Stocks and shares ISA

cashstrappedpete

Hi. I am new to the site and a self confessed duffer at most things financial! I have a stocks and shares ISA through Barclays that I pop £50 a month into. My most recent statement shows the value of the units over the past year mean I might just as well have chucked £30 of the £50 in the bin each month!

I am thinking that I should stop putting money into it and put the £50 into a cash ISA instead, and just leave the units I have to hopefully increase in value if and when the markets improve.

Does this sound reasonable or does anybody have any other advice?

Thanks
Pete

CLAPTON

some facts always help

cashstrappedpete

What facts would you need? For example over the last 6 months, £300 invested but the value of the units purchased have only increased by £100 in total. I am essentially losing a third of my deposits each time.

gadgetmind

2011 was a funny old year, but December and January stormed along, so pretty much everything should be back to July levels PLUS all the contributions along the way were buying in at bargain basement prices.

As Clapton says, facts, which means dates, funds and values.

Derivative

cashstrappedpete wrote: »

What facts would you need? For example over the last 6 months, £300 invested but the value of the units purchased have only increased by £100 in total. I am essentially losing a third of my deposits each time.

The way you are wording your replies is rather confusing to me. We need lump sum values.

If I had a holding of £10,000 in a FTSE tracker, and invested another £100, the FTSE would only have to go down by 1% (quite a lot of days are up/down 1%) for me to see 'no gain'.

If said holding was £1million, it would oscillate by thousands of pounds every day.

More important is how much you invested, when, and how much the current value is. Total.

Biggles

A S&S ISA is a long term thing. There's no point looking at it after a few months and deciding to change tack, you have choose your strategy and stick with it.

dunstonh

My most recent statement shows the value of the units over the past year mean I might just as well have chucked £30 of the £50 in the bin each month!

Strange. As 2011 was a good year for regular contributions. Not so good for single premiums in the first half. Better in the second.

However, it does appear you dont really understand investing if you think a loss in one year is a bad thing.

I am thinking that I should stop putting money into it and put the £50 into a cash ISA instead, and just leave the units I have to hopefully increase in value if and when the markets improve.

I think it is a good idea that you stop as you dont know what you are doing. A £50pm S&S ISA contribution requires timescales in excess of 10 years typically. You are already fed up after just 1 year. Until you understand that negative years will happen and with a regular you want them to happen in the early years and that your overall return is an average of the ups and downs, you shouldnt invest.

I am essentially losing a third of my deposits each time.

No you are not.

psychic_teabag

If you are not buying from a discount broker, up to 5% of each monthly installment could be deducted as initial fees. (Assuming it's funds you're buying : if stocks then trading costs could be eating even more.)

jamesd

cashstrappedpete wrote: »

I am thinking that I should stop putting money into it and put the £50 into a cash ISA instead, and just leave the units I have to hopefully increase in value if and when the markets improve.

Does this sound reasonable or does anybody have any other advice?

If you did that it would make you a mug investor. Prices have been down. That's been a good time to be buying. As prices rise again that'll make you more profit on the new purchases than on the older ones.

If you want to not be a mug investor, do things like copying what I did back in 2008 after the first 20% or so of drops: set up an increase in my regular purchases to exploit the lower prices. That meant that I bought at cheap prices then and even cheaper prices after the drops in October 2008. Those drops meant that I was down on my initial investment value but buying even more cheaply. I made wonderful profits in 2009's recovery.

Take a long view, look to put more money in gradually when the press is full of stories of doom and gloom and put less money in when the press is full of stories of how the good times won't ever end. That'll have you buying at cheaper prices and making more money.

Not sure how much market improvement you want, though. Most markets are currently classed as boom markets after the roaring gains in December and January caused them to increase in value by more than 20%.

Can't comment on your specific investments without knowing what you've been buying. Maybe you've been buying something that's been doing less well than most things.

gadgetmind

jamesd wrote: »

after the first 20% or so of drops: set up an increase in my regular purchases to exploit the lower prices.

I doubled my pension contributions this summer, and bunged a lump sum into a new SIPP. Come April, I'll probably reduce my pension contributions again.

It's hard to get this timing right, but it's very easy to get it very wrong.

jamesd

Getting it very wrong is pretty easy. Just buy a lot during a period of irrational exuberance or buy into something in a clear bubble.

Will be interesting whether your higher pension contributions turn out to have caused you to buy more at lower prices or not. Also interesting to know why you did it. My intent at the time of my decision was the one I described: buy at low prices knowing they may well get significantly lower.