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    • vigman
    • By vigman 6th Nov 18, 1:14 PM
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    vigman
    S&S ISA jitters!
    • #1
    • 6th Nov 18, 1:14 PM
    S&S ISA jitters! 6th Nov 18 at 1:14 PM
    After giving it careful consideration I put 25k in Vanguard Life Strategy funds ISA in July this year.

    I balanced with more money in the 20% equity fund up to less in the 80% fund, most being in 20% and 40% equity funds.

    The total investment has gone down -6.2% overall and drops at a higher rate in the higher risk categories.

    I understand that this should be looked at over at least a five year period. (If/when the 80% fund equals my original investment I will probably move it to the 20% fund)

    I would therefore hope that after 5 years I should have gained at least 5 x the 1.5% p.a. guaranteed ISA rates I can get now.

    Is this realistic?

    TIA
    Vigman
    Any information given in my posts or replies is intended to be of interest and/or help to members of the forum. I cannot guarantee that this is accurate or up to date.
Page 1
    • le loup
    • By le loup 6th Nov 18, 1:30 PM
    • 3,877 Posts
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    le loup
    • #2
    • 6th Nov 18, 1:30 PM
    • #2
    • 6th Nov 18, 1:30 PM
    I would therefore hope that after 5 years I should have gained at least 5 x the 1.5% p.a. guaranteed ISA rates I can get now.
    Originally posted by vigman
    Hope is always good to have but no one can promise a particular outcome.
    • dunstonh
    • By dunstonh 6th Nov 18, 2:17 PM
    • 95,825 Posts
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    dunstonh
    • #3
    • 6th Nov 18, 2:17 PM
    • #3
    • 6th Nov 18, 2:17 PM
    The total investment has gone down -6.2% overall and drops at a higher rate in the higher risk categories.
    A 6.2% loss is tiny. You have broadly suffered half the drop in the correction. So, when a proper crash comes along you would expect to lose around 12-15%. When a depression style loss comes along then around 25-30%.

    I understand that this should be looked at over at least a five year period. (If/when the 80% fund equals my original investment I will probably move it to the 20% fund)
    5 years is around half an economic cycle. So, it is really the barest minimum. 10 years is more ideal. Typically one half of the cycle is much better than the other half. The last 5 years have been much better than expected. So, what does that mean for the next 5 years....

    I would therefore hope that after 5 years I should have gained at least 5 x the 1.5% p.a. guaranteed ISA rates I can get now.

    Is this realistic?
    I think that is unrealistic as you are probably looking at the weaker half of the economic cycle in that period.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • vigman
    • By vigman 6th Nov 18, 2:30 PM
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    vigman
    • #4
    • 6th Nov 18, 2:30 PM
    • #4
    • 6th Nov 18, 2:30 PM
    Thanks Dunstonh. Maybe not a great move on my part

    Given your 10 year cycle example, would you then expect at least a 10 X 1.5% return at the end of that period?

    Otherwise why would folk use S&S ISAs if they are likely to get back the same or less than the current fixed interest rates?

    Vigman
    Any information given in my posts or replies is intended to be of interest and/or help to members of the forum. I cannot guarantee that this is accurate or up to date.
    • dunstonh
    • By dunstonh 6th Nov 18, 3:44 PM
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    dunstonh
    • #5
    • 6th Nov 18, 3:44 PM
    • #5
    • 6th Nov 18, 3:44 PM
    Given your 10 year cycle example, would you then expect at least a 10 X 1.5% return at the end of that period?
    I think I have misunderstood what you were saying when you put 5x1.5% p.a. I thought you meant each year.

    If you look at long term averages as a ballpark, the next 5 years are almost certainly going to be lower than the last 5 years. However, no-one knows for sure.

    A 25% loss period is likely at some point. Whether its a slow multi-year decline (like the dot.com period which saw event after event pulling it down) or a sudden drop (or double dip quick drops) like the global recession, is always an unknown. However, it will probably take a multi-year recovery period.

    So, when looking at just 5 years, you are not giving yourself many growth years if that happens. Whereas 10 years, you are getting close to the whole cycle and would expect to have enough good years to counter the negative and nothing years. Whilst nothing is guaranteed, you would expect to do a lot better than cash over a 10 year period. With 5 years, you hope but there is a chance you may not.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • vigman
    • By vigman 6th Nov 18, 6:10 PM
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    vigman
    • #6
    • 6th Nov 18, 6:10 PM
    • #6
    • 6th Nov 18, 6:10 PM
    Thanks for the clear explanation

    I thought there must be a good reason why folks go for S&S ISAs!

    Vigman
    Any information given in my posts or replies is intended to be of interest and/or help to members of the forum. I cannot guarantee that this is accurate or up to date.
    • AnotherJoe
    • By AnotherJoe 6th Nov 18, 6:12 PM
    • 11,509 Posts
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    AnotherJoe
    • #7
    • 6th Nov 18, 6:12 PM
    • #7
    • 6th Nov 18, 6:12 PM
    After giving it careful consideration I put 25k in Vanguard Life Strategy funds ISA in July this year.

    I balanced with more money in the 20% equity fund up to less in the 80% fund, most being in 20% and 40% equity funds.

    The total investment has gone down -6.2% overall and drops at a higher rate in the higher risk categories.

    I understand that this should be looked at over at least a five year period. (If/when the 80% fund equals my original investment I will probably move it to the 20% fund)

    I would therefore hope that after 5 years I should have gained at least 5 x the 1.5% p.a. guaranteed ISA rates I can get now.

