Are stocks and shares ISA's worth it?

ShefRob

Hello Forum,

I have just signed up to ask this question which has been on my mind for years.

For the past 5 years I have always ensured I have had and always will continue to ensure maximum cash ISA while any other savings (normally around £3,000) are placed into a regular savings account and then transferred into a high interest (well not so high right now) savings account.

Anyway, stocks and shares are something which I have always avoided as you hear stories about people loosing all of their money but then again you hear about these stupidly good rates of 20% and 30% sometimes?! This sounds "too good to be true" given a rate or around 2-3% for savings right now.

So I wanted to ask, instead of using the regular savings account is it worth looking into using my other tax free S&S ISA allowance? I don't mind long term investments but I do mind loosing money when I could have gained money.

I've done some reading and for these relatively low investment numbers it seems I need to do a "self select" ISA which in turn means I choose my investments. This probably sounds a sure way to loose money so this gets me a little dis-interested.

Where can I read more about this so I can see if this type of account it right for me? What are other peoples opinion on these accounts as opposed to regular savers which can give 6% on £3,000 over the year? Oh and finally, I believe I am correct but would like double checking that I can never loose more than I put into one of these accounts (don't want any knock on effect on my other savings).

Thanks in advance.
ShefRob

ajbell

lose NOT loose

saintalan

ShefRob wrote: »

...Oh and finally, I believe I am correct but would like double checking that I can never loose more than I put into one of these accounts (don't want any knock on effect on my other savings).

Thanks in advance.
ShefRob

You are right you can never lose more than you put in although technically charges over the lifetime off the investment might mean you do.

It sounds like from your post that S&S ISA is not for you. Indeed all the ISA is is a tax free wrapper the same argument applies between cash savings and stocks & shares outside of an ISA.

There is a lot of info out there.

Cheers

Alan

BLB53

Maybe the question should be - are cash isas worth it?

Stocks & shares isas are risky if you don't really know what you are doing so before you decide, best to read a bit more. Some good articles on Monevator (https://www.monevator.com) also diy investor (http://www.diyinvestoruk.blogspot.co.uk/) both of which should give you some pointers.

I confirm you can't lose more than you put in but much better to go ahead (if thats what you decide) with a positive mind set!

Good luck.

dunstonh

Anyway, stocks and shares are something which I have always avoided as you hear stories about people loosing all of their money

You hear stories but no-one ever does actually lose money like that. Reality is very different. For someone to lose all their money, they would have to invest 100% into either a single share that goes under (polly peck for example) or choose some unregulated dodgy scheme or scam.

but then again you hear about these stupidly good rates of 20% and 30% sometimes?!

Investments dont have rates. They perform. Some years it is possible to get 20%, 30% or higher. However, you have to average them out with the years you lose money or have a nothing year. Then you get closer to the longer term average which is typically closer to 7-10% p.a. You cannot have the good years without the bad.

I've done some reading and for these relatively low investment numbers it seems I need to do a "self select" ISA which in turn means I choose my investments.

Self select ISAs are largely obsolete nowadays. Your reading source appears to be near a decade out of date. That is a throw back to the self select PEPs. Once ISAs removed that option, the self select plans devloped. Today you mainly get ISs provided by the investment house or investment platforms. Some investment platforms will focus on an investment type (maybe direct investments or maybe commission paying funds or be full whole of market with clean funds and direct investments available)

Where can I read more about this so I can see if this type of account it right for me?

It is not an account. An ISA is a tax wrapper. It is a container for investments of your choice. You can have around 30,000 investments inside an ISA and near infinite variation of those.

ISAs do not make money or lose money. The investments you place inside of the ISA do that.

p00hsticks

dunstonh wrote: »

Self select ISAs are largely obsolete nowadays.

I'm interested in this statement - I can't believe I'm the only who has one of these. What makes you say they are largely obselete ? For me, it's a way of getting access to a large number of different trackers from different providers, ETFs, as well as individual comany shares all in one manageable pot - what other alternative is there for holding such a ISA portfolio in a single place ?

dunstonh

I'm interested in this statement - I can't believe I'm the only who has one of these. What makes you say they are largely obselete ?

It is a throwback to PEPs. The PEP had a £6000 allowance. However, you had a further £3000 you could use in a single company PEP. Back then, the vast majority of PEPs were supplied by fund houses. There were no platforms. So, self select PEPs were introduced to allow people to self select shares. Back then, the majority of self select providers only offered direct investments (such as shares). Most of these morphed into investment platforms that you see today. The investment platform is the modern day option. Self select is the more limited option as it typically only refers back to those offering direct investments not funds as well.

saintalan

p00hsticks wrote: »

I'm interested in this statement - I can't believe I'm the only who has one of these. ...

You're not alone!:)

jimjames

It sounds like you need to do a lot more research to understand S&S ISAs.

• You cannot lose more than you put in
• An ISA is just a wrapper, you can have different investments inside
• Returns depend on the choice of investments
• Investment returns are not smooth and vary year by year