Timing the market

System

ValiantSon wrote: »

Your investment timeframe is really quite short. Five years for accumulation is less than one economic cycle (typically considered to be ten years) and there is a much higher risk of losses in such a short time. If you were prepared to stay invested for a minimum of ten years then your plan would make more sense.

I assume that you are intending to invest half of the money before 6th April and then half after to fall within the ISA allowance. Have you put any money into an ISA this tax year, because if you have then you can't put another £20,000 in an S&S ISA.

They can transfer the cash ISA to a S&S ISA so the ISA allowance is not relevant.

bowlhead99

capital0ne wrote: »

I can never understand why anyone waits till the last few months of the tax year to invest their ISA allowance. If you've got it invest it on 6th April - works for me

ossie48 wrote: »

So you edited out the first part of my sentence that said " I'm new to this as well " to make a point.

I'm new so why not get in before 6th April so I can get in again after 6th April ?

As a practical point, I never do my ISA investing at the start of a tax year. Later in the tax year I have more idea of my total disposable income, what major capital items I'll need to have bought during the year, my tax band, and my likely future needs, and can decide how best to split between ISA vs pension vs VCT (or the occasional EIS) vs keep in cash. So I only drip in a nominal amount into an ISA and SIPP by monthly direct debit and the bulk of my investments are committed later, often at the tail end of the tax year.

As the government allows you to decide how much money you want to put into an ISA right up until the last day of the tax year, there is no need to scramble on day one, it is more comfortable to live your life more flexibly. There is the issue that if you throw it into an S&S ISA and decide ten months later you'd rather use it for something else or keep in cash, you may have lost value in the meantime ; there is also the practical point that many S&S providers do not offer 'flexible' ISAs that allow you to remove money mid year and then make replacement contributions before the year's end. There are of course some exceptions to that like Charles Stanley Direct.

In some countries such as USA, you can make your IRA contribution right up until the due date of your tax return some 3.5 months after the tax year end, which allows you to maximise all your planning and reliefs and is quite useful. Over here we have almost a year to do our tax returns so are not granted that luxury.

I guess if you're capital0ne and well off, with more money than he can spend and lots of money in cash and unwrapped investments which could benefit from being put inside an ISA wrapper, then it is something of a no-brainer to flip some of those assets into an ISA as soon as the ISA becomes available. The 'average' person, who doesn't have that luxury, may have more planning to do.

capital0ne wrote: »

Anyone who drip feeds shouldn't be any where near stocks and shares.

I'll write that one off as trolling / baiting.

talexuser

I'd watch out for interest rates. I have a feeling that some, maybe a lot, of the market has been driven by people who need income and could not get it from savings. If savings start providing rates a little nearer inflation (but obviously still nowhere near beating it) the sell off could start from less experienced investors pulling out of the market to go back into cash, and could start a trend as the market falls are reported day after day.

Alexland

bowlhead99 wrote: »

As the government allows you to decide how much money you want to put into an ISA right up until the last day of the tax year, there is no need to scramble on day one, it is more comfortable to live your life more flexibly.

I agree our S&S ISAs are the final dumping ground for money that hasn't ended up during the year in our pension, LISA or JISA accounts. Across the whole set it really is amazing how much money a family is allowed to contribute into tax advantaged accounts. We run a bit light on cash over the year end finish line to try an use as much of the annual ISA limit as possible.

Alex

Thrugelmir

DairyQueen wrote: »

There's scant evidence that experts can time the market so what are the chances for we amateurs? (Answers on a postcard). I don't even try.

The experts often are the market. As it's their activity which moves prices of an individual stock etc. Much gets written about Buffet for example. One of his favourite stocks is Coca Cola. Berkshire Hathaway owns some 9% of the Company. Any sizable change in the holding will move the price accordingly.

economic

If its all about tme in the market rather then timing the market, why not invest the cash you will invest anyway, even before the new tax year, and then bed & ISA it in the new tax year.

capital0ne

Thrugelmir wrote: »

How often has the market fallen 40% in a single day? :think:

Who mentioned a single day, losses can occur over an extended period of time like weeks, months etc

Audaxer

sebthered wrote: »

Saved me from posting the same question.
I have a maturing cash ISA and my plan is to invest it in a s&s ISA next week (lump sum £40k)
I intend to use it as a top up from my personal pension (keeping me under the tax threshold)
The accumulation period will be 5 years and de-accumulation 5-8 years (I'm assuming most stay invested during this phase ?)
So, is my strategy wise or unwise....
You thought would be appreciated.

If you are planning starting to de-accumulate in 5 years time, I don't see anything wrong with that if you are going to be just taking income and keeping the rest invested. I would keep a cash buffer so that you don't need to sell capital for income at times when there is an equity crash.

Glen_Clark

talexuser wrote: »

I'd watch out for interest rates. I have a feeling that some, maybe a lot, of the market has been driven by people who need income and could not get it from savings. If savings start providing rates a little nearer inflation (but obviously still nowhere near beating it) the sell off could start from less experienced investors pulling out of the market to go back into cash, and could start a trend as the market falls are reported day after day.

Yes but interest rate rises have been predicted ever since 2007 when we had this emergency interest rate of 0.5% introduced. So I have a feeling the Government is hooked on low interest rates (and consequent high property prices) like a junkie on heroin, and will never raise interest rates of its own volition. Not until its forced to by hyperinflation, in which caser I wouldn't want to be holding Sterling anyway.

talexuser

Glen_Clark wrote: »

Yes but interest rate rises have been predicted ever since 2007 when we had this emergency interest rate of 0.5% introduced.

Basically agree but more interested in the Fed and what happens as Trump stokes up a boom that starts inflation - but again inflation is a way out of debt so may be wanted.