Should I invest in a ready-made Stocks & Shares ISA? 4 July 2022 at 11:42AM in ISAs & tax-free savings 8 replies 225 views

Jenny35

I have a cash ISA worth approx £90,000 that will mature in a few weeks. I was thinking of putting some or all of it into a ready-made stocks and shares ISA as I don't  have enough knowledge or desire to choose stocks myself. I would like to leave the investment to do its job for 10 years. I have been reading round the subject but am very unsure as to which company to invest with especially if I read the "bad" comments on Trustpilot. I don't want to invest with a company that has a bad track record either on customer service, administration matters or performance. Trustpilot seems to throw up these problems with whatever company I investigate.

I want what is maybe impossible to guarantee - not to lose money and do better than cash ISA rates. That comment probably demonstrates my risk tolerance level -  cautious in view of the large sum of money involved.

I have sufficient pension income to live on. I am 76 years old and have other accessible savings. The reason for considering a stocks and shares ISA this time is that inflation is around 9% at the moment and even the best cash ISA rates come nowhere that. I feel that I should try to do better with such a large sum. Thank you all for any comments you may have.

eskbanker

As you've spotted, Trustpilot tends to be dominated by those with an axe to grind, so isn't really a particularly useful tool for those looking for financial services companies and products!

S&S should outperform cash over those ten years if you're happy to lock it away, but there is typically short term volatility that could indeed leave your funds depleted at some points during that period, so you can't guarantee capital protection.

There is a substantial middle ground between picking individual stocks and buying into 'ready made' providers (who charge for the privilege of convenience), with many using mainstream platforms but holding a single low-cost multi-purpose fund, perhaps worth reading through other newbie investor threads on here to get some ideas?

dunstonh

 I have been reading round the subject but am very unsure as to which company to invest with especially if I read the "bad" comments on Trustpilot.

The robo providers (pre-made) are all relatively new.  So, they don't have legacy issues that the old brands have.  So, in general, you would expect robos to have near perfect ratings on trustpilot as typically, people are encouraged to rate them when they buy. 

The other thing with robos is that the people using tend to be low knowledge investors. Often virtually no knowledge.   So, when we go through a negative period, they will blame the robo provider and rate them poorly.  Even though it has nothing to do with the robo-provider but is the bad understanding by the investor.

I want what is maybe impossible to guarantee - not to lose money and do better than cash ISA rates. That comment probably demonstrates my risk tolerance level -  cautious in view of the large sum of money involved.

No such product exists.   Investments will zig zag in value.   The value could go below your starting point in the early years and it will have a negative point on its highest value at multiple points.     

Time dilutes risk.   The odds of having your value lower in 12 months time is higher than it being lower in 5 years or 10 years.

Robo-providers are often more expensive or comparable on costs to an ongoing servicing IFA.  But without the handholding you get with an IFA.  If you are nervous, it may be an idea to look at an IFA to guide you through.   Yes, there will be an initial charge but you get increased consumer protection and they can teach you how investments work.  There may be a point you can move on to fully DIY after that.  

Eyeful

With an investment there are no guarantees you are putting your money at "risk" this means you may get out, less, same, more, than you you put in. 

You already know Investing is for the long term, 10 years or more.

You are 76 years, nervous and cautious with no experience.
Will investing cause worry or sleepless night? 
Have you thought about paying an IFA to give you advice and hold your hand?

If you do decide to invest consider putting money in equal amounts into the markets over 1 or 2 years.

Add the following to you research
https://www.moneysavingexpert.com/savings/best-financial-advisers/
https://www.kroijer.com/
https://www.hsbc.co.uk/investments/isas/hsbc-global-strategy-portfolios/#balanced
https://www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds?intcmpgn=lifestrategyfunds_learnmore_link

Perhaps you would be happier in a savings account then investing?

Jenny35

Thank you all for your helpful comments. I think if I invested £30,000 in a robo stocks & shares ISA I would not worry too much about it because I do understand that the markets are very up and down at the moment. Could I please ask Dunstonh what type of increased consumer protection I would get through an IFA?

dunstonh

Could I please ask Dunstonh what type of increased consumer protection I would get through an IFA?

When you buy without advice, you are taking on responsibility for your own actions.    If you mess it up, its all on you.    

If you buy through an adviser, you get the added protection via the FOS and FSCS that if the advice was unsuitable (i.e. the adviser put you in something that was not right for you) then the FOS and FSCS (depending on the status of the advice firm) would look at your complaint and consider compensation.

That doesn't mean if the investments go down and you draw it out at a loss you automatically get compensation. it means that if the adviser placed you in investments that were unsuitable (e.g. outside of your risk profile or didn't carry out sufficient due diligence/research to an acceptable level on a fund that goes on to fail) then compensation for the losses would be due.

Jenny35

Thank you very much for that helpful explanation.

Albermarle

Jenny35 said:

Thank you all for your helpful comments. I think if I invested £30,000 in a robo stocks & shares ISA I would not worry too much about it because I do understand that the markets are very up and down at the moment. Could I please ask Dunstonh what type of increased consumer protection I would get through an IFA?

It seems sensible to divert some savings into investments, where you will most likely not need the money for 10 years or more. It is good to have a balance, and starting with around one third seems a sensible option. However you would need to check with your cash isa provider that it would be OK to do a partial transfer.
An IFA would probably not be that interested in managing an investment fund of £30K, so a robo provider is probably the way to go. You can always transfer out to another provider at a later stage if necessary. I would not be too cautious when picking the fund to invest in, as this can defeat the object of the exercise to some extent.

By the way markets are always up and down, not just at the moment.

Jenny35

Thank you for the practical advice which is an encouraging way to look at this situation. Many thanks.