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

Malthusian

ratechaser wrote: »

While I know SJP tends to get slated on costs, I did at least think the service level was meant to be pretty good

Currently taking six weeks to respond to simple queries and transfer out requests. The brochures are nice and glossy though, or so I'm told.

I am not a fan of drip-feeding. There is an awful lot of misinformation and bad maths in the numerous articles promoting it. It works a psychological trick, and if the choice is between drip-feeding or leaving it all stuffed under the mattress then drip-feeding is better. But anyone who understands that it is a psychological trick should also be able to understand why investing in one go is better. (Because no-one knows what the markets are going to do in the next 12 months, but markets go up more times than they go down, and by staying in cash you miss out on dividends.)

If you think you are going to panic and pull out if there is a market fall within the next 12 months, then what about a market fall in 13 months - when even after drip feeding you'll be fully invested?

bowlhead99

ratechaser wrote: »

4) I will pass on the HL cash rate, although appreciate the answer as it actually goes some way to answering the core question of my post. Now if there was something similar offering 1% on cash pending a drip feed, that could be worth a closer look.

The issue is that when your cash is in an S&S ISA or SIPP wrapper it is held separate from the provider's own assets so they can't go and invest it or use it in their own business and give you a nice rate on it. All they can do is lodge it with a financial institution for you.

If you're dripping monthly you will need the first slice of it within 1 and 30 days from now and the rest of it between a month and a year. 1-week to 1-month libor is about 0.5% and 2-month is 0.55% So HL are being quite good by placing your spare cash somewhere that it gets 0.5% and is available on an instant access, no notice basis if you fancy accelerating the pace of your drip feed, rather than committing to leave it as cash for a month or more.

Of course, most of the non-cash assets on their platform attract high platform fees so they can afford to cross-subsidise things that might make them generally more attractive to certain customers - it helps with the marketing.

There are some banks that offer more than 0.5% for short notice ISAs so if you want to get those rates on your unspent cash you'll just have to use those and transfer lumps over to your S&S ISA manually on a "just in time" basis to create yourself your own little virtual "drip feed product".

Glen_Clark

Drip feeding.... stop losses.... sell your laggards... sell that... buy this... doesn't matter what you buy and sell as long as you trade and generate fees for the middlemen giving you all these bright ideas
But if you do want to drip feed consider an x-o plus account - allows you to buy up to the value of shares you hold without paying up front - you only pay on settlement day (3 days after the trade) and still the only charges are £5.95 a trade.

Malthusian

Glen_Clark wrote: »

But if you do want to drip feed consider an x-o plus account - allows you to buy up to the value of shares you hold without paying up front - you only pay on settlement day (3 days after the trade) and still the only charges are £5.95 a trade.

That strikes me as a very expensive way to drip-feed given that you're paying 12 lots of £5.95 per holding instead of 1 lot. Unless I'm missing something. Fidelity and other platforms with a built in "drip-feeding" facility don't usually charge you additional initial fees, at least not when investing in funds.

gadgetmind

I fully fund our ISAs at around this time of year (use new CGT allowances and new ISA allowances) and could boost cash and drip feed, but TBH find it easier just to spunk the lot in one go.

It worked *really* badly last year, but 2x ISA allowances is such a small percentage of our pots after multiple decades of investing that I can't get excited about it.

Glen_Clark

Malthusian wrote: »

That strikes me as a very expensive way to drip-feed given that you're paying 12 lots of £5.95 per holding instead of 1 lot. Unless I'm missing something. Fidelity and other platforms with a built in "drip-feeding" facility don't usually charge you additional initial fees, at least not when investing in funds.

But what fees do they charge for the funds?
I pay 0.07% pa for a S&P 500 ETF (The type Warren Buffet suggested his wife invest her inheritance in) plus the dealing charge and thats it.
Put my ISA allowance into SWDA (World ETF with 0.2% annual charge) this morning as the S&P 500 seems to have had a good run - the spread and charges were so low that by the time I had entered it into my spreadsheet 5 minutes later it was showing a profit.