How do I manage market risk moving a large cash ISA into investments?

ratechaser

Morning all,

Mrs RC and I have circa 110k of cash ISAs maturing in a months time. Despite being top rate taxpayers, I've just about reached the end of my tether with current deposit rates, and want to seriously look at moving this over into longer term investments.

The concern that I have is that dumping that much into fixed income/equities in one go carries a fair amount of short to mid term market risk (versus drip feeding). Conversely, I don't want a lot of cash sitting around earning nothing whilst waiting to be invested.

So... Are there any hybrid ISAs out there that pay a half decent return on cash, and support drip feeding of that cash over a longer period? In terms of the investments themselves, I'm looking at a fairly vanilla approach, index trackers and govts as a starting point, so no need for anything particularly exotic on that side... In fact to be clear we are both in financial services so self-select investments are a bit of a no-no for compliance reasons...

Thanks
RC

colsten

If you are not happy to DIY it, and especially if you are a top rate tax payer, you should be paying an IFA, and perhaps also an accountant, to make the best out of your money.

ratechaser

Not saying that I'm unhappy to DIY it Colsten... I was just asking if anyone knew of a product that was well placed to handle this situation...

Eco_Miser

I'm not aware of any hybrid ISAs, and according to the link at the top of the page, the best instant access ISA pays 1.4%.

colsten

If you believe there is a product that was well placed to handle this situation but don't know what it is, I honestly think you should be seeking / paying for professional advice. Any short answer pointing you at "a product" would almost certainly be a con.

EDIT: For the avoidance of any doubt, I was not suggesting that Eco Miser pointed you at any product. I don't think he did, he just mentioned an example of a generally available cash ISA.

ratechaser

OK, fair enough, I'm not asking for financial advice here. I'm simply hypothesising that there must be an ISA market for people such as me, that want to migrate from deposit to investment in a way that smoothes out the placement risk.

colsten

ratechaser wrote: »

OK, fair enough, I'm not asking for financial advice here. I'm simply hypothesising that there must be an ISA market for people such as me, that want to migrate from deposit to investment in a way that smoothes out the placement risk.

You are right, there will be such a market, if you listen long enough for the marketing messages that fulfill the wishes of apparent investors, and if you wait long enough for enough takers.

Whether the investors will come out alright is anyone's guess.

#BernieMadoff

jimjames

ratechaser wrote: »

OK, fair enough, I'm not asking for financial advice here. I'm simply hypothesising that there must be an ISA market for people such as me, that want to migrate from deposit to investment in a way that smoothes out the placement risk.

Fidelity and HL both offer options to put money in over a period of time. However I don't believe you get interest on that money.
If some markets are 15% down from previous peak would that indicate a good time to buy?

AnotherJoe

ratechaser wrote: »

OK, fair enough, I'm not asking for financial advice here. I'm simply hypothesising that there must be an ISA market for people such as me, that want to migrate from deposit to investment in a way that smoothes out the placement risk.

Surely you can do that just by drip feeding yourself? Or put into something like a vanguard life strategy at a mix that works for you which is a mix of shares and bonds.

masonic

Some discussion on the virtues of drip feeding a lump sum here: https://forums.moneysavingexpert.com/discussion/comment/70429599#Comment_70429599

There are plenty of defensive funds that you can choose from if you wish to phase your investment. But surely the easiest option is to split up your funds into tranches using partial ISA transfers.

Glen_Clark

jimjames wrote: »

If some markets are 15% down from previous peak would that indicate a good time to buy?

All you can say is its a better time now than it was then.
I would invest it all in one go, it only leaves you in the same position as those of us already fully invested. The only problem is the pschological factor. If the market falls 10% the week after you invest you will probably feel worse than those of us who have been invested for years. (maybe even panic and sell at the bottom of the market?) Even though we all have the same paper loss.
I don't see drip feeding as 'managing market risk' - more like delaying market risk until the time you are fully invested.
Don't forget that whilst you are in cash you are also at risk (inflation, and being too late to buy at current share prices.)