Stocks & Shares ISA - is there risk of losing all money?

tashalove

Hi

I've made a few posts regarding Stocks and Shares ISAs lately and I'm becoming more and more tempted to use this area of my allowance as well as my Cash ISA.

This is going to sound like a really obvious question but is it possible to lose ALL your money if you pooled your money into funds? I understand that there are risks associated with not getting back all of your original investment. However, what i have is time and I remember someone saying that even though the markets crash, they will eventually go back up (unless the company goes bust).

Can anyone advise?

Thanks in advance.

dunstonh

Theoretically, you could lose everything. However, the odds of that will mostly depend on how you invest and what assets you use.

If you use a spread of assets and investments where say you have no more than 5% in any one company then the odds of total loss are remote. Indeed, if that happened, then money would be the last thing you would be worrying about.

lisyloo

Theorectically yes.
But most funds are spread across various shares and therefore it's less risky than buying individual shares (which can crash).
Some fund even invest across asset classses.
The more fund you have and the more spread the individual funds are then the less risk of a total collapse.

It makes sens to have a spread of assets.
For example I have some cash, property, gold, NS&I certificates and shares.
It's a very basic idea that by spreading it you get some spread of risk.
The cash element can also give you instant access.
It's a very good idea to have an emergency fund in cash for - unexpected house/car repairs, redundancy, sickness (if you don't get good sick pay) etc.

If you are invested in funds it's extremely unlikely they'd crash to zero.
Even in a stock market crash you'd still expect to only lose a percentage.
However there is a risk of loss and of volatility.
If the stock market ever crashed to zero then you need to worried about riots on the street an looting, not your equities.

yorkiebar

Yup, if you'd invested in funds and you'd lost the lot then the country would probably be in anarchy and any money you had would be worthless anyway

tashalove

Thanks everyone for the above!

I have another quick question, I notice that HL allows both a lump sum or monthly direct debit of £50 min towards the ISA and I was wondering how this works?

How is the money apportioned? Do I get to decide what fraction of the £50 is invested in what each month?

Also, I've already deposited into a Cash ISA this year, will this stop me from opening the S&S ISA with HL and depositing cash into this? Does the cash in this ISA count as cash or are these immediately apportioned to the investments I have chosen?

Sorry for all the questions, I'm such newbie! but would like to understand what I will be getting myself into before taking the big step!

Lokolo

tashalove wrote: »

Thanks everyone for the above!

I have another quick question, I notice that HL allows both a lump sum or monthly direct debit of £50 min towards the ISA and I was wondering how this works?

How is the money apportioned? Do I get to decide what fraction of the £50 is invested in what each month?

You set it up. So if you deposit £200 you can:

Fund A: £70
Fund B: £50
Fund C: £80

£50 is a minimum per fund.

tashalove wrote: »

Also, I've already deposited into a Cash ISA this year, will this stop me from opening the S&S ISA with HL and depositing cash into this? Does the cash in this ISA count as cash or are these immediately apportioned to the investments I have chosen?

Sorry for all the questions, I'm such newbie! but would like to understand what I will be getting myself into before taking the big step!

Cash ISAs can have a different provider from S&S. So you can have a Cash ISA with X and a S&S ISA with Y. They are unrelated mostly. However, you must work out the allowance yourself.

£10,200 MINUS Cash ISA is your allowance for S&S.

masonic

tashalove wrote: »

How is the money apportioned? Do I get to decide what fraction of the £50 is invested in what each month?

It's a minimum of £50 per fund. So if you want to invest in 3 funds per month you can choose to put a minimum of £50 in each (£150 total per month).

No problem to have a cash ISA as well as a S&S ISA. Cash can be put into the S&S ISA (interest is taxable) as long as you intend to invest it at some point.

tashalove

Ah okay, thanks Lokolo and Masonic for clearing that up I feel more enlightened now!