Is a FTSE 100 TRACKING ISA The best place for my £50 a month?

Lerxst_in_Wonderland

I took out a Ftse 100 ISA with Halifax in Jan 2005. I am on a tight budget and can only save £50 a month. I have paid in £1,700 to date. The income earned from shares in the last statement period Oct 06 to Apr 07 was £11.97 The six months prior to that was £13.98.
With the amount I am saving is it worthwhile keeping this going or should I tranfer it into a normal Cash ISA?!
Any tips or advice would be much appreciated.

dunstonh

I just don't understand if someone lied to my dad by saying they would get a lump sum on top of paying off their mortgage how they can get away with that.

You arent really comparing like for like.

FTSE100 trackers havent performed well for at least 15 years. It hasnt been a good index to track. Of course that could change if large caps come into favour.

At this moment in time, I dont think the risk and reward for a FTSE tracker is worth it. All the risk with limited potential gain. That said, moving it to a cash ISA isnt the answer. Moving it to a better fund or two is a better option.

Lerxst_in_Wonderland

Many thanks. What kind of funds should I be looking at?

Lerxst_in_Wonderland

dunstonh wrote: »

You arent really comparing like for like.

FTSE100 trackers havent performed well for at least 15 years. It hasnt been a good index to track. Of course that could change if large caps come into favour.

At this moment in time, I dont think the risk and reward for a FTSE tracker is worth it. All the risk with limited potential gain. That said, moving it to a cash ISA isnt the answer. Moving it to a better fund or two is a better option.

First time Ive used this so I may have duplicated this reply. What type of funds are you referring to? Thankd

StevieJ

Lerxst_in_Wonderland wrote: »

I took out a Ftse 100 ISA with Halifax in Jan 2005. I am on a tight budget and can only save £50 a month. I have paid in £1,700 to date. The income earned from shares in the last statement period Oct 06 to Apr 07 was £11.97 The six months prior to that was £13.98.
With the amount I am saving is it worthwhile keeping this going or should I tranfer it into a normal Cash ISA?!
Any tips or advice would be much appreciated.

I presume you are quoting dividend income only, do they not send you a statement of how much your investment is now worth? These Ftse trackers are OK if you just want to invest with no research, you should seek out the lowest charges though e.g Fidelity Moneybuilder or Legal and General.

Lerxst_in_Wonderland

StevieJ wrote: »

I presume you are quoting dividend income only, do they not send you a statement of how much your investment is now worth? These Ftse trackers are OK if you just want to invest with no research, you should seek out the lowest charges though e.g Fidelity Moneybuilder or Legal and General.

Thanks. Halifax do send statements every 6 months. I looked up the value online yesterday and it was £1695, £5 less than I have paid in!!! I know this is a longer term plan but on this basis my money is clearly going to be better elsewhere??

pamaris

According to trustnet, this particular fund is up by about 45% since January 2005. So, you should have some sort of positive return, even if it is not the best of all funds. If you want to understand indexing a little better, read "A Random Walk Down Wall Street" by Burton Malkiel. Then, at least you will be investing with purpose and understanding.

StevieJ

Lerxst_in_Wonderland wrote: »

Thanks. Halifax do send statements every 6 months. I looked up the value online yesterday and it was £1695, £5 less than I have paid in!!! I know this is a longer term plan but on this basis my money is clearly going to be better elsewhere??

If you started in Jan 2005 I guess you have made the following payments:
2005 = 12*50 =600
2006 =12*50 =600
2007 =8*50 = 400 ( up to and inclusive Aug)

Grand total 1600 not 1700, are you also withdrawing (not rolling up the dividends)?

If you had invested in a tax free cash Isa at 5% over this period, I estimate that your savings would now be worth around 1708.

I am no expert so I would be grateful if someone could check out those calculations.

jamesd

For some ideas, see Ok then - How do I choose a S&S ISA. One quite good place to start is in the UK equity income sector, with a fund like Invesco Perpetual Income. That still has lots of large companies but has outperformed the FTSE100.

EagerLearner

I am paying £50 into HL each month (at the moment into Neptune Global Growth) and have various other funds too - Jupiter China accumulation, Allianz BRIC and Melchior Asia, First State Global Resources, Jupiter Emerging European Opps and Lazard Emerging Markets. Can anyone advise on whether these are good choices for a newbie? Ideally I want to assess them each month but I am still learning so hopefully you might advise on whether these are ok and also if Neptune Global is a fairly safe option for the monthly £50.

I also wanted to ask what your thoughts are re the current Northern Rock situation - as I have no UK sector, my selection shouldn't be tooooo badly affected should it? I want to understand if the NR thing is just the tip of the iceberg... just as I have decided to start investing!

jamesd

EagerLearner, you're extremely concentrated in emerging markets so you can expect to see value swings of 70% or more in a bad year. To see what a 9 out of 10 fund risk spread looks like have a look at this.

For you, NR is just a symptom of what might or might not turn out to be a global downturn that could seriously hurt emerging markets. Too soon to tell if it will become that.