S&S ISA - overthinking, help!

Bugaboo1

So, I want to open a stocks & shares ISA but I'm someone who very much overthinks things, so combining that with my lack of experience here means I keep backing out of investing at the last minute. Here are my issues:
1. I want to invest at a sufficient risk level to make it worthwhile, but I am nervous about risk. I'm the main earner in our household and don't have huge savings or pension so want to improve future financial security,  not risk making t worse. But comparatively small pension means I do need to fund my retirement somehow.
2. I want a sustainable ISA. I understand their shortcomings but it's very important to me. I was looking at one with Wealthify but it shows a big chunk of the investments being in the US and with Trump coming in, I wondered if that might be risky. 

Is it still worth investing in a lower risk S&S ISA over saving in a cash ISA?
Should I be concerned about the US angle (particularly as I'm looking at a sustainable ISA)?

Any sensible voices welcome!

masonic

If you are to believe forecasts emanating from certain investment banks and firms, then lower risk investments may perform similarly to riskier investments over the next decade, but that's been the story for US equities for a long time now and yet to be proven correct.

It is not much easier to predict the returns from a cash ISA over the next decade than stockmarkets. A common belief is that interest rates will be cut several more times in the coming months, and if you believe that, then returns from a cash ISA may suffer.

You also have the question of what "sustainable" means to you vs the investment industry. There are certainly companies that would tick a sustainability box that are more at risk from a Trump presidency than the largest companies in the US stockmarket.

It is usually best to avoid being influenced by the current political or economic situation when making your investment plan, because in the immortal words of John Bogle, "nobody knows nothing".

Bugaboo1

I did wonder about that point of what classes as sustainable. I guess anything that's not fossil fuels, weapons, etc, still leaves a large pool. 

So I think I'll stick with sustainable but just need to decide on lower or medium risk...

Albermarle

I'm the main earner in our household and don't have huge savings or pension so want to improve future financial security,  not risk making t worse. But comparatively small pension means I do need to fund my retirement somehow.

Normally if you are saving/investing for retirement, then pension beats ISA due to the tax advantages.
From what you have said then it would be better to put more into your pension, rather than to start a S&S ISA.
The best way to do this depends on what sort of pension you have. DC or DB ( usually only in the public sector nowadays) . Difference is explained here.
Pension basics | Help with pension basics | MoneyHelper

Bugaboo1

Thanks @Albermarle, my plan was to do both. I had a meeting with a financial advisor who suggested mortgage overpayments, extra pension contributions and a S&S ISA.

dunstonh

So I think I'll stick with sustainable but just need to decide on lower or medium risk...

Going too low on investment risk for your longer term money can actually increase the overall risk.   You may reduce volatility and investment risk by being lower risk but you increase shortfall risk and inflation risk.

Voyager2002

As others have said, you would probably do better to invest in a pension rather than an ISA. Of course, both are "wrappers" for your investments; you could use both; and once you have chosen the 'wrapper' you still have to decide which investments to buy in each wrapper.

One option you might consider is the S and S ISA offered by Trading 212. You can put money into it, and while you are deciding how to invest it you are earning interest of more than 5 per cent. Currently more than half of my ISA with them is in the form of cash. Do be aware that this carries some risk, although I assess the risk as negligible.

I am interested in sustainable investment and in the past have done very well from wind and solar power. However, since the election of Donald Trump these shares have 'tanked', to the extent that I think that right now they are at bargain basement prices. If you want to choose your own investments you might consider looking at this sector.

Of course, you should split your investment between many different sectors: some will do well and a few will not.

Eyeful

1. Any money needed within 5 years should be in a Bank/Building Society account covered by the FSCS up to £85K.

2. Use tax shelters where possible  (a) Pensions (b) ISA's

3. INVESTING means putting your money at risk. You hope to get more out than you put in, but this this not guaranteed

4. Before investing:

(a) Clear all expensive debt first (except for mortgage)

(b) Have a "Rainy Day" account for emergencies (6 months of house hold bills, is often quoted).

5. The Simple method of investing boils down to this:

(a) https://www.vanguardinvestor.co.uk/investing-explained/what-are-target-retirement-funds

(b) Low Cost Global Multi Asset Funds (for Cautious types & those that want more Control)

     A ready made portfolio, where you pick the share/bond split, you are most comfortable with.

Example:  https://www.hsbc.co.uk/investments/products/hsbc-global-strategy-portfolios/#balanced

This might help, watch:
https://www.youtube.com/watch?v=lGQ9KyQq8Jw

Bugaboo1

Thank you so much @Eyeful, I'll read the links and watch the video ASAP

Eyeful

Bugaboo1: 

Remember  With money there is always going to be some type of risk. It is the type & size of risk that changes.

Example: Money in a savings account covered by the FSCS up to £85K, there is the risk of inflation.

UK inflation max in 1975 about 25%
UK inflation max  in 1990 & 2022 about 9%

The much quoted hyper inflation occurred in Germany after the First World War.
Dec 1922: 1 US dollar = 7400 Marks
Nov 1923: 1 US dollar = 4, 210, 500, 000,000 Marks