Scared of shares: where do I put my other 3.6k?

gandalf

Does anybody here invest in bonds within a S&S ISA?

I already have a cash ISA and wondering what to do with the remaining 3.6k of my allowance. I don't want to lose my allowance and I don't want to touch anything that has a smell of the stock market. I was wondering if I can open a S&S ISA account to keep the remaining 3.6k and not hold any stocks, instead buy bonds or something similar that is almost as good as a cash ISA.

Anybody doing this here?

dunstonh

bonds and fixed interest funds are available. They will suffer volatility but to a lesser degree in general to the stockmarket.

What is your negative position to the whole of the stockmarket and every stockmarket? Some exposure is common sense for most people.

Some investments are available in ISA form with various capital safeguards.

gandalf

My concern is that as far as S&S are concerned (or even funds), I don't know what I am doing. So I need to stick to the certainty of a cash ISA or fixed-term bonds...

Is there a website dedicated to corporate bonds?

gandalf

Surely some people must be buying bonds within their S&S ISA? Come on people...

dunstonh

My concern is that as far as S&S are concerned (or even funds), I don't know what I am doing. So I need to stick to the certainty of a cash ISA or fixed-term bonds...

bonds dont have any certainty. They are lower risk and suffer less volatility over the long term but there is nothing certain about them.

Is there a website dedicated to corporate bonds?

Not that I am aware of. Why just corporate bonds? There are other fixed interest sectors as well.

gandalf

I thought as long as you let the bond mature you know exactly what you'll get, unless the company goes under?

I was looking at corporate bonds coz gilt rates are really low. Did you mean gilts by 'other fixed interest sectors?'

sdooley

gilt rates are lower than corporate bond rates because if the government goes under, it just prints more money, which reduces the value from either gilts or corporate bonds while if a corporate goes under, you lose some or all your money

sdooley

doesn't go in an ISA but you could also try zopa.

jamesd

Corporate bonds aren't like savings account fixed term deposits that banks call bonds. The capital value of bond investments changes, typically going up when interest rates fall and down when they rise.

If you buy a single company bond you know what you'll get and if you hold it to maturity you know that value also so you can ignore the ups and downs. But a bond fund gives you much lower risk than just one company.

As well as bonds take a look at the BlackRock UK Absolute Alpha fund - a low volatility hedge fund that's done a good job so far.

Different asset classes reduce overall volatility so you shouldn't really stick to just bonds - that BlackRock fund is one non-bond option that will help to diversify and reduce up and down movements. You should also look at at least one or perhaps two share-based funds. Perhaps Invesco Perpetual Income and Artemis Global Growth to give one UK and one global fund.

To start you might consider something like 35% in bonds, 15% in BlackRock UK Absolute Alpha, 10% in commercial property, 25% in Invesco Perpetual Income and 15% in Artemis Global Growth.

It's worth a look at Trustnet's IMA sector list.

Paul_Herring

sdooley wrote: »

doesn't go in an ISA but you could also try zopa.

Even riskier than equity ISAs, even though the current default rate is below expectations.

Besides, and even some of the lenders over there say this, you should only put money in Zopa after you've fully subscribed to your ISAs. Any interest earned there is taxable at your marginal rate, even interest on amounts in the holding account (earning only 4.5% IIRC - it's definately below base rate anyway.)

I personally wouldn't recommend them anyway, but not for the product, but the customer service. Much for the same reasons as I wouldn't recommend ICICI or FirstBank.

Unfortunatly it'll take me 3 years (unless I start putting more in, in the future) before I can fully leave them - that's the other thing you have to bear in mind - this is not the place for your money if you should ever need it in a hurry. With equity ISA's you can sell them, even if it's at a loss if you need the money. With Zopa there is (currently) no way you can withdraw money early - you must wait until it's been repaid by the borrowers.

gandalf

OK, let's try this from another angle. I think the way to go here is to invest in unit trusts from within a S&S ISA, using the full 7.2k allowance.

I'd like some advice from people who successfully invest in unit trusts.

I am currently thinking of dividing my money into 4 hypothetical pots:
- Equity
- Bonds
- Commodities
- Property
The initial allocation for each is 25%. If I decide a sector is not performing (e.g. equity and property now), then the other sectors get that money. I'll then choose two 'top' funds from each qualifying sectors.

I am defining 'top' funds within a sector in the following way:
- fund that has had the best return over the last 3 months.
- fund that has had the best return over the last year.

I'll then review the situation every 6 months.

All comments/suggestion are welcome.