Should I abandon ISA's

bigadaj

Six years is at teh short end of teh time range for investing, five years is considered absolute minimum, ten years better and obviously people can be invested for thirty or forty years.

For your purposes then my thoughts would be that you'd either want a diversified tracker, ideally across different markets and including bonds which should reduce volatility and minimise risk and losses. Alternatively look at equity income funds that concentrate on paying out from dividends though with risk on the value as the underlying share or bond prices vary, though the value hopefully increases even after income is paid out.

Have a look on motley fool and moneyvator websites, high yield portfolios, hyps, might be relevant.

pip895

If you don't fancy spending lots of time researching and managing your investments I would recommend passive investing - being in the market rather than trying to beat it.


Tim Hale smarter investing is the recommended text although if you read through a few past posts on here you will get the gist.

trickydicky14

Hello and thanks bigadaj & pip895

I will take some time out and follow some of the sign posts you have directed me to. Regarding the time span for investment, I know you need to be in it for the long haul and the reference to six years was intended to be a minimum period.

I think it would be prudent to consider an entry point with some ‘passive investment’ whilst I become a little more knowledgeable, I feel the clock is ticking and need to move forward but with caution.

Going back to my original question regarding ISA’s can all this investment ‘passive or otherwise be conducted within the ISA basket giving tax free returns?

At this moment in time I have taken out a cash ISA for 2014 - 2015 up to the maximum limit but in July when the ISA increases to £15000, can I use the remaining top up in a S&S ISA?

colsten

trickydicky14 wrote: »

Going back to my original question regarding ISA’s can all this investment ‘passive or otherwise be conducted within the ISA basket giving tax free returns?

all investments can be passive. Difference between investment inside ISAs and outside ISAs is that ISA provides a tax wrapper.

trickydicky14 wrote: »

At this moment in time I have taken out a cash ISA for 2014 - 2015 up to the maximum limit but in July when the ISA increases to £15000, can I use the remaining top up in a S&S ISA?

yes you can

pip895

You can also transfer previous years cash ISAs into a S&S ISA. If you pick a platform - Charles Stanley for instance they will be able to advise on how to go about it.

jamesd

Are you making any use of peer to peer investing? That can be quite profitable, though picking just the biggest name is not a good plan.

For other investments you might consider this sort of mixture initially:

40% Vanguard Global tracker ETF
10% Vanguard European tracker ETF
10% UK commercial property managed fund
20% UK mixed income/growth fund, say Invesco Perpetual Distribution
20% strategic bond fund

This is deliberately highly weighted towards income-producing funds because I think that you're likely to be more comfortable seeing some. I think that the income in a year is likely to be higher than you get today from your savings accounts, so I think that you'll like that.

The European fund is there to increase the weight to a market that is currently at relatively low values compared to the US and UK. Expect a drop of 20% quite often and 40% once or twice a decade.

UK commercial property is there because that is somewhat lower than might be expected long term, it hasn't fully recovered from 2008. Expect a drop of 10-20% quite often and 30-40% periodically.

Income and growth fund is to get you some bond exposure and income in a fund that has a broad bond investing remit and that uses an equity income approach for its equity part. Expect a drop of 10-20% quite often and 30-40% periodically.

Strategic bond fund is more bond allocation but in a fund type that can avoid the more overpriced parts of the bond market. Expect a drop of 10-20% quite often and 20-30% periodically.

The global tracker is at 40% partly because it has a high US weighting and the US is currently at high price levels, so I don't want to point you into too high a US weighting when I know that historically investment returns are lower if bought at high price times and higher if bought at low price times. Expect a drop of 20% quite often and 40% once or twice a decade.

There are plenty of alternative mixtures that could be suggested. This is just to give you some sort of starting idea of what might be reasonable given your background, without too much chance of scaring you excessively during a normal market drop. It's likely that every person who has written to you would make a different suggestion from every other person.

You can transfer any amount of past year ISA money into a S&S ISA to use for this sort of thing. No restriction on cash to S&S transfers.

polymaff

bowlhead99 wrote: »

Another thing to consider is that when you become eligible for state pension in 6 years you don't actually have to take it, you could defer instead. That might sound like madness but if you have got yourself used to living on only your first pension and a bit of saving/investment income, you might be able to ignore the state one for a year or two which would be a potentially lucrative opportunity to consider.

Though do bear in mind that the deferral terms for post-2016 state pensions are nothing like so generous as they are currently. Just under half the current mark-up rate meaning it will take you about 20 years of drawing the state pension to catch back up. Do you feel lucky?