ISA investment general strategy

kidmugsy

KrytenIceCubeHead wrote: »

I do intend to use the new tax year to diversify my portfolio (some into the Far East, some bonds) whilst holding the core of it intact. My mate has 20 years to retirement, whereas I'm on 10 or so (assuming my target retirement age of 62 comes about).

In three years' time you'll be 55, and SIPPs or other personal pensions will be available to you flexibly. Look on those as the equivalent of extra S&S ISA opportunities.

kidmugsy

racing_blue wrote: »

In my view cash ISAs can nicely take the place of bonds in a private investor's portfolio, at a time when bond yields are very low.

Cash ISAs may outperform short dated bonds, and won't fall in price when interest rates rise- unlike bond funds, perhaps?

In ISAs I'd prefer to buy a short maturity gilt rather than a bond fund. I'd know exactly the maturity date and value, and the dates and values of the coupons.

masonic

kidmugsy wrote: »

In ISAs I'd prefer to buy a short maturity gilt rather than a bond fund. I'd know exactly the maturity date and value, and the dates and values of the coupons.

The trouble is at the moment, to get a gross redemption yield of more than the 1.5% typical of instant access cash ISAs, you'd need to buy a gilt with at least 8 years to maturity. To beat the best instant access cash ISA (2%), you'd need to buy a 18 year gilt and there are no gilts currently available on the secondary market that would give a yield that beats the best 4-5 year fixed rate cash ISAs.