New comer to ISAs... advice required

dunstonh

Having IFA's and apparently well informed MSE'ers disagreeing doesn't make it any easier. I guess there are no right or wrong answers (unless you have a time machine).

There is no disagreement. Trackers have their place. However, they are generally a little riskier than managed funds in the same sector because the trackers have no downside protection that the managed funds would. In periods of sustained growth, trackers tend to do very well. In periods of decline or volatility, trackers dont do as well. In a 10 year period you have approx 5 great years and 5 bad years.

This is why you never put all your eggs into one basket.

Investing is about opinions. I am a firm believer in asset allocation and rebalancing. Statistically that has proven to be the best approach. I also believe that people should invest appropriately for their risk. Trackers can be utilised within the portfolio but you shouldnt build a portfolio on the basis of picking trackers only.

just don't want to risk loosing anything to be honest. A stock market crash could mean I lose my money right?

It would mean you would lose some of it and more so in a tracker.

I think I'll try to drip feed a tracker but not sure what index yet. Perhaps both the 100 and 250. Just need to decide on which provider now.

So, you dont want to risk your money but you are picking medium/high risk index trackers which lost around 30% in 2001 (The last stockmarket crash).

There are far more cautious ways to invest your money and still have stockmarket exposure to some or all of it.

Based on what you have typed so far, I think it would be foolish for you to invest in the trackers you have mentioned solely. That said, as part of a portfolio to match your risk profile and goals, they could be utilised but not by themselves.

Maybe I'm better to just stick with savings accounts (and paying tax on them) and making the most out of mini cash ISA's and pensions for tax relief.

Pensions and ISAs can invest in exactly the same places now. So changing the tax wrapper isnt going to make much difference. Plus pension tax relief is not as valuable as it once was.

I think your mistake is thinking that there are only two levels of risk. Savings accounts and stockmarket. It isnt as simple as that. Its a whole sliding scale of risk and you appear to be at the cautious end but looking at the medium/high end without considering any of the options in between.

Sillychuckie

OK, thanks.
I'll do a bestinvest(.co.uk) portfolio health check when their site is back up (health check not working at the moment).
I'll compare what it suggests depending on whether I say I'm happy with a 0% loss (none), or 10% to get a list of managed funds worth looking into.

I'll then either buy the funds from bestinvest or more likely, go with Hargreaves Lansdown (assuming they allow drip feeding). I wont go for the trackers directly but no doubt any funds I'm recommended track these indexes in some way or another. I'm only just starting out in all this (I'm only 22) so the amounts of money I'm dealing with aren't huge.
I don't imagine anything will go spectacularly wrong, so we shall suck it and see.