How safe are ISA's?

goodyjim

I started a mini cash ISA with Halifax 3 years ago as a safe way to save my limited funds. However my last statement showed that I had actually lost nearly £3000! When I asked how this could be I was told it would improve when the markets perked up. How can it be that moey can be lost like this in a so called savings account? I now don't know what to do for the best. HELP!

dunstonh

How can it be that moey can be lost like this in a so called savings account?

Its not a savings account. Its an investment tax wrapper that contains investments. Investments fluctuate in value.

cbrpaul

ISA = Individual Savings Account

I dont quite understand how you can lose money on a cash ISA

A market linked ISA yes , but not a cash isa ( £3,600 per year max)

Quasar

I have what was originally called a Maxi Isa, with a shares component and a cash component. The shares component of course varies according to market fluctuations, but the cash component remains intact - only the interest rate can vary, and boy has it just lately!

dreamypuma

goodyjim wrote: »

I started a mini cash ISA with Halifax 3 years ago as a safe way to save my limited funds. However my last statement showed that I had actually lost nearly £3000! When I asked how this could be I was told it would improve when the markets perked up. How can it be that moey can be lost like this in a so called savings account? I now don't know what to do for the best. HELP!

I'm sorry to say, I have no sympathy for the OP.

Newly_retired

That seems a bit harsh. The OP seems to have a limited understanding of the various sorts of ISAs available and the risks involved in equity-based ISAs. Maybe they were badly advised in a bank?

dreamypuma

Newly_retired wrote: »

That seems a bit harsh. The OP seems to have a limited understanding of the various sorts of ISAs available and the risks involved in equity-based ISAs. Maybe they were badly advised in a bank?

That's what I thought when I typed my full post, which is why I edited it.

The OP will have received paperwork when signing up for the product, and during the 3 years he has had it. There is an element of self help here.

It's what I would call contributory negligence.

cbrpaul

I placed the full amount into a equity-based ISAs 8 years ago its now worth £1500 , so your not alone !!

opinions4u

goodyjim wrote: »

I started a mini cash ISA with Halifax 3 years ago as a safe way to save my limited funds. However my last statement showed that I had actually lost nearly £3000!

You bought an investmnt ISA, not a cash ISA. The investment has fallen in value.

When I asked how this could be I was told it would improve when the markets perked up.

Although it could fall further if they don't.

How can it be that moey can be lost like this in a so called savings account? I now don't know what to do for the best. HELP!

How did you obtain the ISA? Did you see a Personal Financial Adviser in the branch? Did you buy online?

If you were advised to take out this investment, then you can ask them to explain why they advised this. You may still have the paperwork that tells you this.

If you feel that the advice was inappropriate, you should complain.

The thing is, people tend not to complain as the market rises. Only when it falls. And if you were told that markets go up and down and still signed on the dotted line, this on its own would not be grounds for complaint.

What did you think all those 6 monthly statements meant?

Jennifer_Jane

goodyjim wrote: »

I started a mini cash ISA with Halifax 3 years ago as a safe way to save my limited funds. However my last statement showed that I had actually lost nearly £3000! When I asked how this could be I was told it would improve when the markets perked up. How can it be that moey can be lost like this in a so called savings account? I now don't know what to do for the best. HELP!

Well I certainly understand ISA's and I would be asking the Halifax how £3000 could be lost in a mini cash ISA. Yes, all the 'ISA' is is a tax wrapper so should have nothing to do with the underlying savings or equities, but it seems that the OP thought they were sold a savings plan and got equities. Where is the key facts document? Why didn't the Halifax explain things properly?

I do feel for the OP. You get told (and the marketing is very strong) that you must take out an ISA. But they are complicated with all the mini/maxi rules. You try to do the best for yourself and this happens. I thought that all the FSA diplomas, training, and compliance would have avoided this kind of thing. I'm not saying that Halifax mis-sold, but more that it seems that some time on, the OP perhaps cannot remember the original conversation. But clearly the OP feels that they were in savings and they were in equities.

If I were the OP I would be digging out the original key features and checking those documents.

Actually, what I would be doing, is simply waiting for the markets to improve as they will in due course, you may find you make a good profit in the long run. Then get out of the ISAs and do something which is more in line with your risk profile. Of course, by then (and watching how your investments have been doing over the next couple of years), you may start enjoying the ride. Good luck! One of my investments is 40% down, so just stay cool and watch the markets - www.iii.co.uk - you can add the investments on to a 'portfolio' and watch them regularly. Also remember that you should be looking at investments as long-term. I understand you may have been saving for a special reason, but if you want to 'make' money, you'll need to hold now until the markets pick up.

Jen
x

opinions4u

Jennifer_Jane wrote: »

Why didn't the Halifax explain things properly?

Perhaps they did. Perhaps the name ISA (Individual SAVINGS Account) is confusing the buyer. Bring back the very sensibly separated TESSAs and PEPs!

But they are complicated with all the mini/maxi rules

Or complicated further by removing the mini and maxi rules. Let's be honest, the Government went out of their way to make ISAs complicated.

I thought that all the FSA diplomas, training, and compliance would have avoided this kind of thing.

Was the product bought online or by phone on an execution only basis? We haven't even established if any advice was given.

If I were the OP I would be digging out the original key features and checking those documents.

Too right!