We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

How to not lose money on ISA

Was wondering if anyone could suggest a way to stop losing money (or losing less) on my stocks and shares ISA?

No way will I be putting more money in my S&S ISA for this year (08/09) but need to decide whether it would be better to cash it all in or if there is some safe way to at least slow down the loses?

When shares were all losing money, good old Hargreaves Lansdown suggested that corporate bond funds were a brilliant investment - which then lost almost as much as shares. So next they hyped the Blackrock Absolute Return fund which they claimed "would make money even in falling markets" - but the only thing "absolute" about it is that it lost money too.

Now they've decided bonds are great again (forget about the 20% loses after they recommended them six months ago), but all the funds they recommended are heading south again at a rate of knots. If I cash in the funds but keep the money in the ISA HL pay zilch on my money. Don't know what their next big idea will be but every chance it will go the same way as the others. Obviously they don't care so long as the get the money and commission.

The tax advantages of a S&S ISA are minimal anyway, unlike PEPs used to be, so is the best advice to forget about them and put it down to experience? Or do a I do a micawber and hope "something will turn up"?
«13

Comments

  • TH1878
    TH1878 Posts: 458 Forumite
    Was wondering if anyone could suggest a way to stop losing money (or losing less) on my stocks and shares ISA?

    No way will I be putting more money in my S&S ISA for this year (08/09) but need to decide whether it would be better to cash it all in or if there is some safe way to at least slow down the loses?

    When shares were all losing money, good old Hargreaves Lansdown suggested that corporate bond funds were a brilliant investment - which then lost almost as much as shares. So next they hyped the Blackrock Absolute Return fund which they claimed "would make money even in falling markets" - but the only thing "absolute" about it is that it lost money too.

    Now they've decided bonds are great again (forget about the 20% loses after they recommended them six months ago), but all the funds they recommended are heading south again at a rate of knots. If I cash in the funds but keep the money in the ISA HL pay zilch on my money. Don't know what their next big idea will be but every chance it will go the same way as the others. Obviously they don't care so long as the get the money and commission.

    The tax advantages of a S&S ISA are minimal anyway, unlike PEPs used to be, so is the best advice to forget about them and put it down to experience? Or do a I do a micawber and hope "something will turn up"?

    Corporate Bonds aren't a bad bet over the next 12 - 24 months (at which point inflation will probably start to rise).

    The reason corporate bonds have fallen so much recently is because a lot of them had exposure to banks (and we all know what's happened there!). If you want corporate bond exposure without much exposure to banks, maybe look at M&G Stategic Corporate Bond or M&G Optimal Income. The economic conditions (in theory) should be perfect for corporate bonds.

    I personally am investing as much as I can at the moment as I think it's the ideal buying time. Have a look at the graph below:
    29-aug-2c.jpg

    The black line is the market and the wording relates to how investors feel at each stage. I would hazard a guess that you are feeling contempt at the moment, but consider this; looking at the left hand side of the graph, is it better to invest at the 'Contempt' stage or the 'Greed & Conviction' stage?

    It's your own personal decision and you have your own attitude to risk, which differs to mine (for instance).
  • Rollinghome
    Rollinghome Posts: 2,722 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Seen that graph lots of times but how do you know we're at the 'contempt stage' and not at 'dismissal' with a long way down still to go? People were saying exactly the same months ago, including of course Hargreaves Lansdown before the biggest falls of all.

    I know that several fund managers etc. are saying it's a great time to invest but they would wouldn't they? It's a huge industry and they want our money.
    Most of those without a vested interest are far more cautious with many warning of big falls and failures still possible just as with house prices.

    So as so-called "absolute return funds" have been almost as good as anyone else at losing my money, does anyone else have a strategy to stop the rot?

    I'm not risk averse enough and would have been a lot richer now if I had been a year ago. But I am learning to be a bit averse to chucking money down a hole and being charged by the overpaid fund managers for the privilege. :)
  • Rollinghome
    Rollinghome Posts: 2,722 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    PS, I see that chart comes from RMB Unit Trusts.

    If they're so smart how did they come to lose so much money like all the other unit trust managers? ;)
  • dunstonh
    dunstonh Posts: 118,565 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    When shares were all losing money, good old Hargreaves Lansdown suggested that corporate bond funds were a brilliant investment - which then lost almost as much as shares. So next they hyped the Blackrock Absolute Return fund which they claimed "would make money even in falling markets" - but the only thing "absolute" about it is that it lost money too.

    Thats what you get if you rely on marketing material as a source of "advice".
    The tax advantages of a S&S ISA are minimal anyway

    Not for fixed interest holdings or those who pay higher rate tax, the over 65s or those that use their CGT allowance (or would have to).

