Stocks and shares ISA - suggestions for 19 year old

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  • TheLastMongoose
    TheLastMongoose Posts: 96 Forumite
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    The postgrad timescale is slightly awkward to work with. 5-6 years is not really long enough for investing to be safe option but keeping money in savings accounts for that long is likely to result in a small loss when inflation is accounted for. What about a mixture of savings and the low risk investments that have been suggested? Its a solution that guarantees unspectacular results but given the context might be appropriate. Savings rates seem to be slowly moving in the right direction so now might not be a bad time to have a foot in both camps.


    What are your daughters feelings?
  • Reed_Richards
    Reed_Richards Posts: 4,169 Forumite
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    I was about to agree with everybody else that 5-6 years was too short a timescale for a stocks and shares investment but I took a look at the FTSE 250 index and I can see why you chose that. It has been less volatile than the FTSE 100 and unless you had invested in May 2007 and got out in May 2012 I cannot find a 5 year time period since 1998 where you would have lost money and there are many where you would have made good gains.
    Reed
  • lpgm
    lpgm Posts: 355 Forumite
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    Reed_Richards wrote: »
    ...unless you had invested in May 2007 and got out in May 2012 I cannot find a 5 year time period since 1998 where you would have lost money and there are many where you would have made good gains.

    But of course the problem is that all the years you mention are in the past.
  • Reed_Richards
    Reed_Richards Posts: 4,169 Forumite
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    lpgm wrote: »
    But of course the problem is that all the years you mention are in the past.
    Yes indeed, all the usual caveats apply. But isn't the whole rationale for investing in stocks and shares based on past performance?
    Reed
  • lpgm
    lpgm Posts: 355 Forumite
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    Long-term trend, rather than periods of past performance. And in this case we're talking about quite a short period.
  • cloud_dog
    cloud_dog Posts: 6,044 Forumite
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    OP, you could hedge your bets and go 50/50, in S&S ISA and cash (accepting all the caveats around long(ish) term cash and short(ish) term investments).

    For the investment, I would be tempted to select a low cost global all cap equity fund (but that's just me).
    Personal Responsibility - Sad but True :D

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  • Murdina
    Murdina Posts: 433 Forumite
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    edited 12 July 2018 at 8:51PM
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    Many thanks to all for your helpful comments.

    As noted above, the time horizon is difficult - we are between a rock and a hard place - if we invest in cash there is negligible return - equities carries the chance of capital appreciation but also a risk which might be mitigated if the time horizon were longer - and if she decided not to do post grad work (this is in essence the earliest point at which she might want to use the money) then we might regret not having put into equities.
    The fact there is no consensus above is in a way reassuring as it reflects my own maybe this maybe that thought process on the topic.

    I shall reflect further.
  • steampowered
    steampowered Posts: 6,176 Forumite
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    In reality, what is the risk of funds losing value when invested over a 5-6 year period with dividends reinvested?

    Of course there is a risk of that happening, but it is certainly far less than 50%.

    And if the funds were held in cash, there would be a 100% chance of that cash being eroded over time by inflation.

    I would suggest that if the money is to be used for unknown purposes and held for an unknown period - which is likely to be at least a few years - an equity investment is a good idea.

    Obviously this is not a 'risk free' approach but nothing in life is risk free. Your daughter will certainly face bigger risks in starting off her adult life than the possibility that some money invested for her by her grandmother might go through a bit of market volatility.
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