confused about ISA £3000 or £7000 ?

lipidicman

The OP may have a good enough income stream that he can invest the £4k now and still fill that £3k for the cash ISA anyway.

Maybe bonds are a good idea for the stocks and shares ISA. I need to look into these myself.

dunstonh

If you think of risk on a 1 to 10 scale. 1 being lowest, 10 being highest. Also think of that scale as a potential rate of return scale as well. So, the higher you go up the scale, the higher the potential for gain but also the higher potential for loss.

You should invest where you think you believe you are comfortable and not where someone else is. Also, consider risk as an average. For example, £4000 all invested in risk 6 is the same as having £1000 in risk 4, £1000 in risk 8 and £2000 in risk as it balances out to the same. With £4000 you can have at least 4 funds and you should pick those that you feel comfortable with.

We cant give fund advice here as that falls under the FSA rules.

competitionscafe

Yes, you could potentially lose it all - although this is unlikely, you could lose 50% or more. You must be prepared to invest for the long term (5 years at least, preferably more). You may be best spreading your money between 4 funds (£1000 in each) to spread the risk even more and if you are risk averse, don't put the money into high risk funds (emerging markets, technology, etc). Lower risk funds would be in the UK Equity Income, Global Growth and UK All Companies sectors.

This is the standard 'risk warning' that fund managers will have on their literature:

"The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested. Investments should be made for the long term, ie. at least five years. Past performance is not a guide to future performance. Changes in exchange rates will affect the value of investments made overseas. Investments in newer markets, smaller companies or single sectors offer the possibility of higher returns but will also involve a higher degree of risk. "