    It sounds like you are moving from pillar to post with your investments trying to chase where you think next is going to be best. That is bad investing and usually results in lower returns.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • greyteam1959
    greyteam1959 Posts: 4,661 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Mmmmm funny I was just thinking about the subject of Stocks and Shares ISA myself.
    I was thinking that the UK Stock Market was maybe somewhere around the bottom and that putting maybe £200 a month into a UK Equity ISA might be somewhat better than a Cash ISA..........
    Anybody any thoughts ????????
  • TH1878
    TH1878 Posts: 458 Forumite
    Seen that graph lots of times but how do you know we're at the 'contempt stage' and not at 'dismissal' with a long way down still to go? People were saying exactly the same months ago, including of course Hargreaves Lansdown before the biggest falls of all.

    I know that several fund managers etc. are saying it's a great time to invest but they would wouldn't they? It's a huge industry and they want our money.
    Most of those without a vested interest are far more cautious with many warning of big falls and failures still possible just as with house prices.

    So as so-called "absolute return funds" have been almost as good as anyone else at losing my money, does anyone else have a strategy to stop the rot?

    I'm not risk averse enough and would have been a lot richer now if I had been a year ago. But I am learning to be a bit averse to chucking money down a hole and being charged by the overpaid fund managers for the privilege. :)

    Because the wordings relate to investor confidence and you said you were definitely not putting any money in your 09/10 ISA, i.e contempt. I can't predict the future but if I had to make an educated guess, I would say we were closer to the bottom than the top.

    You fit the classic 'greed investor' profile. You were relying on the marketing for investment advice and wanted a quick return - well I'm sorry but the markets don't work like that. You should be looking at a timescale of 5 years and I'll be very surprised if equities and corporate bonds haven't grown significantly over that time.

    Fact is, we're seeing the worst economic downturn in nigh on 70 years and all asset classes have fallen - sometimes you just can't defy gravity. So what point of the market are you looking to re-invest in Stocks & Shares then, if at all? At the top?

    It's your own expectations that need to change; the markets will recover on their own.
  • TH1878
    TH1878 Posts: 458 Forumite
    mervyn11 wrote: »
    Mmmmm funny I was just thinking about the subject of Stocks and Shares ISA myself.
    I was thinking that the UK Stock Market was maybe somewhere around the bottom and that putting maybe £200 a month into a UK Equity ISA might be somewhat better than a Cash ISA..........
    Anybody any thoughts ????????

    As long as you are realistic in your expectations then yes.

    With a regular premium, you have the added benefit that if the markets do fall further then you actually buy more units for your money, meaning the upside potential rises when the markets recover (google pound cost averaging).
  • dunstonh
    dunstonh Posts: 118,565 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I was thinking that the UK Stock Market was maybe somewhere around the bottom and that putting maybe £200 a month into a UK Equity ISA might be somewhat better than a Cash ISA..........
    Anybody any thoughts ????????


    Possibly. However, if you are going to do it then its better to diversify and make sure you understand risk. 4x£50pm into different funds with different objectives means you diversify and dont put all your eggs in one basket.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Rollinghome
    Rollinghome Posts: 2,722 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    dunstonh wrote: »
    Thats what you get if you rely on marketing material as a source of "advice".

    Not for fixed interest holdings or those who pay higher rate tax, the over 65s or those that use their CGT allowance (or would have to).

    It sounds like you are moving from pillar to post with your investments trying to chase where you think next is going to be best. That is bad investing and usually results in lower returns.

    I understand what you're saying but then isn't everyone in the industry marketing it, whether IFAs like HL or the fund managers? They all make their money by getting me to invest. Ok, fair enough, we're all grown ups and understand that.

    I haven't taken their advice (except for a small punt on the hyped Blackrock Absolute Return fund) but did have a spread across bonds and equities and all have lost money. That's why I say I could just sit tight and wait for "something to turn up" or could make some changes i.e. "jump from pillar to post". Or from frying pan to fire perhaps. :)

    Yes I know 40% tax payers can reclaim half the tax on dividends but that isn't much compensation if the capital is going down the drain. I'm married so have a capital gains allowance of £20K each year anyway so not much chance of exceeding that - anyway it's capital losses I'm more worried about now.

    For the over 65's is that the age allowance thingy I heard about and doesn't that only effect the few whose earnings happen to fall beween £20K and £25K or is there something else?

    I know it's difficult for you when you earn your living by persuading people to invest but is there any ISA investment that is a safer bet, less likely to lose money, or is is better to forget it all for a year or two at least? Would you suggest keeping well away from the bond funds currently being hyped (for second time around) by HL?

    Go on you can tell me, I won't tell anyone else.
  • Rollinghome
    Rollinghome Posts: 2,722 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    TH1878 wrote: »
    It's your own expectations that need to change; the markets will recover on their own.

    I take it you don't include the Japanese markets in that assumption, still at just a fraction of their peak 20 years ago. Where is the eveidnce the UK market will be so different?

    We are in a unique situation so it would be a brave or foolish man who assumes that it will all be the same as last time or relies on past history. Or maybe we'll need another WWII as it did last time it got this bad?
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.3K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.4K Spending & Discounts
  • 240.9K Work, Benefits & Business
  • 617.1K Mortgages, Homes & Bills
  • 175.6K Life & Family
  • 254.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.