How much should I hold in cash?

orangello

I can no longer make any further contributions into my ISA as I am now overseas so I just have to make the best of what is already there. It has grown to almost £100K.

I cashed in the fund I was in because I found it had high fees for a tracker and I will buy a low cost tracker.

But what I want to ask is whether to move 100% of the cash into the tracker, or keep some back in cash for whenever the next major market fall happens, so I can buy in then. If keeping some in cash for buying 'low' is a good idea, can anyone suggest how much (10%, 20% etc) and what the logic is for deciding? Or should I just invest it all now and let it ride?

I know I could drip-feed, but as I cannot contribute any more into my ISA, I cannot really drip-feed over many years without keeping a lot in cash now which means being mostly out the market (which I don't want).

I don't anticipate cashing in the ISA for at least 7-10 years.

Thanks for any views.

FatherAbraham

orangello wrote: »

I can no longer make any further contributions into my ISA as I am now overseas so I just have to make the best of what is already there. It has grown to almost £100K.

That's good, but are you certain that your current tax residence doesn't make the UK ISA liable to local taxation? I suppose you need to check the domicile regulations. Advice to UK residents relocating to the US (and thereby becoming "US persons") is sometimes to liquidate all UK ISAs before leaving, in order to avoid US capital gains taxes.

orangello wrote: »

I cashed in the fund I was in because I found it had high fees for a tracker and I will buy a low cost tracker.

But what I want to ask is whether to move 100% of the cash into the tracker, or keep some back in cash for whenever the next major market fall happens, so I can buy in then. If keeping some in cash for buying 'low' is a good idea, can anyone suggest how much (10%, 20% etc) and what the logic is for deciding? Or should I just invest it all now and let it ride?

I know I could drip-feed, but as I cannot contribute any more into my ISA, I cannot really drip-feed over many years without keeping a lot in cash now which means being mostly out the market (which I don't want).

I don't anticipate cashing in the ISA for at least 7-10 years.

Thanks for any views.

You sold the previous fund all in one go. Your aim was to get cheaper market exposure. Just buy back in with the tracker. It's a switch, not a phased investment programme.

At the very least, you'll save having to enter multiple "buy" orders.

Warmest regards,
FA

Totton

A tough decision for sure, no one knows where the markets will be in the future but I do think that the old saying 'time in the market, not timing the market' has a lot of value. I keep 6 months in cash whilst my wife prefers around 65% in cash, the level should be what you feel comfortable with. Within my portfolio itself I am probably around 25% cash at the moment after some recent sells, I aim to put it all to work shortly though as I don't know when the next big crash will occur.

To offset the risk I prefer to hold some Troy Trojan, Ruffer Equity & General, Odey Absolute, Personal Assets IT etc, cash preservers in other words although I fully expect these to fall in any crash as well.

I wouldn't put everything into low cost trackers as then I am guaranteed a heavy landing if the markets fall.

HTH,
Mickey

orangello

FatherAbraham wrote: »

That's good, but are you certain that your current tax residence doesn't make the UK ISA liable to local taxation? I suppose you need to check the domicile regulations. Advice to UK residents relocating to the US (and thereby becoming "US persons") is sometimes to liquidate all UK ISAs before leaving, in order to avoid US capital gains taxes.



You sold the previous fund all in one go. Your aim was to get cheaper market exposure. Just buy back in with the tracker. It's a switch, not a phased investment programme.

At the very least, you'll save having to enter multiple "buy" orders.

Warmest regards,
FA

Thank you for these points. I have checked and I would not be taxed locally.

I see what you mean when you say I was 100% invested before, so maybe I should stay 100% invested with the cheaper fund too.