Coming Year's ISA.. What will you do?

ChilliBob

I still haven't decided how to use up the coming years allowance for the family Isas we have.. So, would you?... 

Put the cash in a money market fund

Put it into a global tracker

Something else passive, perhaps with a tilt away from US growth

Place some active bets - be this funds, shares, investment trusts

Something fixed income

Something alternative, like commodities, property. 


I'm tempted by the money market route at the moment. For the children's Isas though I might just stop any messing around and put it into a global index (ones 5, the other isn't even 1 yet!) 

There's always a part of me (which seems to diminish every year thankfully!) who likes to use the ISA wrapper to take some active punts.. Never say never! 

eskbanker

ChilliBob said:

I still haven't decided how to use up the coming years allowance for the family Isas we have.. So, would you?... 

Put the cash in a money market fund

Put it into a global tracker

Something else passive, perhaps with a tilt away from US growth

Place some active bets - be this funds, shares, investment trusts

Something fixed income

Something alternative, like commodities, property.

I'd do something that aligned with my own timescales, objectives and appetite for risk, rather than being influenced by random anonymous internet strangers with inevitably different circumstances....

ChilliBob

I'm just curious really, it's not like if there four replies in a row saying they are all going in 50:50 on SMT and 3* leverage qqq or something that I'm going to deviate from my plans!

As with the original post, I've said pretty much what I'm likely to do. 

TheBanker

I only have my own ISA, no kids.

Plan is to use half for cash, because I'm a higher rate taxpayer and have strayed into the territory where the nice tax man takes 40% of my interest. The other half is for longer-term savings so I'll continue to put it into a passive global tracker.

I used to place active bets in shares but never really made any money (apart from once - I took a 'punt' on Morrisons just before the takeover rumours started but that was a complete fluke). I've now realised that doing this is not a good idea and I'll stick to an occasional lottery ticket to satisfy my gambling desires!

Really, the best course of action depends on what you're planning to use the money for, when you need it and what other savings/investments/pension arrangements you have. 

ChilliBob

Yeah, I really should stay away from the active bets! My record isn't great, but I guess importantly I've only ever invested small amounts relative to the overall portfolio, so it's no disaster.

I think with the isa being sheltered it always tempts me to do something like this knowing there's no gct should I get lucky! 

silvercue

hi @ChilliBob,

Here is what I am planning to do:

I currently have a Moneyfarm S&S ISA, but with this coming year's allowance I will start a new S&S ISA using Vanguard funds/ETFs, because of their low management fees, but through Iweb for their lack of platform fees. I had considered drip feeding cash into the new ISA over the year due to the fact that the global economic situation is still not great, but have decided to just use it all on April 6th instead.  That is partly becuase I think interest rates in UK and US have likely topped out.    But that may not be the case and there are other concerns still hanging around.   To be honest..it is also becuase I am impatient! 

I plan to run both the Iweb and Moneyfarm ISAs side by side for a while, maybe up to a year, to compare performance and then most likley consolidate.  

The products I have chosen, narrowed down from a shortlist of 10-15 are these:

S&P 500 UCITS ETF			33%
Vanguard FTSE Developed Europe UCITS ETF USD			25%
FTSE All-World high Dividend Yield UCITS ETF			23%
FTSE Emerging Markets UCITS ETF			20%

The thinking is as follows:

The approximate exposure to certain markets is about where I want it. 

This gives me about 42% exposure to US markets.  I was originally looking at a blend that gave me a higher exposure.  If I just bought a developed world or all world tracker that would give me about 60-65% exposure.  But many analysts predict the US Dollar's huge strength will dip a little over the next couple of years.  Vanguard themselves seem to think this will cause a 1.2% drag on profits for USD products.

It also gives me a 31% exposure to Europe, mostly developed.  I wanted a slightly more European weighting than most All World Index trackers would give me.  

High dividend, well I wanted some high dividend products in there too.

Emerging markets - this is a slightly riskier one, but I want more exposure to China and India etc than most All World Trackers would provide as I think we could see higher growth in emerging over the next cpl of years.

I may tweak the percentages a little. But this is roughly where I will land.

I was hoping to just use Accumulate Funds, but I simply can't find exactly what I want that way.  And the exact products I want - Vanguard UK don't actually seem to do....almost everything around it, but not exactly what  want!

I am no market or finance expert, these are just what I am taking a punt on!

Good luck with yours!

Alexland

I don't have much new money to invest in a S&S ISA next tax year due to the ongoing financial destruction of divorce (while still making heavy pension contributions to be tax efficient) so I'll probably just contribute to whoever can bribe me with the most cashback for the smallest deposit. For now money market funds meet my needs - I've got to an age where I have stopped seeing S&S ISAs as a long term investment more a pot (alongside cash) to cover income shortfall risks until I can get to protected pension access age. As long as I end next tax year with enough spare cash from maturing reg savers to fill the S&S LISA then I'll be happy.

For your circumstances just because it's a new tax year doesn't mean you need to do anything different - stick to your plan.

