Advice please

Teacake1903

I currently have £70k split equally with my wife in a Prudential Stocks and Shares ISA which is invested in PruFund Growth Fund ISA. It's been in for just under 2 years . The returns are poor and as it stands we're about £900 up over the 2 years. Up until March 23 they were going okay but have since dropped and never recovered.

We are not ones for investing but feel that we need to do something with this £70k and ideally would look to use the interest to pay for holidays every year. We don't need it to pay off a mortgage and have other smaller savings amounts to cover rainy days .

The initial investment was set up through a Financial Advisor but cant help thinking we could just put the money into a fixed rate savings account and get a better return without paying the FA.

Also a bit confused as to whether cash ISA's may be better.

We'd be happy to put the money away for 3-5 years if we could draw down the interest once a year.

Any advice gratefully received.

Bigwheels1111

Principality BS5 Year Fixed Rate Cash ISA (Issue 306) 5.35%.
Interest can be paid away or compounded. £3745 a year.

3 year Shawbrook 5.51% £3851.
These are the best two today.
Thing might change in the next two weeks due to the boe base rate rise Thursday.

Select year, rate order.
The look at details to see if can be paid away.

https://moneyfactscompare.co.uk/isa/fixed-rate-isas/?quick-links-first=false

boingy

When the stock markets are slow, as they are now, fees on investments can really start to bite. That fund has an annual fee of 1.34% plus whatever you are paying the FA. Suggest you dump the advisor and move it to something like a passive global tracker.

I don't know what type of annual holidays you go for but it might be a big ask to expect a 70K investment to fund them in perpetuity. Anything you withdraw reduces the real value of the investment.

Albermarle

Teacake1903 said:

I currently have £70k split equally with my wife in a Prudential Stocks and Shares ISA which is invested in PruFund Growth Fund ISA. It's been in for just under 2 years . The returns are poor and as it stands we're about £900 up over the 2 years. Up until March 23 they were going okay but have since dropped and never recovered. According to what I can see the fund has actually performed well during a tricky period in the markets. It is up 10 to 15% over two years depending on the exact investment date.
Interactive Factsheet - Prudential PruFund Growth Fund ISA (fundslibrary.co.uk)

We are not ones for investing but feel that we need to do something with this £70k and ideally would look to use the interest to pay for holidays every year. We don't need it to pay off a mortgage and have other smaller savings amounts to cover rainy days .


The initial investment was set up through a Financial Advisor but cant help thinking we could just put the money into a fixed rate savings account and get a better return without paying the FA.

Also a bit confused as to whether cash ISA's may be better.

We'd be happy to put the money away for 3-5 years if we could draw down the interest once a year.

Any advice gratefully received.

The figures you quote do not seem right. Can you supply more details.
Is it something to do with the initial advisor charge?

dunstonh

. The returns are poor 

Poor relative to what?

The pru funds haven't been poor as the smoothing has hidden a lot of the losses that occurred during 2022.  So, relatively speaking, the prufunds often appear better on recent discrete performance.  

and as it stands we're about £900 up over the 2 years. 

Which certainly does not indicate they have been poor.

The initial investment was set up through a Financial Advisor but cant help thinking we could just put the money into a fixed rate savings account and get a better return without paying the FA.

2022 was a year when savings was better than investing.   2023 is a year (YTD) that investing has been better than savings.     In around 1 in 5 years, savings will be better than investing.   4 in 5, investing will be better. When you average it all out over the medium to long term, investing is better in most periods.

So, why do you feel that moving from investing to saving will be better for all of the money?   
Typically, you would expect your short term money to be in savings, along with any emergency fund but anything above that to be invested.

We'd be happy to put the money away for 3-5 years if we could draw down the interest once a year.

Do you mean you would intend to spend it all in 3-5 years or are you referring to rolling it over each and every 3-5 years? 
If the latter, then would be taking an increased risk than you are likely currently taking.

When the stock markets are slow, as they are now, fees on investments can really start to bite. That fund has an annual fee of 1.34% plus whatever you are paying the FA. Suggest you dump the advisor and move it to something like a passive global tracker.

