Stocks and Shares ISA?

CashCow_3

Hi

I have just moved last years ISA in to Halifax Direct Reward at 3% as they dumped it on the 0.5% saver at the end of the year.

I also have some money in N&SI in an ISA.
I was wondering how I could make my money work harder and noticed that Stocks and Shares (fund) ISAs seems to do much better.

I don't mind tyring this money up for a few years so would this be a good idea? Is it possible to transfer money from last years ISA to these too or must I start with new funds.

Some of the ones I initially looked at were below:
http://www.moneysupermarket.com/investments/stocks-shares-isas/popular/

The returns seems much higher and they would still be tax free as a stocks and shares ISA (right?).

It seems a good idea to me but I wonder if I am missing something important or somebody might have some pointers before I embark o this route?

thanks

c

Lokolo

You aren't gaurenteed anything. We have had quite good markets since the recession and these may not continue. You could put in £5k and after 3 years you may only have £3k in the account.

And when investing you should be looking at a minimum of 5 years to tie up your money.

And yes the returns would be tax free, outside of an ISA gains a liable for Capital Gains Tax, but this still isn't payable until profits are over £10,xxx.

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As for transferring, you can either transfer Cash ISAs to Stocks and Shares, or just start a new Stocks and Shares ISA. Personally I wouldn't transfer from Cash ISA if they are your only cash savings.

You would also need to find a fund supermarket to be able to buy the funds.

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And the second rule of investing is that past performance does not indicate any future performance.

jem16

CashCow wrote: »

I don't mind tyring this money up for a few years so would this be a good idea?

How many is a few years to you? Investments need to be at least for 5 years and preferably more.

Is it possible to transfer money from last years ISA to these too or must I start with new funds.

You can transfer a Cash ISA to S&S ISA but not the other way.

Some of the ones I initially looked at were below:
http://www.moneysupermarket.com/investments/stocks-shares-isas/popular/

If you are using a S&S ISA I would use a funds supermarket rather than go direct.

The returns seems much higher and they would still be tax free as a stocks and shares ISA (right?).

Technically yes.

It seems a good idea to me but I wonder if I am missing something important or somebody might have some pointers before I embark o this route?

thanks

c

The something you are missing is that S&S ISAs can also go down.

joerugby

Just bear in mind that the FTSE fell by 28% in 2008. If you are up for that kind of volatility then go for it!

dunstonh

I don't mind tyring this money up for a few years

5 is typically the absolute minimum. Typically you are looking more to 10-15-rest of life.

The returns seems much higher and they would still be tax free as a stocks and shares ISA (right?).

Potentially much higher but you have to accept the periods of loss as well. Depending on the risk level you take this could be significant at times.

Some of the ones I initially looked at were below:
http://www.moneysupermarket.com/inve...-isas/popular/

Not exactly ideal for a novice investor and a varied spread in risk there. A couple of the options there are absolutely dire and should be avoided at all cost.

CashCow_3

Thanks for the replies.

I could tie it up for at least five years.

I do have cash ISAS but have never maxed out my allowance in these.

I figured the market had been pretty bad for the last few years and yet the links I showed has them ranging from 20 to 73% returns over 3 years which seemed impressive in a downturn?

Thanks for the tip about using a supermaket.
Is this like a broker - this site recommends Hargreaves Lansdown.

I am sensing from the replies that this might not be an instinctive approach so think I might need to consider further.

thanks again

dunstonh

I could tie it up for at least five years.

Most modern options are open ended. You dont tie the money up as it is accessible. However, investments need to be looked at over a longer economic cycle which is typically a bit longer than 5 years. You may get lucky and see a 40% gain in one year. However, you may see a loss of 40% in that year and it take another 7 years to break even before then going on to show a profit.

figured the market had been pretty bad for the last few years and yet the links I showed has them ranging from 20 to 73% returns over 3 years which seemed impressive in a downturn?

Assuming you mean stockmarket, then no the last two years have been very good. Indeed, one of them broke growth records. it was the two years before that which were bad.

You seem to be mixing up stockmarket and recession. They are different things.

A fund that has gone up 73% in 3 years can go down 73% just as quick (or quicker). A fund that has gone up 73% in three years is unlikely to go up another 73% in the next 3 years.

Thanks for the tip about using a supermaket.
Is this like a broker - this site recommends Hargreaves Lansdown.

no. Nothing like a broker/adviser. A fund supermarket is a platform that holds your investments. They do not provide advice. They do provide marketing though (remember they are paid to market funds so you take that with a pinch of salt). A broker/adviser does not hold your investments. They provide advice on what you investments you should have and which platforms to use.

Rollinghome

CashCow wrote: »

The returns seems much higher and they would still be tax free as a stocks and shares ISA (right?).

Not really. It's less straightforward than a cash ISA. All dividends on shares are normally received net of the 10% tax payable by basic rate payers but that can't be reclaimed in an ISA and there's a 20% charge on all interest from cash. Money can be transferred from a cash ISA to a S&S ISA but not the other way round.

Some of the pros and cons are laid out here: http://www.candidmoney.com/questions/question388.aspx

dunstonh wrote: »

They do provide marketing though (remember they are paid to market funds so you take that with a pinch of salt).

Especially that from H-L.

dunstonh wrote: »

A broker/adviser does not hold your investments. They provide advice on what you investments you should have and which platforms to use.

And in most cases 'advisers' will also be paid commission either by their employers or directly by the product providers for flogging their product so 'advice' should also be taken with a pinch of salt or at least some awareness of the many conflicts of interest.

CashCow_3

Thanks again.

I have clarified I obviously need to understand a lot more than I do.
(and that this get richer quicker scheme could just as easily become my get poorer sooner scheme).

I think I'll hold off for now and do some reading over time and then perhaps dip my toe into the market with a smaller investment later maybe.

Thanks for the helpful replies.

CashCow_3

PS:

That's a very helpful article too...