to use as an IFA?

No. They dont provide advice but they take the trail commission. All they do is give an online valuation report with access to fund sheets. The two typical options are to DIY (which you have done already with Virgin) and get a commission discount (which you havent had as Virgin keep the commission for themselves) or use an IFA and get advice and servicing. The IFA keeps the running commission to pay for the advice and servicing. Moneyspider is closer to Virgin in that you do all the work and they keep all the commission.

Bescotboy_2

Hi Langkawilady,

Like yourself I have money invested (£9K in an AXA ISA), and I too know little or nothing about money and investments.
If it's any consulation, my investment seems to have followed a similar patern to yours. From 9k, down to a low of 6k. The last valuation in July this year being 10k. It was 12k this time last year !!
I've always been of the opinion that the market will bounce back and things will recover, however I am worried with all that's happening now and wonder whether it would be safer to withdraw the cash and deposit it in a savings account.
I hear of people investing by way of buying gold. I know the price of gold has gone up considerably, but have we missed the boat by now?

I would welcome people's views on AXA UK Growth Class R Accumulation Shares.

Bescotboy.

dunstonh

I would welcome people's views on AXA UK Growth Class R Accumulation Shares.

Just creeps into medium/high risk. It doesnt sound like you are a medium/high risk person if this relatively small market drop is concerning you.

I hear of people investing by way of buying gold.

Dont mix up investing in gold funds (such as blackrock gold and general) with buying gold. Also, many novices buying gold arent actually buying what they think they are and stand to lose a fair bit more if they get it wrong.

The markets have dropped. The horse has bolted. You can close the door now but you will be crystallising that loss. However, what you can do is adjustment your invesmtents from their current 100% in one basket to a wider spread that offers greater diversification and potential. single fund investing is not very good.

Bescotboy_2

Hi Dunstonh, thank for the reply.
I have to agree I'm not a big risk taker (hey that's why I'm in the civil service!!). Accepting the market has already dropped is there any harm in sitting tight on the ISA and awaiting the 'eventual' recovery. I wouldn't know where to begin to spread my share, probably jump from the fat to the fire. Thanks for the gold advice, I'll not take the risk!!

Bescotboy

dunstonh

If you dont know then dont be afraid to get an IFA to do the work for you. I dont service my car, I dont decorate my house. I need to get a plumber in to fix a tap. I know its costs a little more that way but at least its done by someone that knows what they are doing.

Currently you are in a medium/high risk fund with all your eggs in one basket. Its a simple job for an IFA to give you some diversification.