cash isa v s&s isa

santaboy

have received my icesave isa investment certificate and now wondering whether to reinvest ina fixed cash isa at 4.5% or put it into the unknown of a stocks and shares isa. as shares are pretty low and can only go up in the long term is this the right time to invest or wait till well into 2009?

Lokolo

santaboy wrote: »

have received my icesave isa investment certificate and now wondering whether to reinvest ina fixed cash isa at 4.5% or put it into the unknown of a stocks and shares isa. as shares are pretty low and can only go up in the long term is this the right time to invest or wait till well into 2009?

Then what happens if in 5 years they haven't risen? You'll be pretty annoyed at us for telling you to invest

dunstonh

Lokolo wrote: »

Then what happens if in 5 years they haven't risen? You'll be pretty annoyed at us for telling you to invest

And what happens if they rise by more than cash and you didnt do it?

Welcome to the world of investing. You dont know the future and that is why you hear the phrase of not putting all your eggs in one basket. Why not dip your toe or perhaps pay monthly to average out the ups and downs?

earlgrey_3

Isn't drip-feeding in that way, "pound cost averaging", a very defeatist approach to investment? The practice means you put money into the market even though you expect it to fall and put less money in when you expect it to rise. In other words, you believe that your judgement on timing is even worse than a random guess, i.e. that you'll guess wrong more often than get it right. It should appeal to anyone who likes to choose their shares randomly with a pin.

Obviously it might also appeal to financial advisers who benefit from the commission they receive when they persuade clients to invest.

earlgrey_3

Would also add, make sure you'll see any tax benefits from an equity ISA. S&S ISAs are far less generous than PEPs were so many people won't.

Lokolo

But how do you know when the markets bottomed out?

Saver-Rob

Personally I like a fixed rate and you know what to expect then. No surprises.

dunstonh

Isn't drip-feeding in that way, "pound cost averaging", a very defeatist approach to investment?

It is a method that can result in higher or lower returns over the long run. You will never know which its going to be though until you get to the end.

However, inexperienced investors can often feel more comfortable with that method as it masks the down turns somewhat that may give them concerns. A single premium going down 40% will be more noticeable than a regular premium in the early years suffering the same 40% drop.

Obviously it might also appeal to financial advisers who benefit from the commission they receive when they persuade clients to invest.

I'm sure they love being paid 90p per regular contribution as that is going to make them so rich.

You really have a chip on your shoulder about advisers.