Stock n shares isa for scaredy cats

Kayserrant

Good afternoon

I have a capital sum in a cash isa , and was womdering whether to transfer this, or even put in this years allowance into a stocks and share isa.

I have been informed ( cant say it was reliably though!) that there are various lowish risk stocks and shares isa’s , which pay interest around the 4 per cent mark...which seems very attractivr in this day and age.

I can afford to leave the money in for a maximumof 5 years only

Does anyone have any views on this please?

Thankyou

Linton

The risk with sensible S&S investments is not that you will lose all your money but rather the values will fluctuate, sometimes significantly, over time. Over the long term it is not unreasonable to hope for a 4% or rather larger average annual return. However over the short term, and 5 years is the short term for investments, there is a moderate risk that the fluctuations will be timed so as to lose you money.


So with your limit of 5 years I suggest that S&S investments may not be right for you. Perhaps a 4 or 5 year fixed term account could be better.

Albermarle

An S& S Isa is only a 'tax wrapper'to use the jargon . Your money is actually in investments within the ISA.
Some ISA's will offer you the possibility to invest in thousands of different investments and some will have a more limited range ( for beginners etc )
So you could have an S&S ISA with just one investment in it, or with multiple investments.
Different investments offer different levels of risk and return ( which are linked ) NO investment is guaranteed to give you any return and you could lose a lot of money . Only cash savings are guaranteed to give you a ( low ) return.
Now with the warnings out of the way , looking at a 4% return on investments will be at the lower risk end , but you must be willing to keep the investment long term ( 10 years is recommended, certainly no less than 5 years ) to ride out ups and downs in the markets .

Kayserrant

Thankyou both
Ok then, if i adjust my expectations to 10 years , what would be a nice, lower end of risk environment isa please?

Also, if i wanted can i reinvest the income back into it, or if i want that, do i go for a capital growth one?

Thanks

Albermarle

Ok then, if i adjust my expectations to 10 years , what would be a nice, lower end of risk environment isa please?

As already said the isa provider is not the key issue( although there can be a difference in charges ) but the funds invested in within it.
Suggest you check out some isa providers eg Legal and General , Hargreaves Landsdown; Fidelity + most high st banks and building societies . They will all have some kind of simple low risk fund on offer ( as well as lots of other funds) . Plus many others mentioned hee.
https://www.moneysavingexpert.com/savings/stocks-shares-isas/

AnotherJoe

I would say you arent at a stage where you are ready.

They dont pay interest. They gain in value over time, or pay dividends, or both. This is NOT the same as interest.

Low risk doesn't mean "will never drop in value"
Probably even if someone suggested lets say VLS20 which is about as low risk as you can go, the instant your £20k dropped to £19,500 you'd sell it all.

If you are determined, then I'd say go for VLS40 (because 20 is hardly worth bothering with) in the Vanguard ISA, and do not look at its value for ten years. Buy the "Acc" (accumulation) version not the inc. (Inc = Income = Dividends)
If five years is your limit, then dont buy funds.

Stubod

...the last 2 years since we decided to invest in a "low risk" S&S ISA's they have delivered the princely sum of 0.5% pa overall...so if you do go the S&S route be prepared for some years of poor performance..

Alexland

AnotherJoe wrote: »

If you are determined, then I'd say go for VLS40 (because 20 is hardly worth bothering with) in the Vanguard ISA, and do not look at its value for ten years.

I'm not even sure VLS40 is worth bothering with after fees given improving cash deposit rates.

Maybe a mix of VLS60 and cash savings might work out better.

Alex

Albermarle

the last 2 years since we decided to invest in a "low risk" S&S ISA's they have delivered the princely sum of 0.5% pa overall.

I think if you had been in a Higher risk fund then it would have actually gone down......

Elika0215

I've been overhauling my finances and asked similar questions.

There are plenty of low risk funds but you should consider whether you're prepared to lose some of the money invested. You may get lucky and invest in the right fund, at the right time and get a 5%+ return in 12 months. That's all it is though, luck in the sense that nobody can accurately predict what markets are going to do.

Many of these don't need any personal management and you won't need to choose individual equities to invest in. It's all done for you.

If you decide there's, say 20% of your current capital that you're prepare to risk and potentially lose, then that may be worth looking at.

MarkBargain

Have a look on https://www.markets.iweb-sharedealing.co.uk/funds-centre/fund-supermarket/ as you can filter by supposed risk level on there. There are a small number of funds with a risk score of 3/7 which have given an annualised return of over 6% over the last five years.

Personally I quite like the look of Royal London Sustainable Mgd Gr C Acc (Accumulation). "The investment objective is to provide a total return by way of accumulated income, with some capital growth. The Scheme invests mainly in fixed income securities with some equities, mainly in the United Kingdom. Investments in the Scheme will adhere to the Cooperative Investments ethical investment policy.". https://www.markets.iweb-sharedealing.co.uk/funds-centre/fund-supermarket/detail/GB00B8H7XS88