Uninvestability?

Bobbins_2

I'm usually pretty good with money, but in one area I have failed myself completely...

I generally get a 3k mini cash ISA every year, but three years ago I put 7k in a stocks & shares isa from Barclays. I was attracted by the larger allowance, and had big plans to do some research and pick some good stocks... however the more I looked at it, the more I realised what a gamble the whole thing was, and overtime I built up a mental block to the whole thing.

So now I still have 7k sitting uninvested in a Barclays maxi isa doing NADA. What a waste!
(I wonder how many people are in the same boat... how much stocks & shares isa money is uninvested?)

Anyway I'd pretty much given up, and it's hard to know who to trust for impartial advice...
Then I found these forums! :hello: So here goes...

My uncertainties boil down to two things:

:think: Should I transfer away from Barclays, and if so where to?

:think: What's the safest form of investment for this money, in terms of low risk, reasonable gain, and not getting ripped off?

If anyone can offer advice, I will be extremely grateful.

cheerfulcat

Hi Bobbins,

It's kind of hard to say whether you should transfer away from Barclays; it depends on how much they are charging you, what investments you're interested in, how often you intend to deal...you get the idea :-) FWIW, I like squaregain because they charge a flat fee for the ISA wrapper (£25) and make a very wide range of investments available.

What's the safest form of investment for this money, in terms of low risk, reasonable gain, and not getting ripped off?

Low risk and reasonable gain don't go together, I'm afraid...well, I guess it depends on what you mean by "low" and "reasonable". Cash currently returns ~4% after BR tax. For anything higher than that, you are taking the risk of losing capital. Have you considered a simple index tracker?

Bobbins_2

Thanks for the feedback CheerfulCat

Sorry I was a bit vague on the low risk reasonable gain thing, wanted to allow room for interpretation... I do understand there's sadly a trade off between the two.

The trackers sound good, what's the best way to choose a tracker? Is there anywhere to go for impartial reviews of them?

dunstonh

The trackers sound good, what's the best way to choose a tracker? Is there anywhere to go for impartial reviews of them?

You wont get impartial reviews. You have people that are pro trackers and you have people that are pro managed funds. Each side will give you stats that show that theirs is better than the other. The problem is that both are right and both are wrong. At times trackers will be better and at times managed funds will be better.

For example, lets take a 1-10 risk scale. A UK Tracker will be 7 on the scale but a UK equity income managed fund will be 5 to 6 (some funds in that sector come in 5, some in 6). So Equity income is lower risk than a tracker and over the last 5 years and 10 years the sector average has been better with the Equity Income sector. Go back further and it will switch towards the trackers. You will have isolated years where trackers were better than the managed funds and vice versa.

So, do you put all your money in one area or take the more sensible approach and spread your money around the areas (sectors) so not to put all your eggs in one basket.

Nobody knows where the best place is or is going to be. Having a spread allows you not to take the chance on one being better than another. When I do investment reviews, the portfolios with the widest spread of areas have performed better than those in just one or two areas.

cheerfulcat

Hi, Bobbins,

I'm guessing you mean impartial reviews of individual trackers, not as dunstonh rather mischievously implies ;-), reviews of index trackers per se. There are no reviews that I can think of; but there are only two considerations to take into account when choosing a tracker; the charges ( the lower the better, obviously ) and to a lesser extent the tracking error. You can compare the graph of each fund to the performance of the index which it tracks at Trustnet, among other places -

http://www.trustnet.co.uk/ut/funds/list.asp?sort=1&ss=0&txtS=&txtSS=&reg=all&sec=ind&type=all&submitbutton=Go

Unfortunately not all providers subscribe to Trustnet but you can generally get the information on their sites. Another way to track indices - and remember, to get a spread of investments you can and should track others as well as (arguably instead of ) the FTSE 100 - is with Exchange Traded Funds. There are not as many as there are in the States but they are still a very useful tool. You can track Japanese, Chinese, European ( large and small cos), US, and corporate bond indices.

http://www.ishares.net/index.do

If you buy the ETFs in an iPlan ISA with Squaregain, there is no set-up fee, no purchase commission, no stamp duty,an annual charge of £25 for the ISA wrapper and an AMC of between 0.35% and 0.5% depending on the fund.

http://focus.squaregain.co.uk/en/ourservices/whatweoffer/cat/index.html

Trackers are not a panacea for all ills but for the most part, managed funds are benchmarked to an index ( i.e. they are closet trackers ) so if you *want* a fund you may as well just track the index yourself as pay someone else *unless* you do the work and find funds which are *not* closet trackers, or you are willing to research and invest in shares directly, always an option, and the one I have chosen, though I use trackers in my SIPP.

HTH

Cheerfulcat

Bobbins_2

Thanks guys,

Yes CheerfulCat's right, I was thinking more reviews of individual trackers.. in the same way you get websites that review digital cameras or computer hardware...

Of course unlike cameras and hardware it involves a lot of speculation, so is a pretty tall order

Thanks for all the great information and advice, I now have a much better place to start from!