should i jump and transfer unneeded £20K cash ISA to much better rates of Stocks ISA

dan041961

i have a spare £20K in cash ISA currently at 4.6% maturing in September - I'm contemplating transferring it all to my stocks and shares ISAs which run currently around 14-15% (S&P and FTSE). I don't need this cash at all (have other savings) and would like to make more for my kids futures etc. Any thoughts 

surreysaver

You might as well. Obviously do it as an ISA transfer to preserve tax free allowances.
Or, if you're not sure, transfer 50% of it and keep the other 50% in a cash ISA

El_Torro

Investing is for the long term, ideally 10 years or more. If you are willing to leave it invested for that long then sure, go for it. It will perform better than a Cash ISA.

Remember that investments don't just go up, sometimes they go down. Over the long term it should do well but don't expect it to be in constant growth. 

Emmia

What's your risk appetite? A cash ISA will give you predictable interest, a S&S ISA could lose you money, but overall will probably be better in the long run. 

I've had my S&S ISA losing money over what I put in, but I just kept investing - now it's rebounded and all those contributions I put in when it was down are worth a fair chunk now.... I don't look at it much, I just keep putting the money in.

gascar

"Oh for Heaven's Sake"!!

I keep seeing advice which was possibly relevant in the last century, when experts whom you daren't question went about in bowler hats and told you you were incapable of understanding a percentage.

The world has changed.

Get yourself educated, just a bit. It's not hard. Small changes can bring your retirement age down by years. Doing nothing, is the worst you can do.

There are many variables, but are you, for example, prepared to look at the account every month or so? A phone app is fine. Depending on the investment company, you can set Alerts if things hit numbers you care about. A little advice, a little reading, goes a long way.

Much of the "information" you see is plain wrong.

Just because the money is in a S&S account does NOT mean its value bounces around all the time.

What the S&S account gives you the flexibility to use something doing the same as or better than Building Socs, with some or all of your money, for any period you like.

As a start you would probably be best advised using "Funds", not individual shares. Many are OEICS.

You can put your money in the Money Market and get almost exactly the same return that you would in a Bldg soc. (here brown)

A couple of charts: (Hargreaves Lansdown is good for making your own comparison charts)

NB this is 3 years, to date.

Brown is Money market 14.6% which, is about what a Bld Soc would have given you, maybe a precent or so under if you'd shopped around.

Green is the archetypical Stock Market, it's the S&P 500. 49.09% in the 3 years but you would have suffered that big dip around Trump's event. 

You could have sold as soon as you saw it starting, bearing the News in mind,  and rebought when the market was feeling better, but most people mess that up. I sold the S&P type shares in March, not particularly astute. I switched to the Orange fund.

Orange is a Managed, hedged Bond, which I use. It's MAN Group's  Dynamic Income IH. It's run from Ireland, (not an issue), so you find it in Offshore funds. (They have others, with more 'A' grade underlying bonds, slightly less return). It uses bonds from all over the world. About 80% up over three years.

Does it look "risky" to you? Beware, "experts" and IFA's who got lower returns will sneer at it.

Another chart, the last 3 months of the same chart, using the same 3 funds above, same colours, plus 2 others.

Blue is a global hedged Technology fund (Polar Capital), and purple is a Financials Fund (Jupiter  Fin Innov). Others as before.

This shows, in the 3 months,

1.14% from the "roughly Building Society" Money Market fund

5.1% from the MAN fund (hedged)

14.8% from the S&P 500 (there is a Hedged version at Fidelity)

24% from the financials fund

34.8% from the Tech fund (hedged).

Now, the dollar has moved  plus/minus  2% in that 3 months, but you get the idea.

If you pick a few funds then, mostly at the lower end of your "volatility tolerance" range, and less of a couple further up it, and keep your eye on it, you could reasonably expect something WAY WAY better than you'd get in a building society.

In the last couple to 3 years I've held the MAN fund (80% rise) , and used  better ones when I had confidence, which is most of the time.

Those "better" funds dipped around Trump day, but bounced right back up. The thing is to wait if that happens if you get caught - they've always come back up again.

It doesn't cost you anything (less than a tenner, say) to sell, hold, wait for a dip, go back in.

 

The last couple of years of my gains are more than I'd lose in any crash in history. Even Covid was a drop of ~1 year's growth, and it had caught up again in about 6 months.

The market IS high, and we have Earnings week ahead, so hold off right now and watch,  - maybe for a week or two. No Biggie.

The obvious suggestion is to try, with a small % of your pot, and keep watching. 

masonic

gascar said:

...when experts whom you daren't question went about in bowler hats and told you you were incapable of understanding a percentage.

...The last couple of years of my gains are more than I'd lose in any crash in history.

Shall I tell him?

mebu60

masonic said:

gascar said:

...when experts whom you daren't question went about in bowler hats and told you you were incapable of understanding a percentage.

...The last couple of years of my gains are more than I'd lose in any crash in history.

Shall I tell him?

No, please don't :-) 

masonic

I wouldn't want to discourage anyone from including some tech in their portfolio, preferably alongside other high risk sectors, so that one can rebalance between them for diversification purposes. However, one should go in with eyes open. Here is a cherry-picked decade of performance for Polar Capital's sister investment trust (because it has the long term history). It's certainly proven itself to be rather more resilient of late than the retail investor's darling, Scottish Mortgage Trust, but like all tech funds, has had some bad times too.

I suppose it would be valid to say an investment trust would fall a bit further in a down market than an OEIC, due to trading at a widening discount, so perhaps that 83% peak to trough fall would be in the 70s for the equivalent open ended fund. But if we are due something similar again, then a +90% return over 3 years, followed by a 70% drop over 2 years, or even 50%, drop over 10 years, would leave an investor down overall. This is the worst crash in this century, but there were worse than this in the 20th century. That's how percentages work, and why we diversify.

Eyeful

1. Investing means you are putting your money at risk.
2. Money in shares do go up and down, as can been seen by looking at stock market graphs.
3. Money in a S&S ISA when invested in shares, DOES mean its value bounces around all the time.
4. The longer you invest, the higher your odds of winning the game. 

But there is no guarantee you will come out a winner.

cockerWalker

Stocks and shares ISAs (despite the name) do not have to be invested in stocks and shares. If you are unwilling to take risk then you could entirely invest in short dated government bonds or etfs comprised of these, but you are very unlikely to earn the average return you are likely to get through stock markets, but also are very unlikely to suffer the same scale of losses.

If you can afford the potential losses and the time to stay invested then stock will very likely outperform bonds or bank accounts. If that will be true for the next decade is unknown. Likely, but unknown.