Trading 212 Invest

Sunshine_and_Roses

Could someone help with my fuddled brain please 

Both myself and OH have maxed out our ISA allowance for this year, some of which is in cash and some S&S.  We have a decent emergency fund in cash earning 4.75% variable (Zopa) and full holdings of premium bonds.

I have a fixed rate saver due to mature soon (£10000) and possibly have another £20000 to invest before the end of the year.  

I have only recently opened the Trading 212 S&S ISA, and still quite risk averse.  I am happy for this money to be invested for 10 years.  Would a global EFT or something similar to S&P 500 in the Trading 212 Invest be a sensible move rather than another fixed rate saver?  I would rather stick with Trading 212 as I am more familiar with this.

Thanks for reading, and for any advice/reassurance.

El_Torro

If you are planning to stay invested for 10 years or more then arguably a global tracker would work. I wouldn't put it all in the S&P 500, diversification is key and 100% in the US is not diversified. 

While a global tracker should give you great long term returns it will also come with a very bumpy ride. The fund could drop 50% in value in a short space of time. If this happens will this give you sleepless nights? Will it make you cash in your losses and be worse off than if you had just stayed in cash? I ask this because you say you are risk averse. 

If you like the idea of a global fund but you don't want too bumpy a ride then a multi asset fund with some bonds will smooth things out a bit. A popular choice is a fund which is 60% equities and 40% bonds. This fund could drop by 25% in a short space of time, which can be alarming for some people. It won't sink as fast (or grow as fast) as a global tracker though. 

QrizB

Sunshine_and_Roses said:
Both myself and OH have maxed out our ISA allowance for this year, ...
I have a fixed rate saver due to mature soon (£10000) and possibly have another £20000 to invest before the end of the year.  
I have only recently opened the Trading 212 S&S ISA, and still quite risk averse.  I am happy for this money to be invested for 10 years.  Would a global EFT or something similar to S&P 500 in the Trading 212 Invest be a sensible move rather than another fixed rate saver?

I note that you've used your ISA allowances for the year and are now looking at T212 Invest.

The tax treatment of general investment accounts (GIAs) like T212 Invest is somewhat more complicated than with an ISA or savings account. You'll need to keep good records and consider capital gains tax as well as income tax.

Sunshine_and_Roses

QrizB said:

Sunshine_and_Roses said:
Both myself and OH have maxed out our ISA allowance for this year, ...
I have a fixed rate saver due to mature soon (£10000) and possibly have another £20000 to invest before the end of the year.  
I have only recently opened the Trading 212 S&S ISA, and still quite risk averse.  I am happy for this money to be invested for 10 years.  Would a global EFT or something similar to S&P 500 in the Trading 212 Invest be a sensible move rather than another fixed rate saver?

I note that you've used your ISA allowances for the year and are now looking at T212 Invest.

The tax treatment of general investment accounts (GIAs) like T212 Invest is somewhat more complicated than with an ISA or savings account. You'll need to keep good records and consider capital gains tax as well as income tax.

Thank you QrizB, I hadn't considered capital gains tax, not something I really know anything about.  I am a low earner (approx £16k pa), winding down to early retirement.  Trying to make life as uncomplicated as possible whilst making savings work for me.  

Another option I had considered is to keep the money in Zopa earning 4.75% until April, then put straight into S&S ISA for us both.  I am estimating that interest on around £50000 in the Zopa account would still be tax free with personal allowance and starter rate.   I would not be surprised if the ISA allowance is cut in the budget though, which would bring me back to the Trading 212 Invest option.