EGG Share ISA: Worst ever dividend???

JoanneJ

A whinge....
As one who had never invested I fell for constant bombardment by EGG, who I had an interest account with.

Put £3000 into an EGG Shares '4 Markets' Tracker Fund Mini ISA in April 2001. The high profile 'quoted yield' by EGG implied this was a sure thing with forecasts being extra £2k after 5 years; though didn't mention Cash ISAs which carried no risk on original sum. Just wanted to avoid paying tax whilst being a diligent saver towards a house deposit.....

5+1/2 years later, during which time the sum dropped to £2k and EGG dumped all their investment customers to be 'rescued' by Fidelity, have just received latest summary: Total Investment Balance £3,037.14!!!!!!!

After FIVE years of investment and I currently have earned £37.14!

Fell for the 'just leave it and wait for the growth' convenience EGG peddled. Surely LOTTO odds would have been better!

Wiser after the event re Cash/Shares ISAs but what do I do now? Take my £37.14 'winnings' and retire OR leave it for the now touted "TEN year plan".

Under the mattress would have been better for that little nest-EGG.

Anyone else care to admit they are as dumb as I?

ReportInvestor

JoanneJ wrote:

A whinge....

As one who had never invested I fell for constant bombardment by EGG, who I had an interest account with.......

After FIVE years of investment and I currently have earned £37.14!

.......Anyone else care to admit they are as dumb as I?

Hi Joanne,

If you check out this MSE AxaSunLife thread and this MSE Friends Provident 10 year endowment thread you will see some "with profits" savers who might even envy you :eek:.

I don't know the details of the alternatives. Has your investment now terminated? Does this mean that your ISA allowance from 2001/2 is wasted or can it be carried over?

A problem with some 5 year plans is that after 5 years the upfront charges start all over again if you want to stay in the stock market. It's a pity if that applies to you, after going through all that "pain", it would be nice if you could sit back and enjoy some "gain".

Cue dh for a blast at direct marketing, where the customer has no-one to blame but themselves, a blast at short term inflexible plans, and a blast at trackers while he's about it.

P.S. Don't let this put you off investment. The returns can be considerable & worthwhile. That's why I post here - to spread the word.

To reduce risk why not consider a monthly investment into the stock market in the future - with no fixed time frame to retain maximum flexibility? You probably bought in 2001 on the back of fantastic past performance figures. My tactic, which I applied in 2002/3 to good effect, is to double my monthly savings into the stock market when the news is at its worst.

JoanneJ

Ta for replying and after browsing your linked threads, realise there are others in similar or even worse 'lost-out' predicaments.

Am not locked into anything with current ISA though (least I don't think so but, as stated, have been 'duped' before) hence the 'wonder what to do' quandry...leave put for another 5 years or actively manage the funds myself (more work!).

What irks is that I later discovered that the stockmarket had been waning BEFORE April 2001 (and pre 9/11 plummets) whilst EGG conveniently hurled their selling tools at me emphasisng what could be earned tax free in the next 5 years. I feel cheated and presume they made money with each new customer whilst I have been scared with the years of falling values.

Sure (as this 'dh' might scoff) I would have been better taking advice elsewhere first but the EGG selling was so slick and as I stated, did not even mention Cash ISAs....AND this was a big reputable company from Prudential.... AND they would never delude or, perish the thought, DUMP all of their Investment customers at a later date....

True I am now in a position where I have NOT lost (that 'windfall' of £37.14....phew!)....but what does tomorrow bring?

I never desired the big profits, just thought I should follow the trend and avoid tax on savings re an ISA route. And whilst I never seem to have suffered a set-up charge or any subsequent deduction via the Fund Managers, it would seem likely that was ONLY because

a) I never EARNED a dividend from which a % charge could be levied and
b) there has been NO 'fund management' to earn a fee: as the funds were apprently left to languish in a Tracker 'Void' (how else to explain their disastrous performance?).

Fidelity now continue to tout the 'good advice' you allude to (re buying consistently when the market is low) but frankly I have been scared off the whole arena. No longer have any cash to spare (and never did get that house that started the whole 'investment good sense' route) and being fairly prudent have never 'lost' money before....until EGG came out of their shell!

So maybe choosing a fixed interest rate account or one of the Post Office GEBs (ML refs) would be more suited to my over-sensitive, disgruntled current outlook.

No more whingeing allowed.......even the sun has come out now!

Ta once again for taking time to reply.

JJ

dunstonh

Cue dh for a blast at direct marketing, where the customer has no-one to blame but themselves, a blast at short term inflexible plans, and a blast at trackers while he's about it.

Well it is true. If you dont seek advice, you only have yourself to blame. Loads of companies see trackers as the ideal "cheap" product to market to people and the risk is just not appropriate to many of these people.

b) there has been NO 'fund management' to earn a fee: as the funds were apprently left to languish in a Tracker 'Void' (how else to explain their disastrous performance?).