ChilliBob

silvercue said:

hi @ChilliBob,

Here is what I am planning to do:

I currently have a Moneyfarm S&S ISA, but with this coming year's allowance I will start a new S&S ISA using Vanguard funds/ETFs, because of their low management fees, but through Iweb for their lack of platform fees. I had considered drip feeding cash into the new ISA over the year due to the fact that the global economic situation is still not great, but have decided to just use it all on April 6th instead.  That is partly becuase I think interest rates in UK and US have likely topped out.    But that may not be the case and there are other concerns still hanging around.   To be honest..it is also becuase I am impatient! 

I plan to run both the Iweb and Moneyfarm ISAs side by side for a while, maybe up to a year, to compare performance and then most likley consolidate.  

The products I have chosen, narrowed down from a shortlist of 10-15 are these:

S&P 500 UCITS ETF			33%
Vanguard FTSE Developed Europe UCITS ETF USD			25%
FTSE All-World high Dividend Yield UCITS ETF			23%
FTSE Emerging Markets UCITS ETF			20%

The thinking is as follows:

The approximate exposure to certain markets is about where I want it. 

This gives me about 42% exposure to US markets.  I was originally looking at a blend that gave me a higher exposure.  If I just bought a developed world or all world tracker that would give me about 60-65% exposure.  But many analysts predict the US Dollar's huge strength will dip a little over the next couple of years.  Vanguard themselves seem to think this will cause a 1.2% drag on profits for USD products.

It also gives me a 31% exposure to Europe, mostly developed.  I wanted a slightly more European weighting than most All World Index trackers would give me.  

High dividend, well I wanted some high dividend products in there too.

Emerging markets - this is a slightly riskier one, but I want more exposure to China and India etc than most All World Trackers would provide as I think we could see higher growth in emerging over the next cpl of years.

I may tweak the percentages a little. But this is roughly where I will land.

I was hoping to just use Accumulate Funds, but I simply can't find exactly what I want that way.  And the exact products I want - Vanguard UK don't actually seem to do....almost everything around it, but not exactly what  want!

I am no market or finance expert, these are just what I am taking a punt on!

Good luck with yours!

Thanks for the detailed reply and rationale, we're a right mix up here, my wife's ISA will be with iweb, mine with ii and the children's Jisas with probably HL, but perhaps Fidelity where they are now!

Interesting, I was thinking of a global tracker and a Europe tracker to increase euro exposure and reduce US, then accepting whatever Row/emerging came with the tracker.

Likewise, good luck! 

ChilliBob

Alexland said:

I don't have much new money to invest in a S&S ISA next tax year due to the ongoing financial destruction of divorce (while still making heavy pension contributions to be tax efficient) so I'll probably just contribute to whoever can bribe me with the most cashback for the smallest deposit. For now money market funds meet my needs - I've got to an age where I have stopped seeing S&S ISAs as a long term investment more a pot (alongside cash) to cover income shortfall risks until I can get to protected pension access age. As long as I end next tax year with enough spare cash from maturing reg savers to fill the S&S LISA then I'll be happy.

For your circumstances just because it's a new tax year doesn't mean you need to do anything different - stick to your plan.

Sorry to hear that man, it must be a stressful and difficult time

Yeah, I know what you mean, I basically am sticking with the plan. I think I just get a bit excited as I used to see my ISA as my 'fun portfolio' but now it's getting larger I need to stop thinking of it that way!

Obviously long term cash for Isas will come from the sale of core holdings in the GIA, but I'm not near that position for a good few years probably. 

Beddie

I'm thinking similar to you, money market fund for a bit of safety with perhaps half of it. As for the rest, I do like to try and pick a good active fund with a long term track record, but of course it usually drops to 4th quartile from the day I invest in it!

So, I really need to learn my lesson and go for a tracker fund, or perhaps a Vanguard Lifestrategy or similar. I'll take my time and not drop it all in too quickly.

Tonski

My plan this year is to start investing in long term, passive funds to grow money for my retirement, and to transfer money from my cash ISA into S&S ISA. This will be my first time investing in S&S so hopefully all of the research that I've done makes sense but if anyone has any improvements or suggestions, I would be interested to hear them:

Increase my pension contribution from 10 to 15% to ensure that I stay under the higher tax threshold and just pay 20%.

Open a S&S LISA with HL and buy HSBC FTSE all world index Class C accumulation. I'll put in £4k over the year to get the full £1k bonus. Only fees will be 0.25% flatform fee and 0.13% fund fee. As this is a fund not an ETF, i avoid the trading fees.

Open a S&S ISA with Invest Engine and transfer in £10k from cash ISA which will get me a £100 investment bonus. I will then transfer in £500 monthly to buy 90% Vanguard FTSE developed world ETF (VHVG) and 10% Vanguard FTSE emerging markets. This will mimic the Vanguard FTSE Global all Cap but with cheaper fees (90%*0.14% + 10%*0.22% vs 100%*0.23%) and there are no fees for the DIY setup on Invest Engine.

Finally, open a junior S&S ISA for my daughter (4) with Fidelity. I'll transfer the balance from her current cash JISA and set up a recurring £100/month to buy Fidelity Index World Fund P Accumulation. No platform fees and just 0.1% fund fee.

Any spare cash I have will probably go into premium bonds as a safe, easy access emergency fund.

Any comments on these plans would be really helpful to make sure I'm on the right track.