Any Difference?

threlkeld53

I'll have £30k available between February-May, to put into my S&S ISA.

The ISA already comprises of 60:40 Multi-Asset funds only.

What, if any, would the difference be between adding £30k to similar 60:40 funds OR putting £18k into an index fund (100% equity) and £12k into a savers' bank account for a fixed 12 month term @ 1.3%?

dunstonh

What, if any, would the difference be between adding £30k to similar 60:40 funds OR putting £18k into an index fund (100% equity) and £12k into a savers' bank account for a fixed 12 month term @ 1.3%?

Differences could be anything up to 50% over a 12 month difference.  i.e. loss of 50% (theoretically, more than 50% is possible).

Your question is a bit like asking the difference between walking, driving and flying when doing the school run.

Billycock

threlkeld53 said:

I'll have £30k available between February-May, to put into my S&S ISA.

The ISA already comprises of 60:40 Multi-Asset funds only.

What, if any, would the difference be between adding £30k to similar 60:40 funds OR putting £18k into an index fund (100% equity) and £12k into a savers' bank account for a fixed 12 month term @ 1.3%?

You can't put 30K into your ISA

Alexland

Billycock said:

You can't put 30K into your ISA

The contribution date range covers 2 tax years of allowance.

p00hsticks

Billycock said:

threlkeld53 said:

I'll have £30k available between February-May, to put into my S&S ISA.

The ISA already comprises of 60:40 Multi-Asset funds only.

What, if any, would the difference be between adding £30k to similar 60:40 funds OR putting £18k into an index fund (100% equity) and £12k into a savers' bank account for a fixed 12 month term @ 1.3%?

You can't put 30K into your ISA

OP says the money wil lbe available between February and May, so they can, assuming they haven't already put in more than £10k this tax year. They can make it up to £20k up to  April 5, and put in a further £20k after that date.

Billycock

Yes, you're correct. My apologies.

Linton

threlkeld53 said:

I'll have £30k available between February-May, to put into my S&S ISA.

The ISA already comprises of 60:40 Multi-Asset funds only.

What, if any, would the difference be between adding £30k to similar 60:40 funds OR putting £18k into an index fund (100% equity) and £12k into a savers' bank account for a fixed 12 month term @ 1.3%?

There are many differences.  One is that the 40% non-equity investments in a 60/40 fund can be very different to cash in a savings account and would be likely to perform differently.  Another difference is that the fund will maintain the 60/40 ratio despite any equity crash.  It would be difficult to do this if you kept your non-equity in a fixed term savings account.

MX5huggy

Cash is not equivalent to bonds. Historically bonds diverge from equity ie equity falls by 20% bonds rise by 5% cash won’t do this. To maintain the 60/40 the fund sells some of the bonds and buys the now cheaper equity. Equally if the equity rises faster than the bonds equity will be sold and bonds purchased. Cash could be held instead of bonds but but locking it in a fix rate account you can’t rebalance if there is an downward adjustment in equity value so missing out on the buying opportunity of a fall. 

I hold 1 global equity fund and 1 global bond fund at 75/25 I rebalance whenever I add additional funds and promise myself to rebalance by buying and selling between the 2 if they became more than 5% away from my target. 

threlkeld53

dunstonh said:

What, if any, would the difference be between adding £30k to similar 60:40 funds OR putting £18k into an index fund (100% equity) and £12k into a savers' bank account for a fixed 12 month term @ 1.3%?

Differences could be anything up to 50% over a 12 month difference.  i.e. loss of 50% (theoretically, more than 50% is possible).

Your question is a bit like asking the difference between walking, driving and flying when doing the school run.

Let's just assume that the market crashes 50%....

£18k in an index fund would have a reduced value of £9k
£30k in a 60:40 multi-asset fund would also be reduced by £9k.

So the difference in equity value in the 2 scenarios would be zero. 

eskbanker

threlkeld53 said:

I'll have £30k available between February-May, to put into my S&S ISA.

The ISA already comprises of 60:40 Multi-Asset funds only.

What, if any, would the difference be between adding £30k to similar 60:40 funds OR putting £18k into an index fund (100% equity) and £12k into a savers' bank account for a fixed 12 month term @ 1.3%?

As is so often the case with investment-related questions on here, the key thing is what is it that you're trying to achieve, i.e. objectives, timescales, risk tolerance, etc?  Without knowing the destination it's hard to plan the best route....

Albermarle

Also there is the opposite scenario, where equity markets do not crash and keep growing/steady .

In this case it seems in the current situation , that cash maybe less risky than holding bonds , due to the possibility of interest rate rises. Which would be positive for cash and negative for bonds.