S+S ISA for Mortgage Repayment

cloud_dog

moneylover wrote: »

What happened in 2006?

We (I) had the May/June 2006 correction and didn't get out quick enough. YoY no gain

moneylover

dunstonh wrote: »

Personally, I use ISAs against my mortgage and average 15% a year (including crash years) but my target growth rate was just 5%. Working on a low target growth rate is sensible. Also, you need to keep it under review. Invest and forget is not something you should be doing with investment linked mortgages.

Dunstan, if this was a client's portfolio of investments rather than yours would they be achieving the same provided they had an annual review? Or have you achieved this 15% by making more than annual changes?

dunstonh

moneylover wrote: »

Dunstan, if this was a client's portfolio of investments rather than yours would they be achieving the same provided they had an annual review? Or have you achieved this 15% by making more than annual changes?

I get the 0.5% trail rebated but the rest is the same.

cagey76

thanks for all the responses everyone

cloud_dog, they are nice figures, would be over the moon if I could get somewhere near those. Do you use a IFA ?

moneylover

dunstonh wrote: »

I get the 0.5% trail rebated but the rest is the same.

Just to persist, if I may, so that I am clear, leaving aside the trail rebated would a client need more than an annual review to get the 15% if your portfolio was theirs ? I think 15% is wonderful.

cloud_dog

cagey76 wrote: »

cloud_dog, they are nice figures, would be over the moon if I could get somewhere near those. Do you use a IFA ?

No IFA used. Tend to do a lot of research.

My (our) investments are split between UT's / OIEC's and shares (stocks), about 65% in stocks atm, with the UT's/OIECs not being traded very often - although I managed to be 80+% cash by the end of July this year (something I'm quite chuffed about).

Someone mentioned Trustnet on this thread (or another one) and for funds they are a prime source of information, rating, and analysis.

Another method for funds is to 'follow the manager'. There are some very good managers out there who consistently perform in the top percentile, and sometimes they move investment houses. I used to use BestInvest to pretty much do the same comparisons for funds but on managers.

http://www.bestinvest.co.uk/fundmanagers/fmpro?-db=webprices.fp5&-format=index.htm&-token=&-token.1=99&-token.2=5&-token.3=3&-view

I use SelfTrade, and have both stocks and funds with them - just makes it easier to have them with one broker, especially if you want to transfer monies between accounts. My wife's SIPP is with HL and is invested solely in funds.

The important thing to remember with investing is that you can never guarantee returns, even an average. After the bubble burst in 2001 it took about 3 years to get back to where I was - not nice.

Trading is a constant battle between fear and greed. The recent 'correction' in shares (credit crunch) is a prime example. After the correction (remember I was 80+% cash) my mind was telling to start re-investing (accumulating) back in to the shares I liked but my fear of another or continued drop stopped me.

I have to admit that I changed my trading philosophy after the Tech Bubble - before it was all about making money, as much as I could, but now it is all about retaining money. So, I am comfortable with occasionally taking money off the table and not making as much as I could have - there are ALWAYS other opportunities.

One way to ignore the fear / greed is to just invest monthly and pound cost average.

dunstonh

moneylover wrote: »

Just to persist, if I may, so that I am clear, leaving aside the trail rebated would a client need more than an annual review to get the 15% if your portfolio was theirs ? I think 15% is wonderful.

Annual is fine.

I aim for double digits but personally I am medium/high risk in investment nature but periodically I take gains and move them into something safer. Its been a good run for med/high risk funds (or higher) in general.

One thing you must not do though is follow an investment strategy or technique that is above your own risk profile. Remember its easy to make money when things are going well and its easy to get carried away when the corrections/crashes get forgotten.

jamesd

cagey76, sadly EdInvestor has repeated a false claim about the HYP.

EdInvestor wrote: »

The yield on the portfolio will match the interest rate on the mortgage

The mortgage here is 5.1%. HYP1 exceeded that only in 2002 when it's yield was 5.25%. It's average yield over six years has been just 4.18% and it's been trending down over the years. The yield on the HYP unlikely to match the interest rate on your mortgage.

Meanwhile the Invesco Perpetual Higher Income fund did 4% better than the HYP with lower risk (much less concentration of holdings).

so it's significantly less risky.

It invests in FTSE 100 companies like Northern Rock that go bust or nearly bust about once every ten years. It's not low risk compared to investment funds that in practice have to spread their investments over a minimum of 30-40 companies instead of 10-15.

Going back to your question it's entirely reasonable to pay off your mortgage as you plan but you might want to read the this topic that contains some discussion of the risks and how you can allow for them.

It's also a bad idea to repay the mortgage as soon as you can. If you do that you lose the large capital amount that's growing faster than the mortgage interest rate. Better to wait at least a few years and then start gradually paying off say 10% a year so that the majority of the investment continues growing. This way you can pay off the mortgage and still be left with capital greater in value than the mortgage to continue growing and provide an early retirement pot.

cagey76

cloud_dog, thanks for sharing the information, I have already started following up on those links.

jamesd, thanks for your mail, the link is a great read.

Since starting this thread I have already read so much, am looking forward to taking on these new streams of research. It has woken me up to all areas of my finances, have even dug out my old company pension docs tonight, but thats for a different thread.