Best way to release funds from Stocks and Shares ISA

melb

hi there I have a stocks and shares ISA with about £400,000 in it which is doing really well (apart from Fidelity MoneyBuilder Corporate Bonds which have lost about 20% over about 30 years),

I have switched from reinvesting any dividends to having them paid into my bank account.

But I need to realise some money for day to day spending, say about £5,000 to start with.

I assume in order to do this I have to sell some shares for which i will receive any income tax free.

My question is simple (or maybe it isn't) but would i be best selling some of the shares/funds which have been performing the best over this time period, or those that are doing the worst.

Thanks for any advice.

eskbanker

It sounds like time to revisit your objectives and strategy - firstly it's a risky situation to be needing money at short notice from investments which could be at depressed values rather than their current elevated levels, which is just convenient happenstance in this particular scenario.  So, the norm is to derisk according to your projected income requirements, i.e. make sure that you have enough in low-risk products to minimise the risk of loss prior to withdrawal, unless you're in a position to defer withdrawals by years.

Having established when you anticipate needing to access funds, you plan your investments accordingly, so rather than simply looking backwards at recent performance, it'll generally be more productive to consider which products you need in order to fit your future plans.

vacheron

As general investing advice (which is just as applicable to ISA's), I remember someone once telling me that people who hold on to poorly performing investments in the hope of a potential recovery should ask themselves:

"If I didn't own this investment, would I buy that same investment today at todays market price?"

If the answer is no, you should sell. If the answer is yes, you should hold.

However there is no right or wrong answer (without a crystal ball), and either could work out to be a good or bad decision in hindsight.

mebu60

FrugaiMacDugal said:

melb said:

hi there I have a stocks and shares ISA with about £400,000 in it which is doing really well (apart from Fidelity MoneyBuilder Corporate Bonds which have lost about 20% over about 30 years),

I have switched from reinvesting any dividends to having them paid into my bank account.

But I need to realise some money for day to day spending, say about £5,000 to start with.

I assume in order to do this I have to sell some shares for which i will receive any income tax free.

My question is simple (or maybe it isn't) but would i be best selling some of the shares/funds which have been performing the best over this time period, or those that are doing the worst.

Thanks for any advice.

Gain on shares does come under income tax it is Capital Gains Tax.

When selling best to limit sales to avoid  multiple charges.

Not when they are held in an ISA as advised in the OP's opening statement in which case they are exempt from CGT.

FrugaiMacDugal

mebu60 said:

FrugaiMacDugal said:

Gain on shares does not come under income tax it is Capital Gains Tax.

When selling best to limit sales to avoid  multiple charges.

Not when they are held in an ISA as advised in the OP's opening statement in which case they are exempt from CGT.

Aye, realised that after posting and deleted my original, but you were too quick for me.

El_Torro

Congrats on having such a large amount in an ISA. According to HMRC there are 42,000 people in the UK with more than £500k in ISAs. It doesn't mention figures below £500k but I can't imagine there are a huge number of people with £400k or more in ISAs. 

As for your question: basically what eskbanker said. Any money that you plan to take in the next 5 years (arguably longer) should really be relatively safe. Either in cash or in a currently fashionable Short Term Money Market fund.

dunstonh

hi there I have a stocks and shares ISA with about £400,000 in it which is doing really well (apart from Fidelity MoneyBuilder Corporate Bonds which have lost about 20% over about 30 years),

No it hasnt



Green is total return and red is unit price with income withdrawn. Being an fixed interest security, you would expect the unit price on the income units to remain relatively stable as the return is in the income.

Eyeful

1. Any money you know you will need within the next 5 years, should be held in either:
(a) NS&I accounts/bonds where it has 100% protection as you are lending to the UK government.
(b) Bank or Building Society on the FSCS list, where it will have FSCS Savings Protection up to £85000.
This money could be held in a Cash ISA, so the starting sum and interest would be shielded from tax.

2. No one can see into the future and know which investments will do well and which poorly.
 So which investments to share or keep is up to you.

3. Investing is for the long term. The longer the better. 
If you know you will not touch the money for at least 10 years then you might consider investing.

jimjames

Eyeful said:

3. Investing is for the long term. The longer the better. 
If you know you will not touch the money for at least 10 years then you might consider investing.

If the OP has been investing for 30+ years then they're probably well aware of the long term nature of investments! (I'm assuming you'd done a copy & paste for some of that reply so not specific to the OP)

melb said:

I assume in order to do this I have to sell some shares for which i will receive any income tax free.

Always hard to choose what to sell but if your platform charges fees for selling then the smallest number of transactions would be better. If not then you could sell an amount of each. It might just be your terminology but if you sell shares that will generate capital which is free of CGT. Any interest from it inside the ISA remains tax free but once it's outside the ISA wrapper any further interest will potentially be taxable.

Beddie

Sell some of your highest risk fund - it's probably full of US growth stocks and has had a good run. No harm in taking profits when the markets look toppy.

Although it barely matters where you take it from, as you're only withdrawing about 1% of your money - insignificant.

Albermarle

Beddie said:

Sell some of your highest risk fund - it's probably full of US growth stocks and has had a good run. No harm in taking profits when the markets look toppy.

Although it barely matters where you take it from, as you're only withdrawing about 1% of your money - insignificant.

As above , it is such a small % it is not worth spending too much time or energy thinking about it.