Worried about stocks and shares ISA

TractorFactor

I understand nobody can say what will happen but I'm a little worried about investing in stocks and shares.

It seems with the announcement from the government reducing the amount of cash I can invest in a cash ISA, I'm sort of forced to use stocks and shares.

But if the worst happens, I'll loose money, right?

I have some money, up to £10,000 that I can invest and it'll be invested for 15 years plus.

I understand the longer the better and not to look at it every day. I invested £150 a week or so ago and while it's gone mainly down, it's now lost less than 30p so far.

Am I right to be worried in investing some life savings? It'll be in something relatively stable - the FTSE100 or the UK version perhaps.

Any other tips or reassurance? 

El_Torro

If you don’t need to access the money for at least 10 years then the likelihood is that investing in the stock market will give you a much better return than saving in cash.

Having said that it’s worth understanding how to invest and what you’re investing in. Diversification is key, investing only in the UK is not diversified. It’s worth looking into global trackers and multi asset funds and seeing which of these funds looks best for you. 

Alexland

TractorFactor said:
But if the worst happens, I'll loose money, right?

It'll be in something relatively stable - the FTSE100 or the UK version perhaps.

Loads of people invest in houses that change value every day it's just less obvious as there isn't a sign outside giving the latest price. They even take out lots of debt via a mortgage to pay for it, borrowing to invest, using leverage makes it even more risky but people still do it and it's usually fine.

It's the same with S&S investments - if you invest your money sensibly you should be fine over 15 years.

If you own most of the important companies from around the world selling software, energy, insurers, banks, food, etc then if they all go bust civilization has probably failed and your money will be worthless anyway. If you also own fixed income bonds from those companies and government debt and that all fails to be repaid then we really are back to being hunter gathers searching for food and shelter.

So if you accept the premise that total loss is highly unlikely it's then about coming up with a blend of assets to make the risk acceptable to you. If you own a stock market tracker of companies like the FTSE100, the UK large cap index, then you are risking the account valuation might drop around 50% in a bad crash (before hopefully recovering eventually) but if you own a Multi-Asset fund that blends both stock market and fixed income bonds then the alchemy of diversification can reduce that volatility substantially.

Time dilutes risk - by holding long term you are more likely to get an averaged out result. There are lifestyling techniques to further reduce risk as you approach withdrawal to get more certainty of outcome.

The Vanguard LifeStrategy and HSBC Global Strategy multi asset fund series that are available at various risk levels and if you want to invest your £10k in one of them then you can open a Scottish Widows Share Dealing (was iWeb) account and invest for just £5 for the trade plus around 0.2% pa ongoing fund manager fee.

https://www.vanguardinvestor.co.uk/investing-explained/what-are-lifestrategy-funds
https://www.assetmanagement.hsbc.co.uk/en/intermediary/capabilities/multi-asset/hsbc-global-strategy-portfolios

My view is that it's fine to look at the valuation as often as you want provided you can keep it in perspective and think long term. Look at the data going back hundreds of years if you want to be reassured. You may have even already been unknowingly S&S investing for a while if you have a defined contribution pension.

Uriziel

Every time the market has crashed it has recovered however the FTSE 100 is based on UK companies so bare in mind that if anything happens to the UK your money is also finished.
If you want your investment to be as safe as possible try to invest in a diverse portfolio that stretches over countries. There is an EFT that covers most of the world called "all world". It is safer to invest in several countries than only the UK since if the UK goes to !!!!!! but the others still do well your money would retain its value.
You can ask for a safe portfolio and someone here can give you further advise.
Please note that the less risky your choices are the lower the return will be. You could get a 8% return if you invest in all countries however people who took a gamble and invested in NVIDIA or Palantir years ago are now millionaires though if you are investing your life savings you should stick to something safe.
Also make sure you have enough money in an interest savings account in case of emergencies, most people recommend 6 months of expenses.

jaybeetoo

I started investing (many decades ago) by putting in a regular amount each month.  That way you’re not timing the market.  I started my investment journey with F&C investment trust, reinvesting dividends.  Once you’ve invested, do not keep looking at the share price!

Woodstok2000

TractorFactor said:

I understand nobody can say what will happen but I'm a little worried about investing in stocks and shares.

It seems with the announcement from the government reducing the amount of cash I can invest in a cash ISA, I'm sort of forced to use stocks and shares.

But if the worst happens, I'll loose money, right?

I have some money, up to £10,000 that I can invest and it'll be invested for 15 years plus.

I understand the longer the better and not to look at it every day. I invested £150 a week or so ago and while it's gone mainly down, it's now lost less than 30p so far.

Am I right to be worried in investing some life savings? It'll be in something relatively stable - the FTSE100 or the UK version perhaps.

Any other tips or reassurance? 

You can still invest £20k in a cash isa this year and next year, and £12k per year after that....

Eyeful

1.  Anything to do with money will have risk attached. All that changes is the type & size of the risk,

Example: A low risk savings account protected by the FSCS up to £120,000.

