Ist it worth taking out a shares ISA at my age

bdb47

I have a bond maturing in a few week, currently deposit accounts are rarely offering more than 0.5% I could put the proceeds of around 25K into a shares ISA but as I am now 74 and may need access to it in a couple of years or so I wonder if it's too late in life to consider it. Any advice appreciated

tacpot12

As you may need access to the money within two years, the effect of inflation is going to be small and can be offset to some degree by saving the proceeds in a deposit account paying 0.5%. I think two years is too short a time horizon to consider investing for. The risks outweigh the benefits. 

dunstonh

Investing means taking investment risk.   Time dilutes the risk.  There are only a handful of times an investment would be lower after 5 years which is why you often see the risk warning that you should invest for at least 5 years.  However, they are plenty of times it could be lower after 2 years.    You dont have the timescale to average out the ups and downs.

eskbanker

Some research published last year outlined the probabilities of investment gains or losses by duration of holding, based on data from developed equity markets between 1971 and 2020, with mirror image charts illustrating the same data from opposite perspectives:





Poor deposit interest rates in themselves aren't really a good reason to invest instead, but you could always split your pot between cash and S&S?

moneyfoolish

bdb47 said:

I have a bond maturing in a few week, currently deposit accounts are rarely offering more than 0.5% I could put the proceeds of around 25K into a shares ISA but as I am now 74 and may need access to it in a couple of years or so I wonder if it's too late in life to consider it. Any advice appreciated

I'm in a similar situation although I am nearly 76 and won't ever need to access the money. However, I can never make up my mind on suitable investments so I'll probably just end up putting it in the best cash ISA currently on the market!

Notepad_Phil

Mrs Notepad's mother is in her 90s and has quite a chunk in investments, so don't just think that because you're in your 70's that it's too late to invest, rather it depends on what other savings/investments you have, what retirement income you have coming in and what outgoing you expect to have.

If the full £25k is likely to be needed then you should really just keep it in the best savings account that you can find, however if there's some money that you believe you won't need for a decade and you have invested before and so have an idea of your risk appetite then you might consider putting some away into investments.

Adyinvestment

eskbanker said:

Some research published last year outlined the probabilities of investment gains or losses by duration of holding, based on data from developed equity markets between 1971 and 2020, with mirror image charts illustrating the same data from opposite perspectives:

I have seen this before but wonder why it is not a smooth graph? according to the above you have a higher chance of positive return if you hold for 8 years than if you were to hold for 10-11 years

eskbanker

Adyinvestment said:

eskbanker said:

Some research published last year outlined the probabilities of investment gains or losses by duration of holding, based on data from developed equity markets between 1971 and 2020, with mirror image charts illustrating the same data from opposite perspectives:

I have seen this before but wonder why it is not a smooth graph? according to the above you have a higher chance of positive return if you hold for 8 years than if you were to hold for 10-11 years

It's just an analysis of real historical data, so lumps and bumps along the way should be expected, rather than perfect linearity - it just so happens that for that particular data set, there were more positive 8-year periods than 10-year ones.  It's just the same looking forward from this point - it's entirely plausible that an investor who's ahead in 8 years time could suffer a drop in the following two years that's significant enough to wipe out the gains made before that, even if on average the odds are against that....

Albermarle

moneyfoolish said:

bdb47 said:

I have a bond maturing in a few week, currently deposit accounts are rarely offering more than 0.5% I could put the proceeds of around 25K into a shares ISA but as I am now 74 and may need access to it in a couple of years or so I wonder if it's too late in life to consider it. Any advice appreciated

I'm in a similar situation although I am nearly 76 and won't ever need to access the money. However, I can never make up my mind on suitable investments so I'll probably just end up putting it in the best cash ISA currently on the market!

If you read this forum often enough, you will know what the recommendation will be for someone like you > low cost medium risk multi asset fund e.g Vanguard Life strategy ; HSBC global strategy etc .....

Thrugelmir

With parts of the market at extreme valuations along with the broad uncertainty caused by Covid. I'd avoid if your time frame is short. Bound to a bumpy road ahead. When who knows. But all the indicators are flashing just as they did in the past that there's a storm on the horizon. .  

barnstar2077

Thrugelmir said:

With parts of the market at extreme valuations along with the broad uncertainty caused by Covid. I'd avoid if your time frame is short. Bound to a bumpy road ahead. When who knows. But all the indicators are flashing just as they did in the past that there's a storm on the horizon. .  

I am not advocating that the original poster should invest in a S&S ISA, however I don't think you can say not to pull the trigger because there is a storm on the horizon, there is always a storm on the horizon.  I know you will now quote me some indices that show tough times ahead, but personally I am optimistic about the next few years.  We are constantly inundated by the media with doom and gloom, because no one clicks on a story that says "Everything is going to be okay. "