Value of Bonds and ISAs dropping by half

sheenaf

As I am retired my income has dropped to below the Tax Threshold. I have noted that the overall value of my savings, invested in Bonds and shares in ISA wrappers, has been dropping by up to 50% over the course of the year.  Would it be to my advantage to cash these in now and put the proceeds into an ordinary savings account, where the interest will be lower but the Capital will be secure?

grumiofoundation

There have been a lot of threads asking the same question over the last few months. 

If you sell you are crystallising a loss, obviously if you need the money now you have no choice. 

The markets have greatly recovered from when they dropped - I doubt your investments are now 50% down (even when they did drop 50% seems a very big drop). 

eskbanker

sheenaf said:

I have noted that the overall value of my savings, invested in Bonds and shares in ISA wrappers, has been dropping by up to 50% over the course of the year.

What specifically are you invested in - that sort of loss doesn't sound credible unless you've made some strange investment decisions, such as inadequate diversification?

masonic

Someone investing in a global index fund would be down about 5% from all time highs

Someone investing in a UK index fund would be down about 15%

Someone investing in a global government bonds would be up about 5%

Someone investing in a UK government bonds would be up about 8%

Someone investing in a global high yield bonds would be down about 15%

Someone investing in a UK high yield bonds would be down about 43%

So I'm guessing you put too many of your eggs in the last basket.

dunstonh

 I have noted that the overall value of my savings, invested in Bonds and shares in ISA wrappers, has been dropping by up to 50% over the course of the year. 

What the heck are you investing in that has halved?

On our 5 risk profiles, people range from either being in profit, breakeven or just a few percent off their January values.   That would be similar for most investors whether advised or DIY using sensible strategies.

Either you have some really duff investments or you are misreading what you have.  Even the FTSE100 (which is a dire index) only fell by 35% and has recovered somewhat since then.  What is it that you have invested in?

sheenaf

I am an idiot! The above comments have made me have a closer look and the worst performing ISAs are my oldest ones.  I had calculated on the basis that they were bought for circa £10,000 and had fallen to a value of £5,333. and £ 5,790  It has now occurred to me that these were bought when the limit for an ISA was £7,000 !! so not such a drastic drop but still a loss of  approx £3000 of capital between the two of them with smaller losses on the other investments. 

My question is still whether It would be better to cash in these funds and put them in an interest paying savings account where the capital will not be affected.  My income now (mainly a reduced state pension + a £180 per month private pension) means that I do not pay any Income Tax.  I am wondering therefore if my savings could do better outwith ISAs? 

Albermarle

If these are 'old ' Stocks and Shares ISA's bought for £7K , you would have expected them to be worth a lot more than that now , not less. So something still sounds not right . What actual investments do you hold in these ISA's ? They seem to have performed spectacularly badly.

grumiofoundation

The ISA limit hasn't been 7000 for over ten years. So if you bought for 7000 that means in ten years your investments have dropped by ~20%!!?? What on earth is it invested in? 

masonic

sheenaf said:

My question is still whether It would be better to cash in these funds and put them in an interest paying savings account where the capital will not be affected.

If the investment performance is as bad as you suggest (i.e. a substantial loss over 10+ years) then it would make no sense to keep such poor investments. Your choice is not between terrible investments from over a decade ago and cash savings accounts - it is between sensible investments available today vs cash savings accounts. If you need to spend the capital in the coming years then you should choose the latter, otherwise change the investments. Either way do let us know what these awful investments are.

Sea_Shell

Do you know what your "then and now" unit prices are for these investments?

dunstonh

The revised figures are still off from what you would expect.   £7000 ISA allowance means a decade ago.    So, you would be expecting to be around double the value now as a ballpark (a little less at the lower risk end, a little more at the higher risk end).

you should not be in a loss position at this time unless you have been drawing money out.