Help stocks or not!!!

Meirion658

I currently have all my savings in a cash only ISA, and is there for the long term. Having seen that the markets are pretty low compared to the highs of 2008, is it worth splitting some of this and investing in the stocks (long term) for better growth. If so where do I start looking as I am a complete novice to all this!!!! Any help and advice would be appreciated.

Thanks

jfpeeps

Hi

Am / Was in a similar situation to you, the first thing is that there is no way of nowing when the market will recover or how much it will when it does. It might be years away and there might well be further to fall. Buying individual stocks is very risky for the uninitiated, perhaps funds (a managed stock that is made up of lots of other stocks is a very simplified way of putting it) might be safer as your risk is spread. However as you have said "All my savings" I would be very wary of investing it all in a high risk area such as stocks, funds etc.

Rafter

In the long run, investing in stocks or corporate bonds has yielded better returns than savings.

However, guessing when the market has bottomed is not for the faint hearted and some people think we are currently in a 'bear market rally' which means that stocks will fall again.

If you are prepared to take a risk that your savings will fall in the short term, then go for it. Otherwise I would suggest starting to save regularly in a tracker ISA so you are building up your investment over time and not taking a big punt on the market at a point in time.

As far as advice, depending on the sums involved it may be worth talking to a financial advisor.

If it is a relatively small amount I would simply plump for a tracker ISA with a low management fee. Over 50% of 'managed funds' fail to beat the index once higher management fees are taken into account.

R.

a7man

The markets arent so volatile at the moment, and the FTSE is fluctuating around 4000. However its probably better to drip feed into a stocks & shares ISA as theres no telling whether the markets will take another dip.

Rather than individual shares you will be looking at investing in funds with a range of stocks. The amount of risk you want to take will justify your fund choice.

Hargreaves Lansdown, Fidelity, Cofunds all do stocks & shares ISAs.

sham63

Remember that the only tax advantage of a stocks & shares ISA is that you don't pay capital gains tax.

So unless you expect to make over £10,000 profit from you shares ISA this year you may as well keep your cash in the cash iSA and open a 'normal' share dealing account.

Obviously if your only savings are in your cash ISA and you simply expect to make more by investing that pot of money in shares then go for it - but you probably won't get any tax benefit until you've built up a portfolio of many tens of thousands of pounds.....

(The only caveat to this is that higher rate tax payers would normally pay tax on dividend income at 32.5 per cent which is reduced to 10%)

dunstonh

Remember that the only tax advantage of a stocks & shares ISA is that you don't pay capital gains tax.

or the following:

1 - no higher rate of income tax if you are a 40% or 50% tax payer.
2 - fixed interest securities can claim back the interest in the ISA
3 - income has no impact on age allowance reduction figure
4 - income in the ISA is not added to your other income which could take some people into 40% higher rate or the 50% band

There is also the added benefit that you dont have to keep detailed records of buys and sells for tax purposes. For monthly contributions, that can be a pain over the long term.

jfpeeps

@ sham

I have some S&S but do not expect to take 10k from them per year, however I do take that amount as dividends from a private (non listed) company I am involved with, would that mean I should keep my S&S in an ISA to prevent CGT