Stocks and shares ISA

JCL

bebbpsoke wrote: »

Hi - wife & I have the £3k6 cash Isa's but the potential S & S Isa's return is surely too suspect and doubtful to make it worthwhile? Please can someone clarify? Thank you.

You need to clarify your attitude to risk. If you can afford to lock the money away and forget about it for the long-term then stocks and shares could be for you and you could benefit when (or if) the market rises again. However, if you don't want any risk and aren't in for the long haul I'd suggest you stick with your cash. It's a personal choice though.

dunstonh

bebbpsoke wrote: »

Hi - wife & I have the £3k6 cash Isa's but the potential S & S Isa's return is surely too suspect and doubtful to make it worthwhile? Please can someone clarify? Thank you.

You dont mention anything about where you would invest in the S&S ISA. You could pick lower risk, higher yielding funds or you could go gung ho or choose a range of options in between.

For long term investing then times like this are attractive. For short term then you avoid it at all costs.

Harrybrattbakk

Im planning on saving £3,600 per annum in my cash isa and between £50 - 200 a month in my S&S Isa and see after 5-10 if its been worth it, to be honest i wont miss £50 a month its only really 1 night on the town i have to stay in .

mungus

I've never had a Stocks and Shares ISA before, only cash. I've maxed out my cash allowance for the year and I'm thinking that with the current state of the markets, it might be a good time to put say £1000 into a Tracker ISA. I'd be prepared to leave it for 3+ years, I know the 'markets can go down' risk, but does anyone have any other reasons why this might not be a good idea? Are managed ISAs better?

My thinking is that the market is so low, things have to go up again sometime!

Blah99

mungus wrote: »

My thinking is that the market is so low, things have to go up again sometime!

I like this chart, as it puts things in perspective. But if you're in it for the long term I would wait to see if the FTSE100 drops below 3800 over the next couple of days. If it does, wait a while. If it doesn't, buy in and forget about it for a good long time.

dunstonh

I'd be prepared to leave it for 3+ years

Thats way too short for investing. Its an absolute minimum of 5 years but ideally 10+. The longer the term the less likely you are to lose money.

CluelessJock

dunstonh wrote: »

Thats way too short for investing. Its an absolute minimum of 5 years but ideally 10+. The longer the term the less likely you are to lose money.

dunstonh, by way too short you mean that people should be prepared to leave the funds invested for up to 10 years if necessary, it is of course possible to make money in shorter periods.

FAs' typically advise investors that periods of 5 - 10 years are necessary to get a return. I think this can be misleading for the inexperienced as there is a danger that people can miss taking profits by taking this advice literally.

As you know there are many examples of 2 or 3 year periods with significant growth that when stretched to 5, 6 or 7 have not been so good.


Would you agree?

BiggaThanBen

Forgive my ignorance, but what happens to your investment if a S&S ISA provider, like Legal & General goes bust ?

dunstonh

FAs' typically advise investors that periods of 5 - 10 years are necessary to get a return. I think this can be misleading for the inexperienced as there is a danger that people can miss taking profits by taking this advice literally

FAs are transactional mostly due to their remit. They cannot tell you to buy and sell. Servicing IFAs can but transactional IFAs typically wont.

As you know there are many examples of 2 or 3 year periods with significant growth that when stretched to 5, 6 or 7 have not been so good.

There are problems with that view though. Say you invest and it goes up and then you tell the person to transfer it all to cash. Then the market goes up another 40% and the person then sends in a complaint saying they missed out on the extra growth. This would be probably be upheld as the person would say their risk profile hadnt changed.

Forgive my ignorance, but what happens to your investment if a S&S ISA provider, like Legal & General goes bust ?

L&G are just the administrator. You dont invest in them. Your money is ringfenced and held away from the company assets. It has never happened so the actual mechanics of it are unknown but you should find that you will either get the investments encashed or you appoint a new administrator.

CluelessJock

Morning dunstonh,

I am not having a pop merely highlighting that it is not necessarily the case that 5 or 6 will be better than 2 or 3 years. It just doesn’t seem right to me when I hear FAs’ using language that indicates this is the case. I think fuller explanations would help. I am sure there are some who call their FAs’ at 5 years when they find their investment has fallen somewhat.

I whole heartedly agree (can’t not it’s a fact) that the longer it is left the less likely it is to lose and that it is important to stress that any investor should be in a position to leave the funds for 5 years plus.

I take your point re an advisor recommending selling due to an increase only for the market to increase further. If this were the scenario I guess this could be viewed as the advisor being influenced by his personal considerations?

Historically the Financial Services Industry has suffered from bad publicity, much of which is justified, however it seems that the emerging culture of holding others responsible is finding its way in to the Industry and having the potential to backfire. As would be the case in your scenario if an IFA did not recommend selling with a 40% increase (to cover his own back) and then the market had to fall.