Cash or Stocks and Shares ISA?

threechoirs

Hi all,

Hoping for some advice. I have 80k currently in a stocks and shares ISA with Aegon (Cofunds). I will absolutely need to withdraw the majority, if not all, of these funds in two year's time and am feeling nervous about the level of risk associated with it. Everyone is saying the markets are looking volatile for the next year or two, and in fact our financial advisor said the markets won't be fully robust for another 3-5 years. 

My initial instinct is to move it all into a Cash ISA at a one year fix, and see where we are in a year's time. We could always transfer back into stocks and shares then, or keep in a cash isa. But I wonder if this is silly, and the returns we are likely to get in two year's time from an S&S ISA will be far better than keeping in cash - particularly as the interest rates are likely to drop. 

Would love to hear your thoughts - thanks so much. 

Bravepants

Investing in stocks and shares is, in general, for the long term; at greater than 10 years or so. If you need the money in 2 years' time then you would be better finding a decent savings account for your money. 

A good test is to think how you would feel if, in a year or so, the value of your investment fell by 25%? Not uncommon for the popular 60/40 (stocks/bonds) portfolio, which is considered medium risk, and perhaps the mix that is most popular in the UK. Even taking into account that most crashes take 2 years or so to recover, that would still be outside your timeframe.

Albermarle

threechoirs said:

Hi all,

Hoping for some advice. I have 80k currently in a stocks and shares ISA with Aegon (Cofunds). I will absolutely need to withdraw the majority, if not all, of these funds in two year's time and am feeling nervous about the level of risk associated with it. In this case convert into cash as two years is short term in investing terms . Everyone , is saying the markets are looking volatile for the next year or two, that is because the markets always look like that .  the  and in fact our financial advisor said the markets won't be fully robust for another 3-5 years. So they have a crystal ball ?

My initial instinct is to move it all into a Cash ISA at a one year fix, and see where we are in a year's time. We could always transfer back into stocks and shares then, that would make no sense at all as then you have only one year until you need it or keep in a cash isa. But I wonder if this is silly, and the returns we are likely to get in two year's time from an S&S ISA will be far better, or far worse than keeping in cash - particularly as the interest rates are likely to drop. 

Would love to hear your thoughts - thanks so much. 

As you need the money in the relatively short term, you should convert most/all of it to cash.
Not because of any market predictions ( that are usually wrong anyway), but simply because it is the only way to have certainty.

threechoirs

Ok, thanks so much. If anyone else has any thoughts, I'd appreciate any input. 

eskbanker

When you funded the S&S ISA and decided what to invest in, were you aiming for known maturity/access in 2026, and if so, has anything changed from your original plan?  I'd agree with previous posters that market conditions aren't likely to be different from long term norms, i.e. volatility should always be expected, and anyone making plans involving a fixed end date always needs to factor that in.

ColdIron

If I absolutely needed to withdraw at a fixed date in the near future, it would be cash for me. Not because of predictions or forecasts, but that the certainty of meeting my needs would outweigh any possibility of a gain

jimjames

threechoirs said:

Hoping for some advice. I have 80k currently in a stocks and shares ISA with Aegon (Cofunds). I will absolutely need to withdraw the majority, if not all, of these funds in two year's time 

My initial instinct is to move it all into a Cash ISA at a one year fix, and see where we are in a year's time. We could always transfer back into stocks and shares then, or keep in a cash isa. But I wonder if this is silly, 

I think that would be an exceptionally poor idea. By all means keep it in S&S for the next 2 years but doing cash for 1 year and then even closer to the deadline for when you need the money moving back into S&S would seem to be crazy to me.

Markets are always volatile, rather surprising to have an adviser stating otherwise. But if you need the money then I would move to cash, you can get 5% at the moment for that which is guaranteed.

artyboy

....or just leave it in the S&S ISA and switch to a money market fund, which should give you a pretty stable 5% right now... would save a bit of admin.

Better still, put it in CSH2 (which is an ETF version of a money market fund) and then transfer it over to an HL S&S ISA - they will give you £1000 cashback for an £80k+ transfer...

Albermarle

artyboy said:

....or just leave it in the S&S ISA and switch to a money market fund, which should give you a pretty stable 5% right now... would save a bit of admin.

Better still, put it in CSH2 (which is an ETF version of a money market fund) and then transfer it over to an HL S&S ISA - they will give you £1000 cashback for an £80k+ transfer...

I would guess that CHS2 or maybe even any ETF are not available on the Aegon platform, although hopefully there will be a money market fund.

Stargunner

Albermarle said:

artyboy said:

....or just leave it in the S&S ISA and switch to a money market fund, which should give you a pretty stable 5% right now... would save a bit of admin.

Better still, put it in CSH2 (which is an ETF version of a money market fund) and then transfer it over to an HL S&S ISA - they will give you £1000 cashback for an £80k+ transfer...

I would guess that CHS2 or maybe even any ETF are not available on the Aegon platform, although hopefully there will be a money market fund.

It could be transferred over to HL as cash and then the OP could purchase CHS2 or an alternative MMF

Janie2008

The only safe thing to do is to put it all in cash now.  The good thing is market's have been doing well and have gone up a lot in the last 3 months so not a bad time.