Stocks and shares isa - invest now?

kenzie123

We are currently thinking about opening a stocks and shares ISA - we have 5k to invest but initially thinking of investing 3k as a lump sum and then drip feed the rest as a precautionary measure. Will plan to keep this between 5-10 years and will be for our daughter.
With everything going on (Covid-19 etc) and the current volatile market is it best to hold fire for a few weeks/months and then invest or shall we bite the bullet and start now?
Really unsure what to do but with savings rates so low doesnt make sense not to invest but we are pretty risk averse. Any advice would be most welcome!

Thrugelmir

Investing needs to be undertaken with a long term view, i.e. a minimum of 10 years.  If the cash is required for a set purpose in the shorter term you are better shopping around for the best fixed rate savings accounts. The one thing that markets hate is uncertainty. Volatility is a sympton of that uncertainty. As every piece of news good or bad. Is reflected in individual share prices. My personal view is that if you don't feel comfortable then don't at the current time. Highly likely that a much clearer macro picture will emerge in a matter of weeks. In the bigger scheme of things a betterway of looking after your daughters interests. 

steampowered

There's no better time to invest than just after a market crash.

If you wait to have covid-19 certainty, stocks will be higher than they are today. Of course it is also possible that stocks will go down from here, but the chances of a recovery over a 10 year period are very high.

If you are investing for the long term, being "risk averse" doesn't mean you shouldn't invest. It simply means you should be patient enough to take a long term view.

The statistics over the past 50 years are that investment over a 5 year horizon has a 92% chance of making a profit, and an investment over a 10 year horizon has a 98% chance of making a profit. You can decide whether that's an acceptable level of risk for you.

masonic

What are you intending to invest in? You mention "the current volatile market", but if you are pretty risk averse it seems unlikely what the stockmarket is doing would be relevant to an investment suitable to your risk tolerance.

kenzie123

masonic said:

What are you intending to invest in? You mention "the current volatile market", but if you are pretty risk averse it seems unlikely what the stockmarket is doing would be relevant to an investment suitable to your risk tolerance.

We are thinking of the nutmeg fully managed portfolio risk level 5. It is a mix of cash, gilts, bonds, ETF's and stocks.

Alistair31

kenzie123 said:

masonic said:

What are you intending to invest in? You mention "the current volatile market", but if you are pretty risk averse it seems unlikely what the stockmarket is doing would be relevant to an investment suitable to your risk tolerance.

We are thinking of the nutmeg fully managed portfolio risk level 5. It is a mix of cash, gilts, bonds, ETF's and stocks.

Have you looked at and compared with something like VLS40 ? 

Nutmeg seems a good way to lose money in fees, whilst trusting a platform that is itself in poor financial standing. It wouldn’t be me. 

masonic

kenzie123 said:

masonic said:

What are you intending to invest in? You mention "the current volatile market", but if you are pretty risk averse it seems unlikely what the stockmarket is doing would be relevant to an investment suitable to your risk tolerance.

We are thinking of the nutmeg fully managed portfolio risk level 5. It is a mix of cash, gilts, bonds, ETF's and stocks.

Are you aware that would have a ~20% loss potential (it's probably fallen less than 10% so far)? Average growth of 3% above inflation after nearly 1% charges means you are giving a quarter of the real returns to Nutmeg. I agree with Alistair31 this is an expensive option with a loss-making provider.

As well as Vanguard Lifestrategy 40, you could consider L&G Multi Index 4 or 5. The L&G funds are perhaps a little more diversified for the lower risk funds, although it is notable that the Vanguard funds have stood up relatively well to the crash so far, being more focused on high quality bonds.

deejaybee

Interesting thread !

I am saving money to bridge the gap ( 19 months ) between when i want retire and SPA, and considered investing a portion of that while prices are low ( of course we could be nowhere near the bottom yet ) . However the potential retirement date is about 5 1/2 years away, and i often read you should invest for 10 year minimum..

The 98% figure for 10 year profit and 92% for 5 year caught my eye though - still massively in favour of profit ( historically of course )

I guess if it went wrong, i would just have to carry on working till SPA....

Would something like VL40 mentioned above be suitable for my scenario ?

masonic

deejaybee said:

I am saving money to bridge the gap ( 19 months ) between when i want retire and SPA, and considered investing a portion of that while prices are low ( of course we could be nowhere near the bottom yet ) . However the potential retirement date is about 5 1/2 years away, and i often read you should invest for 10 year minimum..

Unless you are planning to cash in all of your investments on your potential retirement date, you may still be able to invest for the 10 year minimum (which is generally recommended for 50% equities upward). Most people draw down their investments gradually, so can keep some of their money invested for the long term even after they have stopped working.

deejaybee said:

The 98% figure for 10 year profit and 92% for 5 year caught my eye though - still massively in favour of profit ( historically of course )

I guess if it went wrong, i would just have to carry on working till SPA....

Would something like VL40 mentioned above be suitable for my scenario ?

Those figures are average figures for someone investing at any point in the economic cycle, after a 20% crash, the odds are shifted further in your favour, although there is no guarantee the future will resemble the past.

You might wish to consider two VLS funds, one for the money you need within the next few years, and one for money you won't need until much later in retirement.

Alexland

Unless you are doing Nutmeg for a new customer cashback bonus (often worth more than the fees during the clawback period) then I don't see why you would pay twice as much for a similar investment when Vanguard are more financialy secure.

deejaybee

masonic : thanks for feedback - much appreciated.

I will look into the VLSxx funds .