Help: Do I keep Investment ISA?

StumpyDav

Hi, hoping someone might be able to help a complete financial dunce to decide what to do.

I've been putting in £50 per month into an Investment ISA with Aviva since Oct 2000 - it was called the Performance ISA then. The money's in Aviva Investors UK Growth Fund Class 1. Currently it's worth £8,824 - which is significantly less than I've put in.

Saving for a rainy day and being tax-free were what was important to me.

For the 1st time (I know, shame on me) I've taken a look at it and it seems that at no point (according to my statments) has it ever been worth more than I've put in. I appreciate that things can go up as well as down - it's just that I thought at some point in 10 years it might actually look like a savings account. I'm thinking I'd have been better off putting my money into Premium Bonds - at least occasionally I get something back off them and I never lose money.

I just don't know whether to keep plugging £50pm into it or to move all or part of it to another ISA (would a cash ISA be better?), or maybe cash it in altogether if favour of something else (although lord knows what!)

I'm just lost, so any helpful advice to get me started would be very much appreciated.

bigsy

How much do you think you've put into the ISA?

123 monthly contributions (Oct 2000 - Jan 2011) of £50 is a total of £6150, considerably less than the fund valuation.

dunstonh

I'm thinking I'd have been better off putting my money into Premium Bonds - at least occasionally I get something back off them and I never lose money.

apples and oranges. Two totally different things. Premium bonds and S&S ISAs (containing medium/high risk investments). Two totally different things.

You are asking us to compare a medium high risk investment (the fund, not the ISA) with a low risk deposit based product (not nil risk as it suffers inflation risk and shortfall risk). At different times one will be better than the other.

Also, regular contribution plans tend to take around 15-20 years at least to start making greater returns. You have had it just 11 years. you really shouldnt be expecting much from it in the earlier years.

StumpyDav

Hiya

Bigsy - I did warn I was a dunce didn't I. That'll teach me to do sums after half a bottle of wine! It was because I thought I'd put in more than I actually have that I felt disappointed. I laugh at myself!. Feel much better now! Thank you.

Dunstonh - thank you too. I knew it would be long term, but I hadn't appreciated that it would be as long as 15-20 years, so now that I understand that, I'll have more patience with it. Do you think it's a good idea to keep it going and even to put more money into it. I've not used all the allowance and I'll have £1000 that I could put into it before April.

Thank you both, really appreciate the help you've given me already.

jimjames

Check the fund charges you are paying (it should be listed as the TER)

You may find that moving the ISA to a discount broker such as Hargreaves Lansdown would save you money and allow you to invest in a wider selection of funds. Keeping all your money in the one fund means you are more exposed should that fund not perform well. A selection of funds would diversify that risk. Over the last 10 years the UK market has not done that well but others such as Asia have soared. HL offer some HSBC tracker funds that have charges as low as 0.27% TER which is much lower than many managed funds which are around 1.5-2% each year.

The transfer process is very easy and their website is excellent for being able to manage your funds.

You can also leave the existing ISA there if you prefer and start a new one from April with HL investing in a different fund.

[edit - just checked the performance of the Aviva fund and over the last 5 years it has underperformed the index so you would have been better in an index tracking fund and paying lower charges. Aviva is 1.62% pa compared to HSBC at 0.27%. It mnight seem a small difference but over a long period it can make a big change to returns]

StumpyDav

JimJames, thank you so much for taking the time to give me such informative help. Really do appreciate it.

xrjtg

I get that to be the equivalent of 7% annually after charges, which is better than a poke in the eye with a sharp stick. There may be better funds, but I'd be reasonably pleased with how you've done over the past 10 years.