S+S ISA Buying/Selling strategy

ukflippy

Hi all,

I'm pretty new to this investment thing - I started a S+S ISA in May, and so far it's done pretty well - up 15% in 7 months.

I've basically been sticking £1000 in it occasionally, and shifting it 1 or 2 funds/shares, but until yesterday, I'd not sold anything.

The fund I did sell was the only one to have made a significant loss - 7%. Clearly, if my strategy is "sell things that have made a big loss", I'm not going to get anywhere fast!

So I was wondering what people's approaches to this kind of thing are - I'm not overly keen on spending a lot of time researching, so I'm thinking there might be something like a "sell at 15% profit or 5% loss" approach which is widely used.

I've read a few things about spending a day researching once a year, and rebalancing the portfolio - that kind of appeals...

westy22

Investing is volatile - 20% up or 20% down is neither here nor there in the grand scheme of things; therefore set rules such 'sell at 15% profit' etc are not likely to give you the result you want.

You are investing for the long haul so it is far better to leave things alone and then, once a year, re-evaluate where you are. Even then that doesn't mean selling losers and buying more winners - in fact the opposite may be the better option.

What matters is the average performance of the overall portfolio - my own has a mix of spectacular successes, spectacular losses, and a good helping of average performers. Together they give me around 10-12% per annum, year in / year out. That is what you should be aiming for.

srcandas

ukflippy people who sell get rich investment formulas make their money from selling get rich investment formulas. If they knew how to make money they wouldn't need to sell formulas.

And if there was a general rule that always gave good returns the financial services industry as we know it would be very different (and a lot smaller ).

And free advice on forums is often over simplified, misinterpreted, inaccurate, relates to vested interests or is even a scam.

There is of course good comment and experiences past on. But these need cross checking and then carefully applied to any individual circumstance.

So if you don't want to invest time then you need to go for a very simple low risk approach. Certainly not an individual share portfolio.

Many here have useful info on tracker strategies and keeping costs low. I'm sure they will be along shortly. You could do well to reaesrch their thoughts and start with taking on board West22's thoughts above.

The sad news for you is that you have made a small gain in 7 months against a rising market. It would have been much more valuable for you to have made a loss. But you are where you are.

Good Luck whatever way you go :beer:

Archi_Bald

You should, of course, start out with a balanced portfolio, and re-balance once a year or so if necessary. That way you do stand a reasonable chance of steady growth over the years.

Westphalia

I must say that taking profits from funds is something it took me a while to get my head round. As I now understand it, and I will possibly be corrected, but taking HL as an example, if your fund has made x amount and you decide you wish to take x amount of profit, this will be realised by selling units as opposed to simply being taken from the actual fund balance. You will therefore be left with a reduced holding.

BLB53

I read this on one of the articles on market timing (diy investor site) - Investing is easy - you buy a share, wait for it to go up and then sell it. If it doesn’t go up, don’t buy it - simples!

Here's a link https://www.diyinvestoruk.blogspot.co.uk/2013/03/timing-market.html

jimjames

I don't buy & sell unless I need the money for something. Buy & hold long term otherwise you'll be paying out on transaction fees or trying to chase the latest market fad.

Westphalia wrote: »

taking HL as an example, if your fund has made x amount and you decide you wish to take x amount of profit, this will be realised by selling units as opposed to simply being taken from the actual fund balance. You will therefore be left with a reduced holding.

I don't understand this. What fund balance can you take from? You could take income from income units but if you own 10 shares/units the only way to take money out is to sell some of those units/shares.

Westphalia

jimjames wrote: »

I don't buy & sell unless I need the money for something. Buy & hold long term otherwise you'll be paying out on transaction fees or trying to chase the latest market fad.



I don't understand this. What fund balance can you take from? You could take income from income units but if you own 10 shares/units the only way to take money out is to sell some of those units/shares.

Apologies perhaps I should explain more clearly (without wishing to labour the point too much) If you decide to sell or switch a fund via HL, you are given the option to sell or switch part of your holding either by units or by value. I assumed, somewhat naively, that if you chose to sell by value your profit would reduce but your original holding would effectively remain the same.

Similarly, with an income fund, that your profit would reduce, but your income would remain the same.

I do appreciate this is basic, entry level stuff and I possibly need to study O level economics. However I can say that in my 4 years, in terms of paper profits, I'm not actually doing too badly.

jimjames

Westphalia wrote: »

I assumed, somewhat naively, that if you chose to sell by value your profit would reduce but your original holding would effectively remain the same.

That's good news you've done well over the last 4 years, you must have had quite good nerves to have invested in 2009 but very wise to do so!

Any increase in value of holdings is only generated by the price of units going up so unfortunately in order to realise that gain you do have to sell units. Sometimes though you can hold income units which would generate income and then reinvest them buying more units. If that was the case then later on you could sell units and still have your original investment as well. But the unit price would still reflect any gains in the underlying assets and increase/decrease as well as producing income.

Westphalia

jimjames wrote: »

That's good news you've done well over the last 4 years, you must have had quite good nerves to have invested in 2009 but very wise to do so!

Any increase in value of holdings is only generated by the price of units going up so unfortunately in order to realise that gain you do have to sell units. Sometimes though you can hold income units which would generate income and then reinvest them buying more units. If that was the case then later on you could sell units and still have your original investment as well. But the unit price would still reflect any gains in the underlying assets and increase/decrease as well as producing income.

It was actually pure luck. I took voluntary retirement that year, and stuck my full ISA allowance into the IP Monthly Income Plus fund for no other reason than to generate some additional income. 3 years on I found myself sitting on a paper gain of around £3k, but realising I couldn't actually take any without reducing my income.

Prompted partly by Woodford's departure, I have now moved the entire balance to a new fund (Fidelity Moneybuilder Balanced) and opted instead for a further increase in income. Cake, cant, have, eat!

Apologies to the OP for disrupting the thread.

Wilkins

ukflippy wrote: »

Hi all,

The fund I did sell was the only one to have made a significant loss - 7%. Clearly, if my strategy is "sell things that have made a big loss", I'm not going to get anywhere fast!

If you are buying funds, I can't see the need to ever sell. This is passive investing, so you should not try to be active. You can rebalance through your buying strategy.

There is a case for occasional selling with individual shares, if you have made large gains or losses, but this should not happen with funds unless they are specifically high risk.