Should I withdraw my money from my stocks and shares ISA?

freddiegoffey99

My stocks and shares isa has reduced by 10% in the last few weeks. I was planning on not withdrawing the money for another 4.5 years but with it reducing every day at the moment I wanted to know if I should withdraw and put it in a more stable saving account?

masonic

A 10% drop suggests the investments you hold are medium-high risk. Those investments are unsuitable to hold for such a short period of time. While now is not the best time to realise this fact, there is the potential for further losses. If you think that prospect is going to stop you sleeping at night or affect you psychologically, then perhaps a 10% loss is a price worth paying for peace of mind.

dunstonh

My stocks and shares isa has reduced by 10% in the last few weeks.
So, a very small drop then.

 I was planning on not withdrawing the money for another 4.5 years but with it reducing every day at the moment I wanted to know if I should withdraw and put it in a more stable saving account?
When you invested the money, you knew there would be periods it would go down as well as up.   So, now that we have entered a negative period, why are you suddenly surprised by this?

In simple terms, a 5 year period may have 3 good years, 1 nothing year and 1 negative year.  You never know the order they will come and you could get 2 negative years in a row or 5 good years in a row.   Your timescale to invest was almost certainly going to see a large negative period occur at some point.  So, again, why has this surprised you?

tel_

I can remember starting a S&S ISA about 18 months ago, and was doubting myself after just a few months later whether I was still happy to continue investing (being a newbie investor). My funds had tumbled negatively due to the USA/China trade war briefly.

They had performed really well until recently (with a rate of return nearly 20% at times), but now they are a negative again, I don't seem to be too bothered this-time-around. Maybe that's because I've gained a little experience by seeing what my investments are reading each month.
 
In-fact I feel very tempted to buy some more funds right now, but the consensus seems to be to 'hold-off' for the time being as the markets could dip even further. 

Thrugelmir

Don't buy investments because they appear to be cheap. Buy because you believe them to offer value at current prices. If uncertain leave your money on deposit. A few days of waiting is unlikely to hurt. 

Orby

dunstonh said:

My stocks and shares isa has reduced by 10% in the last few weeks.
So, a very small drop then.

 I was planning on not withdrawing the money for another 4.5 years but with it reducing every day at the moment I wanted to know if I should withdraw and put it in a more stable saving account?
When you invested the money, you knew there would be periods it would go down as well as up.   So, now that we have entered a negative period, why are you suddenly surprised by this?

In simple terms, a 5 year period may have 3 good years, 1 nothing year and 1 negative year.  You never know the order they will come and you could get 2 negative years in a row or 5 good years in a row.   Your timescale to invest was almost certainly going to see a large negative period occur at some point.  So, again, why has this surprised you?

Not sure if this is right place to post - just wondering then likelihood of 10% loss can be clawed back over 3 years in a managed fund ? I invested a dc pension of 153, 000 following advice in royal London low risk fund in Jan 2020 now worth 142000. Does this seem consistent with others or much worse / better ? 

I was  planning originally on leaving untouched for 2 years (living off 25% lump sum ) then starting to take between 12000 and 20000 annually to live off. I am not working my DS is Unwell and plan was to enjoy time together (in mid 50s), now wondering if should withdraw personal allowance for this year £8000 left and also further £40000 and pay tax to boost liquid savings as can’t see returns will recover over my time frame, basically wanted low risk investment to hold dc payout to live off for next ten years and cover inflation. In hindsight all cash holdings  would have been better option but hindsight is wonderful and not advised to do so ! 

masonic

Orby said:

Not sure if this is right place to post - just wondering then likelihood of 10% loss can be clawed back over 3 years in a managed fund ? I invested a dc pension of 153, 000 following advice in royal London low risk fund in Jan 2020 now worth 142000. Does this seem consistent with others or much worse / better ? 

I was  planning originally on leaving untouched for 2 years (living off 25% lump sum ) then starting to take between 12000 and 20000 annually to live off. I am not working my DS is Unwell and plan was to enjoy time together (in mid 50s), now wondering if should withdraw personal allowance for this year £8000 left and also further £40000 and pay tax to boost liquid savings as can’t see returns will recover over my time frame, basically wanted low risk investment to hold dc payout to live off for next ten years and cover inflation. In hindsight all cash holdings  would have been better option but hindsight is wonderful and not advised to do so ! 

Statistically there is a good chance that the returns in the few years after a >20% loss event will be good, but there is no guarantee this will be the case. Recoveries can happen over the course of a few months or more than a decade. There is a weak trend that rapid falls like this one tend to be accompanied by rapid recoveries, but every crash is different.

The real question is can you afford to lose another 10% of your investment balance over the course of those next few years?

I don't really see the value in taking money out of the pension and paying 20% tax to then put it in a savings account paying <2%. Surely it would be better just to leave the cash uninvested in the pension if you want to be out of the investment.

smiffy

Whilst I appreciate that fund values will go up and down, I'm happy to continue to invest my £200 per month, however, is any of the money safe if the ISA provider gets into difficulty?

masonic

smiffy said:

Whilst I appreciate that fund values will go up and down, I'm happy to continue to invest my £200 per month, however, is any of the money safe if the ISA provider gets into difficulty?

If the S&S ISA provider gets into difficulty then your assets are protected from associated losses by the FSCS up to £85k. Such losses could include your share of the administrators costs if the company goes into administration. In practice you can be many times over the FSCS limit and not be charged costs of more than £85k. You should be aware that you could be unable to trade or access your investments for several months, perhaps as long as a year, if this happens, but for someone holding for the long term this should be of little concern.