The FTSE100 hasnt performed well for many years and whilst there has been some opinions that large cap is coming back into favour, I have my doubts still.

So maybe choosing a fixed interest rate account or one of the Post Office GEBs (ML refs) would be more suited to my over-sensitive, disgruntled current outlook.

You would have got less back with a GEB. They track the same index.

The problem with your investment was you put all your eggs into one basket and chose an area that hasnt performed well. Had you put £3000 into 3 x £1000 funds with different goals then you would have done better.

A FTSE250 (instead of you 100) would have turned 3000 into 4900. A lower risk UK equity fund would have been not too far behind and bonds and property would have done better too.

Dont dump the ISA. Just adjust the funds to suit your risk profile and perhaps do a bit of research before you invest or if you arent willing to do that, then use an IFA.

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And a very interesting reply from you, Joanne.

Financial education is one of my hobbies and your thought patterns closely match what I think was going on at that time between the industry and potential first time investors. Sometimes people, in their anger, are dishonest but I sense that you aren't.

I hope you will have the confidence to invest in future - perhaps along the lines I suggested.

But don't trust a financial product that doesn't pay dividend income. Reinvested dividend income is the real secret to long term stock market growth. Companies that produce products that take it away usually want to keep your dividends for themselves via charges .

cheerfulcat

dunstonh wrote:

The problem with your investment was you put all your eggs into one basket and chose an area that hasnt performed well. Had you put £3000 into 3 x £1000 funds with different goals then you would have done better.

A FTSE250 (instead of you 100) would have turned 3000 into 4900. A lower risk UK equity fund would have been not too far behind and bonds and property would have done better too.

Dont dump the ISA. Just adjust the funds to suit your risk profile and perhaps do a bit of research before you invest or if you arent willing to do that, then use an IFA.

To be fair to Egg, I assume by that the fact that it was called " 4 Markets " that it was invested in, er, four markets, not just one.

Fidelity now continue to tout the 'good advice' you allude to (re buying consistently when the market is low) but frankly I have been scared off the whole arena.

To be a successful investor it is necessary to invest when markets are cheap. It is a very common mistake to invest at the top of the market and then panic and either sell when it's going down, or decide to wait until your investment is worth as much as when you started & then sell. When a tracker, especially, loses value it's time to buy more.

Mr_Mumble

JoanneJ,
Was it this product:
http://production.investis.com/egginvestor/newsreleases/news2001/2001-02-12
?

The FTSE All-Share and S&P 500 have been rather flat from April 2001 to now . The European Tracker has done well but its rise has been wiped out by the Techmark 100's underperformance. This index halved in price in the year prior to April 2001 and you were catching a falling knife by investing in it at the time.

aderbyshirelad

cheerfulcat wrote:

To be a successful investor it is necessary to invest when markets are cheap. It is a very common mistake to invest at the top of the market and then panic and either sell when it's going down, or decide to wait until your investment is worth as much as when you started & then sell. When a tracker, especially, loses value it's time to buy more.

I think for the OP and myself, like the vast majority of the population, trying to work out when the market is "cheap" is pretty daunting.

I think I've been pretty lucky so far in that when I invested with Fidelity the FTSE 100 was above 6000, yet my initial investment has substantially grown since then. Not as much as if I had put my full allowance in the best performing fund out of the three I chose, but I took the diversification path (and who knows, that might still pay off in the coming years.

Most importantly, if the OP was hoping to save money for a deposit on a house, investing in the stock markets is probably not the best vehicle for this as such investments surely have to be held over the long-term.

cheerfulcat

I think for the OP and myself, like the vast majority of the population, trying to work out when the market is "cheap" is pretty daunting.

Well, it's pretty simple; when everyone is panicking about the crash and getting out of shares is generally when it's cheapest . But really it is futile to try to time investments which is why I suggest that the best way to invest is with regular amounts. That way you will be investing at least some of the time when the markets are cheap.

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aderbyshirelad wrote:

I think for the OP and myself, like the vast majority of the population, trying to work out when the market is "cheap" is pretty daunting.

That's why I recommend regular saving. It means you don't have to . In fact, as cc suggests, the experts aren't much good at it either .

if the OP was hoping to save money for a deposit on a house, investing in the stock markets is probably not the best vehicle for this as such investments surely have to be held over the long-term.

With the average first time buyer age up to 34 that may soon change. IMHO that age is going to increase. [It's a good job the government's raising the retirement age to match.]

Some smart graduates may run their student debts (interest rate fixed at inflation) but invest in the stock market over ten years from 25-35 to save up for a decent sized deposit more quickly & overtake onto the property ladder the people who graduated when they were freshers.

I totally agree with you that you need a long term time-scale for success, though.

dunstonh

The other way is not to stick all your eggs in one basket and make sure you have a spread that doenst only included stockmarket funds. Then periodically rebalance the portfolio which acts a way of selling units in the funds that have gone up the most and put them in the ones that have gone down or gone up the least.

What goes up comes down. What goes down comes up generally