Good growth in stocks and shares ISA - trying to "crystallise" the growth

Murmansk

I've got a Trading 212 stocks and shares ISA that's grown about 17% since May.

I realise after a response I got on here to a post ages ago that if I take the £5K approx growth out and put it in the building society I'm not really preserving that £5K as the remainder of my ISA could drop in value and I'd only really be saving that £5K from dropping in value by as much as the remaining funds in my ISA might subsequently drop. 

So the only way to really "crystallise"  my growth is to cash in the the whole damn lot and transfer it into a cash ISA?

I'd then, maybe, get back into the stocks and shares ISA with my original sum from May but without the £5k growth. That original sum might go down in value but I would (I think?) have crystallised that £5k of growth?

Does this make any sense?

Albermarle

Often you can hold cash within many S&S ISAs.

Either in a the cash account, which usually pays a rate of interest a bit below what you would get in a savings account ( the rates vary from provider to provider).
Or in a Short term money market fund, which is a very low risk investment, that pays interest at the BoE rate.
These would be available in most S&S ISAs.

vacheron

I'm curious as to why you are so interested in "crystalising" your gains.

The only reason I can think of would be if you wanted to use your annual £3k CGT allowance, in which case, if your portfolio had risen by 25% you would have to sell 12K of your portfolio to lock in the £3k of gain. You could then buy back some different investments (or the exact same investments after 30 days).

.... however, your investments are in an ISA and so are not subject to CGT at all !

If you are predicting that we are at some kind of peak, and want to exit the market, hold your ISA as cash, and then buy back in later, then this is the way to do it, but perfectly predicting a peak (and subsequent trough) is extremely unlikely and relies more on luck than judgement.  

Murmansk

vacheron said:

I'm curious as to why you are so interested in "crystalising" your gains.
 

It's a fair question and the answer is that I'm 64 so don't want to lose what seem like the incredible gains I've made since May in a market crash that takes years to recover from. 

scoobyjones1

 

It's a fair question and the answer is that I'm 64 so don't want to lose what seem like the incredible gains I've made since May in a market crash that takes years to recover from. 

Which companies are you invested in, inside your SnS ISA?

vacheron

Murmansk said:

vacheron said:

I'm curious as to why you are so interested in "crystalising" your gains.
 

It's a fair question and the answer is that I'm 64 so don't want to lose what seem like the incredible gains I've made since May in a market crash that takes years to recover from. 

Ok, that clarifies, thanks.

in that case you have to think of your investment  as two pots now. Your initial £30k investment, and your subsequent £5k gain.

Your first option if you want to protect your gain, is to sell the £5K to some kind of cash holding, but your original £30K remains “at risk”, so should this £30k then fall in value by about 17%, you have still “lost” that £5k (on paper) as your investments are now worth £5k less. 

The second option is to protect your original  investment capital by drawing out your £30K but leaving the £5 recent gain invested as “fun money” which, even if you lost it all, would still leave you in the same financial position you were in back in May. 

The third option of selling the entire holding. This would protect both your original capital and your gain but the second that you re-purchase some new investments with your £30k in the future, you would be  back into the same scenario as option 1. i.e. there would be no difference in the “crystallised” status of the £5k either way.

clairec666

Murmansk said:

vacheron said:

I'm curious as to why you are so interested in "crystalising" your gains.
 

It's a fair question and the answer is that I'm 64 so don't want to lose what seem like the incredible gains I've made since May in a market crash that takes years to recover from. 

In which case, why not transfer the whole lot to a cash ISA.
Of course, you run the risk of missing out on further gains over the coming months.

Trying to second-guess the market is pretty much impossible. The best advice is to put your money away long-term and forget about it, as it will generally make gains in the long run. If you invested in May and ignored it until next May, you may see you've made gains of 5% and would feel pretty happy with that. But you wouldn't realise you'd actually gained 17% over the first 6 months then lost 12%. In another year you could have lost 12% then gained 17%, in which case peeking at it halfway through the year would have been pretty demoralising.

wmb194

Murmansk said:

I've got a Trading 212 stocks and shares ISA that's grown about 17% since May.

I realise after a response I got on here to a post ages ago that if I take the £5K approx growth out and put it in the building society I'm not really preserving that £5K as the remainder of my ISA could drop in value and I'd only really be saving that £5K from dropping in value by as much as the remaining funds in my ISA might subsequently drop. 

So the only way to really "crystallise"  my growth is to cash in the the whole damn lot and transfer it into a cash ISA?

I'd then, maybe, get back into the stocks and shares ISA with my original sum from May but without the £5k growth. That original sum might go down in value but I would (I think?) have crystallised that £5k of growth?

Does this make any sense?

You need to find your, ‘sleep level.’ If you want to take £5k out take £5k out.

There’s never anything wrong with taking profits and when to take them is just another facet of investing we all have to struggle with.

Albermarle

vacheron said:

Murmansk said:

vacheron said:

I'm curious as to why you are so interested in "crystalising" your gains.
 

It's a fair question and the answer is that I'm 64 so don't want to lose what seem like the incredible gains I've made since May in a market crash that takes years to recover from. 

Ok, that clarifies, thanks.

in that case you have to think of your investment  as two pots now. Your initial £30k investment, and your subsequent £5k gain.

Your first option if you want to protect your gain, is to sell the £5K to some kind of cash holding, but your original £30K remains “at risk”, so should this £30k then fall in value by about 17%, you have still “lost” that £5k (on paper) as your investments are now worth £5k less. 

The second option is to protect your original  investment capital by drawing out your £30K but leaving the £5 recent gain invested as “fun money” which, even if you lost it all, would still leave you in the same financial position you were in back in May. 

The third option of selling the entire holding. This would protect both your original capital and your gain but the second that you re-purchase some new investments with your £30k in the future, you would be  back into the same scenario as option 1. i.e. there would be no difference in the “crystallised” status of the £5k either way.

Fourth option would be to cash in half of the £35K ( or around half) and leave the other half invested.
Hedging your bets .

jimjames

Murmansk said:

vacheron said:

I'm curious as to why you are so interested in "crystalising" your gains.
 

It's a fair question and the answer is that I'm 64 so don't want to lose what seem like the incredible gains I've made since May in a market crash that takes years to recover from. 

You might still have 25 years (or more) of needing that money to grow and be available. How does this fit in to the rest of your retirement planning? (Are you actually retired at 64?)