S&S ISAs performance over recent years - anyone in the know?

Linton

Let me give you an example .....

One of my favourite funds is JPM Natural Resources. In the past 16 years it has averaged about 9% return per year and is now worth some 4 times its value in 2001. Sounds good? In the same period an investment in the FTSE100 with dividends re-invested would have about doubled in value. So JPM NR is exactly what you are looking for?

However:

May 2001-May 2008: increased in value 7-fold
May 2008-October2008: dropped in value by about 65%
October 2008-Jan 2011 increased in value 4-fold
Jan 2011-Jan 2015: dropped in value by 75%
Jan 2015-now: doubled in value

If you are prepared to invest for 16 years it's pretty good. 5 years perhaps a little risky, choose the wrong 5 years and you lose 3/4 of your money. So how much risk are you prepared to take? How long is "a number of years".

Charlton_King

Linton wrote: »

Let me give you an example .....

One of my favourite funds is JPM Natural Resources. In the past 16 years it has averaged about 9% return per year and is now worth some 4 times its value in 2001. Sounds good? In the same period an investment in the FTSE100 with dividends re-invested would have about doubled in value. So JPM NR is exactly what you are looking for?

However:

May 2001-May 2008: increased in value 7-fold
May 2008-October2008: dropped in value by about 65%
October 2008-Jan 2011 increased in value 4-fold
Jan 2011-Jan 2015: dropped in value by 75%
Jan 2015-now: doubled in value

If you are prepared to invest for 16 years it's pretty good. 5 years perhaps a little risky, choose the wrong 5 years and you lose 3/4 of your money. So how much risk are you prepared to take? How long is "a number of years".

Do you know, I could swear I put 'any or all of the money' in my last posting...

Never mind. I think I shall go elsewhere for this information. Thank you to those who actually bothered reading what I wrote.

Plus

Charlton_King wrote: »

Ok, as someone with 'a complete lack of knowledge', I shall ask this again... you know, on the grounds that, just maybe, the first two and a half years of the recent five years of 'rising market' WERE a pointer to the subsequent two and a half years.

To a certain degree, things that go up must come down. Usually they don't come down as much as they went up, but a fall is certain sooner or later. Often those falls can be very rapid, which tends to spook beginner investors, particularly those who got in at the 'dizzy heights' stage.

The point is nobody knows what the rollercoaster ahead looks like. This is the point of 'past performance is not a guide... ' etc. If you take a upward period and project it forwards, you'll end up with a curve that goes up and up to infinity, when actually what happens is it will eventually fall back (but then hopefully start rising again).

So it doesn't make sense to look at short term trends. Longer term trends (10-20 years) make more sense, because the peaks outweigh the troughs. But you have to be ready that things will fall, it's just a matter of time.

I am 'happy to risk losing' any or all of the money I put into this investment. I would have thought that 'no guarantees' means... just that. Or, are you saying that some investment firms actually DO guarantee a maximum level of loss..?? Are you deliberately quoting strange percentages to try to elicit more of my alleged 'naivety'..??

There are things called 'structured products' which sometimes have a loss guarantee. Generally they're expensive, overcomplicated, and very much tied up with the health of the bank that issues them (who pockets a lot of your returns). To be avoided in general.

A. a rough guide as to how this market has performed over the last few years?

Just look up the charts for a fund (eg Vantage Lifestrategy 60) or a market (eg FTSE All Share or S&P 500) on websites like MorningStar, Trustnet, Citywire or Yahoo Finance. That will show the peaks and the troughs. But it's meaningless because you can't project from the chart alone whether it will continue like that.

B. a suggestion as to a reasonable 'contender'? BLB53 proposed Vanguard Lifestrategy 60, for which I am duly grateful. Any other possibilities would be gratefully received.

There's no such things as a 'reasonable contender', it really depends what your requirements are. What you're doing is saying 'I'm hungry' and expecting a suggestion like 'number 47 at the Peking Palace'. When really we first need to know things like what meal you're looking for, what else you're eating, how hungry you are and what you're allergic to.

mollycat

Charlton_King wrote: »

B. a suggestion as to a reasonable 'contender'? BLB53 proposed Vanguard Lifestrategy 60, for which I am duly grateful. Any other possibilities would be gratefully received.

Impossible unless you reveal what you're hoping to achieve.

What is this £500+ per month saving being saved for? (Inheritance, major spends, etc)
Do you need more than this?
How much more?
Over what time scale?

BTW, "in retirement" is no help.

If you are 50 rather than 70 then doing the opposite of what is commonplace as you get older, (de-risking one's portfolio), is less counter intuitive.

Suspect you'll be happier if/when people come along and suggest investments for you.

Read monevator is my last bit of advice.

davieg11

Common ones on here seem to be Vanguard Lifestrategy 40, 60, 80 or 100. (100 being higher risk.)
L & G multi-index 6 and 7
HSBC Global strategy balanced or dynamic.
Type into google and you will find how they performed on morningstar or trustnet websites.

jimjames

Charlton_King wrote: »

So, once again, is there anyone out there who can give me:

A. a rough guide as to how this market has performed over the last few years?

and

B. a suggestion as to a reasonable 'contender'? BLB53 proposed Vanguard Lifestrategy 60, for which I am duly grateful. Any other possibilities would be gratefully received.

If you want to find out how the market has performed then a simple search using Google for the appropriate market will tell you. Likewise for the performance of an investment, look up the performance and you can compare how that relates to the market return.

