Tracker ISA - Buying Shares

the_pear

Hi all,

My first post so please shoot me down if my understanding of this is way off.

I will have £5000 i am looking to invest in about 3 months. I have currently decided to invest this into a Tracker (ftse 100) ISA but at the same time was looking to invest £1000 of this in some shares. As I can only open 1 investment ISA a year (to avoid the tax)I was wondering whether it is possible to use a tracker ISA to invest in shares as well?

Or can i invest £4000 in the tracker ISA and then open a cash ISA for the other £1000 and use this to invest in shares. Would this be tax free if by some miracle my investment made more than £3600?

Any help would be greatly appreciated.

EDIT:

What if I open a investment ISA before April 1st for my £1000 to buy shares, and then open a tracker ISA in a couple of months to use the other £4000 with.

This way I will have 2 investment ISAs which would have been opened in different financial years.

dunstonh

I have currently decided to invest this into a Tracker (ftse 100)

<note: sorry to regulars>

What has made you want to put all the money in such an awful index?

As I can only open 1 investment ISA a year (to avoid the tax)I was wondering whether it is possible to use a tracker ISA to invest in shares as well?

You just need an ISA manager that can handle direct investments. Are you using an OEIC or IT/ETF for the tracker?

the_pear

dunstonh wrote: »

What has made you want to put all the money in such an awful index?

Well i thought (possibly naively) that at a current low investing in it now for a long term investment until it recovers would yield a profit. My Wife did this after the last slump back in 2001 and made a great profit. I am guessing from your question you think this is a bad idea?

dunstonh wrote: »

You just need an ISA manager that can handle direct investments. Are you using an OEIC or IT/ETF for the tracker?

Totally undecided i have literally in the past week began to look into this.

What investment would you suggest for my £5000?

dunstonh

I am guessing from your question you think this is a bad idea?

Its not for me to make that judgement. On the forums, I will prod and poke but let you decide for yourself. After all, thats what DIY means.

However, the FTSE100 is a very poor index with limited diversification and FTSE100 trackers have spent most of the last 15 years amongst the worst investments in their sector. Over a 10 year period you would have come out in the bottom 6% of funds.

That doesnt mean you will in future but putting 100% into large caps means you are putting all your money on the hope that large caps happen to be the best place to be going forward.

Totally undecided i have literally in the past week began to look into this.

What investment would you suggest for my £5000?

Personally, I prefer unit trusts/OEICs as its what I deal in daily so its my comfort zone. However, for a tracker, ETFs are usually better (for single premiums). Every investor will have a preference but its usually based on their own comfort zone. Some prefer unit trusts, some ITs/ETFs, some shares. You can mix and match with some ISA managers as well.

However, with the £5k allocated to a FTSE100 tracker, I wouldnt do that. I would do £1000 into 5 funds with different objectives and areas.

the_pear

dunstonh wrote: »

However, the FTSE100 is a very poor index with limited diversification and FTSE100 trackers have spent most of the last 15 years amongst the worst investments in their sector. Over a 10 year period you would have come out in the bottom 6% of funds.

The more I read on this the less confident I feel with the FTSE. Which index has proved the best investment?

Is there any reading you could recmommend to help me with my investing? I don't want to bore you with all of these newbie questions but i want to get a good knowledge before making the investment. Seems to be so much choice.