Where would you put your £4000 mini-shares ISA money?

solventguy

Hi -

I am thinking of investing in a mini-shares-ISA, and wondered if people on this board had any advice or recommendations. This could be about specific products, but I'd also be interested in general philosophy (money-wise) about saving for retirement.

My situation: Early 40's. Reasonable job. Cash-ISA sorted. I've have a pension through work, but would like to save more (I started a bit late).

Preferences: I want nothing to do with property! I'm not worried about short-term variablility in the markets. Again, this is retirement money. I'd prefer low managment fees on a fund, but I suppose everyone does. I want something that I could just put money into and forget about.

Thoughts: Simple tracker fund? Retirement fund? I just don't have any idea now.

Any advice would be most welcome...

Aegis

In my view, £4k means a minimum of 4 different funds. For preference I would go with funds from different sectors and would generally avoid trackers because they aren't going to beat good actively managed funds.

If you're not too worried about the volatility, you might want to think of something like 1k in UK Equities, 1k in UK Equities & Bonds, and 2k in more risky funds, like emerging markets or other specialist funds. That then balances out the risk at about the medium-high level and gives reasonably growth potential and some protection against downturn.

JohalaReewi

Have a look over at the Motley Fool site for loads of information and ideas.
http://www.fool.co.uk/isas/compare-isas.aspx

While trackers aren't going to be top of the pile, lots of funds don't beat the market average (and you still have to pay the fees) so trackers aren't a bad idea.

ramagel

solventguy wrote: »

Where would you put your £4000 mini-shares ISA money?

In a savings account until things settle down, or March 08 - later if you're not going to have the £4k to invest next ISA year.


I think Aegis has a good approach there. When we started out (with £14k joint) we invested as low as £500 (Threadneedle Latin America) - how I wish we'd had more in that! We've put more into that over time, I'm pleased to say. Our biggest was £1k parcels in things as varied as Merrill Lynch Gold and General, Schroeder UK mid 250, Henderson Cash and a Barings Bond fund. We got rid of the last two dogs about 9 months later. Over the intervening years we've consolidated a bit and no longer have as many small parcels* as we did, but we've still got 45 'lots'* of 28 funds in our 8 ISAs.

It sort of depends how important £4k is - when we started the £14k was very important, but I didn't know I was gambling quite as much as I was (it paid off) - I could have lost a bundle, as it is I did well.

*What IS the right name for them ....

EdInvestor

ramagel wrote: »

we've still got 45 'lots'* of 28 funds in our 8 ISAs.

Ever considered consolidating that lot into one self select ISA in one spot so you can see everything online on one screen?

Selftrade do a good deal, only 25 quid a year fear regardless of ISA size.Initial charges on fiunds are discounted and there's no dealing fee.

https://www.selftrade.co.uk

ramagel

EdInvestor wrote: »

Ever considered consolidating that lot into one self select ISA in one spot so you can see everything online on one screen?

I'm not quite sure what you mean - maybe I made it look as if we were a bit disjointed. Oh, in some things we quite clearly are, btw! All 8 ISAs are with Fidelity/FundsNetwork all currently registered with Torquil Clarke.

Is that the same sort of thing you were suggesting, or have I missed your point entirely?

Jake'sGran

I started to consider income in retirement in my 40s. I had very little knowledge of the stock market but used to read Times Money every Sunday in bed and believed everything I read. The performance tables seemed very impressive so I invested in Fidelity Special Situations. Turned out to be a very good first investment. I started with monthly payment of £40 and stopped at £4400 w.hen my husband was made redundant. On 18 Dec 06 it was worth £50,363 (when they split the fund). Not long after that the privatisations started so I bought a lot of those. Then came carpet bagging but today three lots of the shares I was given have drastically reduced in value. They didn't cost anything so I can't complain.

I knew I would have only a small pension so I continued to invest and now have a varied portfolio. Like you I use my cash ISA each year and the balance in equities. Invesco Perpetual Income has a great reputation so three mini ISAs went into that. M & G Global Basics is doing well also Artemis Smaller Companies. I have not switched many, just the original M&G PEP as my choices were poor. Tracker funds seem very boring to me. I had one with Virgin and it was a complete waste of time. There are some good European funds and I have Fidelity but there may be better ones that you could compare.