Back to the OP, asking what performance for a S&S ISA is like asking what's the performance of petrol. It gives quite a difference response if it's in a Micra to a Ferrari. A S&S ISA is a wrapper, you can hold any multitude of investments inside it, what mix really depends of your risk profile, hence the questions about loss potential. Whether you have bonds in your portfolio or all equity will impact how that performance can vary.

If you want an example I have Fidelity China Special situations in my portfolio, over the last year it's up 39%, over 3 years up 93% and over 5 years 151%. Before that it had dropped significantly. It isn't the fund that matters, it's the overall portfolio and unless you have a multi asset fund like VLS which has already been mentioned then you can't give an specific return as there are so many variables. I'm not retired so my risk profile is probably very different to yours.

Out of interest, how come you've now decided to invest when you've not done so before when you had more time before retirement to ride out the market movements? Is it purely because you want a better return?

Plus

Charlton_King wrote: »

Do you know, I could swear I put 'any or all of the money' in my last posting....

What people are trying to tell you is risk is not a black and white thing, it's many shades of grey.

Let's say you put your money on red on roulette at the casino. That's very high risk, because if it's black you lose it all. It's actually a bad bet because, while the returns are double or nothing, the odds of winning double are less than 50/50 (the house takes a 2.7% cut). Not only could you lose all your money, it doesn't pay well enough for the risk if you win.

So you have to decide what risk/reward tradeoff you want. Higher risk generally brings higher rewards over the long term - but that can be decades. So it really depends on when you are likely to need the money and what other resources you could draw on if it suffered a big drop. Which is why we're asking these questions.

ruperts

I think you're being unnecessarily negative in your responses. People are just trying to help. In your original post you did imply you had some sort of expectation that because your friend has doubled his money in five years that means the chances of you being able to do the same are increased, but it really doesn't work like that. You did also specifically ask people to tell you what the catch is and that's exactly what they're doing.

The warnings you hear about past performance not being a guarantee of future returns aren't overly cautious, they are truthful - if anything they understate the risk. It's important to understand that over five years anything can happen and you might end up losing a serious amount of any money you invest. Most people aren't prepared to take that sort of risk, hence the posts trying to steer you towards having a serious think about your risk tolerance. You've subsequently said that you're happy to risk losing all of your money, which does give some insight into your risk tolerance, but I suspect if you went to see a financial advisor they'd want to go into a lot more depth before making any recommendations, and there are good reasons for that.

You also seem to be referring to stocks and shares ISA's as a market in themselves, which implies you don't understand that a stocks and shares ISA is just a wrapper in which a myriad of different investments can be held. There is no stocks and shares ISA market. Nobody can tell you how well it has done because it doesn't exist. It seems likely however that you're referring to the global stock market in general, in which case you can find information on past performances from the relevant indexes or through the performance of global funds such as Vanguard Lifestrategy 100%. Trustnet and Morning Star are good online resources for looking at past performance of all sorts of funds. Here is the link for vanguard 100 on trustnet: https://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=ACFDV

Again though, if you understand that past performance has absolutely no bearing on future performance, why would this information be relevant?

In terms of actual funds, if what you're looking for is exposure to the global stock market then various funds exist which all do largely the same thing, the Vanguard mentioned above being a popular example.

Stirfry

I have also just started investing for the first time. Myself and OH will be relying on the income from investments. The money is from selling our main home and inheritance hence just starting out. Does this mean it is a bad idea?

I was content at first to put money into fixed rate savings but only too aware of inflation risk going forward, so like the OP I thought I would give it a go. Looked at Buy to Let for some of the portfolio but since discarded that option as too much hassle. I have since done a lot of reading in this website and also the OU course Managing My Investments, to enable me to work out my risk strategy.

I take full responsibility for any errors I may have already made, I suppose only time will tell. I would be very happy to get even 4% return and am not worried if my original funds end up depleted as long as I can achieve x amount of income for the next 30 years. So I know what my aims are.

Just because at the age of 59 years I have only now been able to invest significant sums, is it wrong because I will be soon relying on the dividend income? Perhaps the OP is already aware and is willing to put in money he can afford to loose to take the gamble?

OH has S&S isa Lifestrategy 60 and IT's Dunedin Income Growth, Henderson Far East Income, Scottish American Investment and F & C Capital and Income. Already at a lose because of Brokers fees and buying at the top of the market. Am I being overly ambitious with these choices, going down the IT route at this stage of play?

Plus

A couple of suggestions for the OP:

As a beginner investor, it might be worth looking at some of the 'robo-advice' platforms - they basically ask you some questions and the computer tries to measure your risk level. One such is Nutmeg and their fixed allocation portfolios - you basically pick your risk tolerance from 5 levels and they have portfolios to match each one. They're quite expensive as things go, but perhaps worth trying when starting out.

Another is that Trustnet gives each fund a 'FE risk score' that's a number that indicates how risky it is, with the FTSE 100 being 100. That should give you an idea when comparing funds.

But neither of these are going to help with the counterintuitive mindset that it's better to buy things that have done badly and are 'cheap' in the hope they will grow, rather than things that are 'expensive' because they've already had a good run and are likely to be due for a period of underperformance. It really is hard to get into the way of thinking that the best thing to do in a market crash is not to sell, it's to buy more and ride it out. Buy-high, sell-low is the classic newbie mistake.