Should i stay or should i go? ISA Misery!

Lipsticklady

Hello all,

When i turned 18 i was apprached by CIS financial advisors asking me if i wanted to invest some child funds in to an ISA.

My investment was a mini and Maxi isa fund. In six years, the mini has made the grand total of £3 :eek: but the amount i put into the Maxi has lost £300. :mad:

Any advice what to do. Should i cut my losses or hang on?

Please help as these are the only savings i have and i feel so worried about it.

dunstonh

The ISA hasnt lost anything. The funds you are invested in within the ISA have not performed as required.

If you dont like the way the CIS funds are performing (which is no surprise really), then there are thousands of funds available as alternatives whcih you can transfer into (via an ISA transfer) which allow you to re-asses the funds and choose ones appropriate to your risk profile and goals.

isasmurf

Lipsticklady wrote:

My investment was a mini and Maxi isa fund.

Not in the same year?

Lipsticklady

I havent had alot of input in into this. The mini fund has only £125 in it and the maxi started at £3000.
The mini is now £128 and the maxi is now £2700.

It has increased since march the maxi then stood at £2700. So ,effectively they have made nothing in 6 years.

dunstonh

Its not the ISA but where you have it. If you dont appreciate/desire a fund as volatile as the one you have, there are thousands of alternatives available, many with a much lower risk. Also, from next tax year, commercial property funds will be available in ISAs and these are lower risk than stockmarket funds.

Lipsticklady

I was thinking of cutting my losses and moving the money out. It would mean walking away with less than i put in (£2700) and absolutley no gain on my cash! The other thing is i have saved enough money (in the 6yrs) to open another ISA fund. Am i unable to do this, what i mean is would i have to transfer this ISA (if i decide to cut my losses) or could i take my money and just start another ISA. Plus, are they able to overlap?What i mean is, this ISA is started 6yrs ago, could i start another and finish this one in a month or so, when the value might have increased?

dunstonh

Each tax year you can do a new ISA so you dont have to worry about previous years allowances.

You invested into a stockmarket fund just before the worst stockmarket crash of recent times. You have gone through the crash and come out the other side and we are seeing some significant growth now. To pull out whilst it is on the climb could be considered poor timing. The idea is to invest in the stockmarket when its down and come out when its high. Currently it is still around 20% lower than it was at its highest point before the crash.

What you should really be considering is whether the CIS fund is a suitable fund for you or if you could transfer it to another fund or funds which offer greater potential.

We do not know what fund(s) you are invested in so its hard to give any suggestions but you shouldnt really go pulling it out now. It could take you another 2-3 years to break even outside of the ISA but could be a lot quicker than that where it is or better still, in a equity funds run by proper managers and not an insurance company.

thor

Note: Just because the stock market has bounced back and is still below it's max there is no guarantee about which will it will go. Historical trends mean nothing as it could easily sink all the way back again. Investing in the market is just gambling dressed up to look respectable. Sadly there is risk associated with wherever you put your money, even in savings accounts but that is where I would stash most of my cash.

dunstonh

Note: Just because the stock market has bounced back and is still below it's max there is no guarantee about which will it will go.

Very true. Most fund managers are estimating around 8% a year for the next 3 years. They may be right, they may be wrong but their "guesses" are going to be better than our "guesses". There is also lower risk stockmarket funds. ie. if you invested 5 years ago in a UK equity income fund, you would still be higher than you invested and more than a bank account even with the stockmarket crash.

If the money is needed short term, then bank accounts are usually best. However, if you have the time and accept the risk, it would be worth leaving it in a stockmarket fund. Personally, I would dump CIS and get it into an ISA with a proper fund manager. If risk is an issue, then it can be lowered by picking corporate bond/gilt/fixed interest funds and from next April, Commercial property funds.

Sadly there is risk associated with wherever you put your money, even in savings accounts but that is where I would stash most of my cash.

Which is why there is no one solution that fits everyone. I have very little in savings accounts with most of it in a wide spread of equities. I even save my annual tax bill into unit trusts (albeit property funds where there is low volatility). Horses for courses....

EdInvestor

Hello Lipsticklady

Here's a list of some of the more popular and better performing UK stockmarket funds:

Special Situations Fund/ Fidelity
Income Trust/ Jupiter
High Income Fund/ INVESCO PERPETUAL
UK Smaller Companies Fund/ Artemis
Growth Fund/ Jupiter

*UK Index Tracker/ Legal & General
*UK Index Tracker/Fidelity


I suggest you think about moving your ISA from CIS over to the low cost IFA https://www.Cavendishonline.co.uk

and pick a few of the above funds to invest in.

*These two funds have very low charges because they just follow the market index. Cheap is good, but performance is better, and you may get better performance with some of the other funds. Although the other funds cost more, if you go through Cavendish they will rebate the charges to you.

dunstonh

Special Situations Fund/ Fidelity & UK Smaller Companies Fund/ Artemis

Considered high risk (especially Fidelity Spec Sits at this time). Far higher than the CIS fund that is likely to be used currently. I have ceased recommending Fid Spec Sits given the situation that the fund is now in.

Income Trust/ Jupiter
High Income Fund/ INVESCO PERPETUAL

Considered just below medium risk.

Growth Fund/ Jupiter
*UK Index Tracker/ Legal & General
*UK Index Tracker/Fidelity

Just above medium risk.

If you are going to suggest funds, it would be a good idea to ascertain what Lipsticklady's risk profile is, rather than suggest funds (which generally are good quality so no arguements there) across different risk areas.

Lipsticklady, i have a risk questionnaire you may want to fill in. I can email it to you if you want. It helps you decide what your risk profile is. Its a DIY form and multiple choice of about 10 questions. Each answer gives a points value. You total up the points at the end and it tells you where you are on the risk scale. PM me with your email address if you want it emailed to you.