Today, after some research, I placed an order with HL for Allianz Global Investors. Have a look, it just keeps rising but this can change of course.
HL will discount all the initial fee and rebate some of their annual commission.

It's not the right time for property and I have not been interested in that anyway. Today I also looked at Neptune Russia & Greater Russia but it is
more risky I think. I fancied Merrill Lynch Gold & General but it may have reached a peak (they say).

I wonder what Ed thinks about my Allianz investment. Maybe I should have split it (£3000).

Hope this gives you some ideas Solventguy.

djbd1973

Thanks for asking the question SolventGuy.

I have had similar thoughts but more along the lines of moving a current PEP/ISA allowances to a better performing ISA S&S.

I currently have £4400 in the Henderson UK Growth & Income fund that has been in there years and I had forgotten about it to be honest. It was originally two products that were merged into the same fund; one PEP and later an ISA. My initial reasons were as a back up to my endowment mortgage but now I am thinking of keeping it to grow for the future as a egg nest and possibly retirement but at £4400 and the fact that the value decreased over the last 6 months, I can't see it doing any good as it is if I leave it with Hendersons. I have asked a local IFA that I know to give me some options and he is coming to see me Monday as I have the day off. I don't have the confidence to pick funds myself. Personally I don't want to go for high risk but I would like to be able to see it grow over the years at say 10% or more even if I can follow a successful fund manager.

solventguy

Thanks for all of these useful responses!

Aegis, I like the idea of investing in multiple funds. I'd like exposure to UK equities, but something in addition might be worthwhile. Like Jake's Gran, I'm a regular Sunday Times reader, and a recurring theme is the merits of passive tracker funds vs. active funds. In today's volatile markets, active funds might be a bit of a safer bet. Perhaps I'll do a bit of both.

Ramagel - why would you wait until March 08 (is it just until next tax year)? My £4K is important, because I've saved it and don't like wasting money, but my thought is that with the market down a bit it might be a good time to buy. Yes, it might sink more, and I'm not too worried about this, my bet (although I'm not really the gambling type) is that things will be up in a 5 to 10 year time-frame. If the investments are throwing off some dividends in the meantime, all the better. I was also thinking that investing £4k now and then drip feeding another £4k in next year, etc., starts to build a bit of momentum. That said, perhaps you are right: perhaps there's no reason (except my contrarian urge) to enter the markets at the moment.

JohalaReewi - thanks for the useful link. I found a nice, low cost index tracker that I want to find out more about...

ramagel

solventguy wrote: »

Ramagel - why would you wait until March 08 (is it just until next tax year)? <snip>
That said, perhaps you are right: perhaps there's no reason (except my contrarian urge) to enter the markets at the moment.

I say March 08 because if you need to get your money into ISAs in 07/08 that's the last time.

If you see bargains, go for them! One of my favourite sayings is don't buy funds that have shot up - they might have nowhere to go but down!

I'm waiting to do anything with my portfolio until things settle down a bit more. I just can't see any patterns and can't accumulate enough 'feel' to make choices (I mean I'm £5k down this last week, but a week ago I was at my peak for this year) - it's a bit too volatile with too many factors playing against and alongside each other at the moment for my tastes to be making any significant moves. Oh look, significant is all relative - I'm only talking about shifting £14k or so around - taking some profits and hopefully finding some new runners ....

Personally, if I can't see where to put the £14k of profits I want to take from my star performers by March 08, I'll take it out in cash, and wait until later in 08/09 before putting it back in. Why? "Sell in May and go away and don't come back till St' Ledger's day".

In other words, rumour hath it (and history bears out that) markets tend to drift downwards over the summer so I will want to sell in March (before May) and buy some months later. We don't have any new cash to put into ISAs so the £14k we take out will buy two new ones in the subsequent year. If there were cash funds available to me inside my ISA's I'd just sell at the chosen time and keep the cash in the ISAs to reinvest as and when.