Is at risk of inflation, this is where the same amount of money will buy you less, as time passes.

RPI% graph 1948-2025 -- gov.uk

https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/czbh/mm23

2. (a) SAVINGS: means cash in the bank/building society (Low risk)

 Best savings Rates: https://moneyfactscompare.co.uk/savings-accounts/

 (b) INVESTING: means you are putting your money at risk; Think shares, bonds, gold etc. (various risk levels)

There is no guarantee you will win,

3. Investing is for money you know you will not touch for at least 10 years.

This is because your odds of winning the game will be high.  The longer the better. 

4. You can make investing as simple or as complex as you like.

Simple can do just as well as complex.

5.  SIMPLE INVESTING IN DETAIL (advantages, easy to understand  & implement)

(a) First watch this: https://www.kroijer.com/

(b) Then read these:

 https://monevator.com/passive-fund-of-funds-the-rivals/

https://monevator.com/best-global-tracker-funds/

6. Once invested its "buy & forget" only look at prices once or twice a year at most. 

Eyeful

If you are still worried about investing, then stick to low risk savings accounts.
Some persons cannot handle investing.
Never let the tax tail wag the dog.
Unless you have a defined benefit pension, then any pension you have is almost certainly already in investments.

1. If the stock markets fall then while your money goes down you still own the assets. So prices can also then go up & you can get the money back.

2. If you have money in a nice safe low risk saving account and the rate of inflation goes up, then you also loose money purchasing power permanently., with no chance of getting it back.

3. Back in the 1970's,
(a) If you had money in a safe low risk savings account, you would have lost money purchasing power due the an RPI of over 25% in one year of a labour government!

 (b) If it the money had been in an investment trust that invested world wide, then after 10 years you would be in profit.
Not only would the share price have been higher, you would have been paid dividends as well (the cherry on top of the cake).

Alexland

Uriziel said:

Every time the market has crashed it has recovered however the FTSE 100 is based on UK companies so bare in mind that if anything happens to the UK your money is also finished.

While the FTSE100 companies are listed in the UK it's quite a global index these days with around 3/4 of the revenues and earnings generated overseas. I think there are better global indexes but they all have their own problems with sector bias, valuation concentration, etc.

There is an EFT that covers most of the world called "all world". It is safer to invest in several countries than only the UK since if the UK goes to !!!!!! but the others still do well your money would retain its value.

If the OP is worried to invest at all then a multi-asset fund might be more suitable which should give a smoother ride than a global index tracker which has potential to drop around 50% in a bad crash and take years to recover.. Given elevated stock market valuations and attractive fixed income yields they might even get a higher return in the medium term.

dunstonh

 I'm sort of forced to use stocks and shares.

No you are not.   Cash savings are not going anywhere.   Labour are just regressing to what appears to be older ISA rules.

But if the worst happens, I'll loose money, right?

If the worst happens, then money will cease to exist as we know it.

I have some money, up to £10,000 that I can invest and it'll be invested for 15 years plus.

On that timescale, cash savings are propably a higher risk than investments.      Inflation risk and shortfall risk will offset the investment risk.

 I invested £150 a week or so ago and while it's gone mainly down, it's now lost less than 30p so far.

An economic cycle is around 10-15 years.     So, why are you concerned with movements over days?

Am I right to be worried in investing some life savings? It'll be in something relatively stable - the FTSE100 or the UK version perhaps.

Investing 100% in the FTSE100 (which is UK equities by the way, albet globally weighted ones), would be bad investing.    Investing 100% in one country is not a good idea.

Eyeful

TractorFactor said:

I understand nobody can say what will happen but I'm a little worried about investing in stocks and shares.

I have some money, up to £10,000 that I can invest and it'll be invested for 15 years plus.

I understand the longer the better and not to look at it every day. I invested £150 a week or so ago and while it's gone mainly down, it's now lost less than 30p so far.

It'll be in something relatively stable - the FTSE100 or the UK version perhaps.

Any other tips or reassurance? 

1. If you are going to invest for 15 years plus. You already understand it is a long term investment.
 So why are you already looking at your investment after just one week & worrying about a 30p loss on a £150 investment.
That way is going to drive you mad!

Tip 1: Comes from the late Jack Bogle who started Vanguard:
"Once invested do not look at your investment until you retire. Then sit down before looking, as it will be a big pleasant surprise". 

2. What do you mean by? "It'll be in something relatively stable - the FTSE100 or the UK version perhaps."
 Investments prices go up & down all the time.  Where did this idea of relatively stable come from?

Tip 2. Investing means you are taking a risk with your money & hope to get more out than you put in. You are being rewarded for taking that risk.
 
3. No one can see into the future. So no one can tell you what will happen in 10 or 15 years time. 

Tip 3.  Investing like gambling, you play the game where the odds are high on you winning. That why you invest for 10 years or longer.

4.   Speculation (Timing the markets) is putting money into the markets for a short time. 
Your odds off winning are low, so your odds off losing are high.

Tip 4. Never ever Speculate. It's a mugs game.