Slow down a minute.   You are recommending a high risk fund for someone that clearly lacks understanding of investing and is struggling with a cautious investment.     If they cannot handle the cautious investment then how do you think they will react when that global tracker you are recommending drops 50%?

Whilst I am no fan of the prufunds (that extra layer of security you pay for with increased charges compared to those without it), it does seem that they are far more suitable than a global tracker.

Teacake1903

Albermarle said:

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Teacake1903 said:

I currently have £70k split equally with my wife in a Prudential Stocks and Shares ISA which is invested in PruFund Growth Fund ISA. It's been in for just under 2 years . The returns are poor and as it stands we're about £900 up over the 2 years. Up until March 23 they were going okay but have since dropped and never recovered. According to what I can see the fund has actually performed well during a tricky period in the markets. It is up 10 to 15% over two years depending on the exact investment date.
Interactive Factsheet - Prudential PruFund Growth Fund ISA (fundslibrary.co.uk)

We are not ones for investing but feel that we need to do something with this £70k and ideally would look to use the interest to pay for holidays every year. We don't need it to pay off a mortgage and have other smaller savings amounts to cover rainy days .


The initial investment was set up through a Financial Advisor but cant help thinking we could just put the money into a fixed rate savings account and get a better return without paying the FA.

Also a bit confused as to whether cash ISA's may be better.

We'd be happy to put the money away for 3-5 years if we could draw down the interest once a year.

Any advice gratefully received.

The figures you quote do not seem right. Can you supply more details.
Is it something to do with the initial advisor charge?

So as of today, the £70k is currently worth £70,900. In Feb it was up to £72,800 and then plummeted. It recovered slightly to £72,400 then plummeted again and since the end of May it is very slowly increasing to todays figure of £70,900. That’s a return of just over 1% and to me , with savings rates as they are , it seems prudent to save rather than invest. I don’t foresee savings rates dropping very much over the next few years and with a general election coming up , investing just doesn’t seem the right thing at this time. 

There is an adviser charge and a management charge which amount to approx £120 per month.

I’d prefer stability with the knowledge of a fixed return which can pay towards a holiday than what I see as the likely rollercoaster ride over the coming 18 months to 2 years.

dunstonh

So as of today, the £70k is currently worth £70,900. In Feb it was up to £72,800 and then plummeted. It recovered slightly to £72,400 then plummeted again and since the end of May it is very slowly increasing to todays figure of £70,900. 

Not seeing any indication of "plummeting" in those figures.

That’s a return of just over 1% and to me , with savings rates as they are , it seems prudent to save rather than invest.

its easy to feel that way after a negative period.   However, positive periods outnumber negative and tend to be bigger on the bounce after a negative.

 I don’t foresee savings rates dropping very much over the next few years and with a general election coming up , investing just doesn’t seem the right thing at this time. 

The UK is around 4% of the global economy.  A UK general election is insignificant in the scheme of things.

I’d prefer stability with the knowledge of a fixed return which can pay towards a holiday than what I see as the likely rollercoaster ride over the coming 18 months to 2 years.

Again, referring to it is a rollercoaster ride does not fit the reality of what you have.

You would be replacing investment risk with shortfall risk and inflation risk. In the short term, that isn't a big deal but it will cause problems in later years.

savit4l8er

dunstonh said:

You would be replacing investment risk with shortfall risk and inflation risk. In the short term, that isn't a big deal but it will cause problems in later years.

I like that. ☺️

Albermarle

than what I see as the likely rollercoaster ride over the coming 18 months to 2 years.

Investing has always been a sort of rollercoaster rise and always will be. There is nothing particularly special that has happened in markets recently, compared to some more dramatic periods in the past.

The difference though with a rollercoaster ride, is that with investing you should be higher at the end than at the beginning, if you wait long enough.

and with a general election coming up , investing just doesn’t seem the right thing at this time. 

The global economy and financial markets are mainly influenced by what happens in the US and increasingly by China. Plus a few wild cards like war in Ukraine. If there is any reaction to a UK general election result, it will be localised and short lived.