    Is this realistic?

    TIA
    Vigman
    Originally posted by vigman

    That is a great way to not benefit from investment. You dont sound cut out for it.
    Perhaps a number of monthly savers would be better (I'm being serious) then you dont have to worry about the stock market.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • vigman
    • By vigman 6th Nov 18, 6:50 PM
    • 1,269 Posts
    • 297 Thanks
    vigman
    • #8
    • 6th Nov 18, 6:50 PM
    • #8
    • 6th Nov 18, 6:50 PM
    Thanks AnotherJoe. I just thought I might have been better to stick to the 20% 40% 60% funds rather than keep the highest risk 80%?

    Vigman
    Any information given in my posts or replies is intended to be of interest and/or help to members of the forum. I cannot guarantee that this is accurate or up to date.
    • masonic
    • By masonic 6th Nov 18, 7:03 PM
    • 10,135 Posts
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    masonic
    • #9
    • 6th Nov 18, 7:03 PM
    • #9
    • 6th Nov 18, 7:03 PM
    Thanks AnotherJoe. I just thought I might have been better to stick to the 20% 40% 60% funds rather than keep the highest risk 80%?

    Vigman
    Originally posted by vigman
    If you are not paying to switch funds, it would be simpler for you to stick to one, or at most two funds. You won't gain anything from holding more than the minimum number of funds to achieve the percentage equities you desire.
    • AnotherJoe
    • By AnotherJoe 6th Nov 18, 7:17 PM
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    AnotherJoe
    There's no point holding 20/40/60/80/


    As said either get just one (20 sounds right for you at most ) or at most get 2 in the appropriate ratio to give you what you want, eg if you want 30, then get 20 and 40 in equal amounts.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • Alexland
    • By Alexland 6th Nov 18, 10:26 PM
    • 3,645 Posts
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    Alexland
    Pick the ratio you want and stick to it (unless markets have fallen significantly and look particularly cheap in which case maybe increase your equities).

    However if you decide to go with low volatility VLS 20/40 then you have to question if you might be better with a cash savings account.

    Alex
    • vigman
    • By vigman 7th Nov 18, 10:06 AM
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    vigman
    Pick the ratio you want and stick to it (unless markets have fallen significantly and look particularly cheap in which case maybe increase your equities).

    However if you decide to go with low volatility VLS 20/40 then you have to question if you might be better with a cash savings account.

    Alex
    Originally posted by Alexland
    The whole reason for going to an S&S ISA was that we have too much in cash ISAs and interest paying bank accounts which are only paying c 1.5% ( about 60k in both types). In discussions here it was suggested trying an established S&S ISA like Vanguard. When a couple of smaller ISAs came to date I put 25k in the Vanguard accounts. I put higher amounts in the 20% and 40% funds, less in the 60% and even less in the 80% thinking I was spreading the investment to a medium to medium high risk level. I may still take this to 20 40 60 to give a medium risk level although I take notice of comments to go 20/40 only.

    I actually had a tester account of 5k and this initially went up 3% so put the balance over to Vanguard

    As there is no cost in moving funds I may wait until the 80% has levelled off its loss and then move it to the 20% fund?!

    My 'portfolio' if it is such consists in order of value of properties, cash ISAs, interest paying bank accounts, gold in storage and finally this new S&S ISA.

    Although these have mostly done well I would be disappointed if the S&S ISA had actually lost money after 10 years. I just wanted to improve the 1.5% on cash returns

    Vigman
    Any information given in my posts or replies is intended to be of interest and/or help to members of the forum. I cannot guarantee that this is accurate or up to date.
    • AnotherJoe
    • By AnotherJoe 7th Nov 18, 11:01 AM
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    AnotherJoe
    The whole reason for going to an S&S ISA was that we have too much in cash ISAs and interest paying bank accounts which are only paying c 1.5% ( about 60k in both types). In discussions here it was suggested trying an established S&S ISA like Vanguard. When a couple of smaller ISAs came to date I put 25k in the Vanguard accounts. I put higher amounts in the 20% and 40% funds, less in the 60% and even less in the 80% thinking I was spreading the investment to a medium to medium high risk level. I may still take this to 20 40 60 to give a medium risk level although I take notice of comments to go 20/40 only.

    Vigman
    Originally posted by vigman

    Theres no need for 3 its pointless. With the appropriate ratio of just two funds you can get to any desired level between 20 and 60. If you had for example, 100 in all 3, you might as well hold 300 in 40, as it comes to the same thing. If you want something less than 40, hold only 20 and 40 in the appropriate ratios.

    You have to be able to take on board volatility and risk. If you cant, or you havent come to that point yet, then investing isnt for you, use higher rate savings (though be aware then that in real terms your money is losing value every year at 100% certainty.

    With investments, its in the long term extremely likely to gain and outpace inflation*, but theres a risk there, especially over short timescales, and if you cannot stomach that risk just get out because you are likely to compound the problem by buying at say low to medium risk, suffering drop anyway and then selling and crystallizing your loss.



    As there is no cost in moving funds I may wait until the 80% has levelled off its loss and then move it to the 20% fund?!
    Originally posted by vigman
    Why would you sell it if its being doing well?


    My 'portfolio' if it is such consists in order of value of properties, cash ISAs, interest paying bank accounts, gold in storage and finally this new S&S ISA.

    Although these have mostly done well I would be disappointed if the S&S ISA had actually lost money after 10 years. I just wanted to improve the 1.5% on cash returns

    Vigman
    Originally posted by vigman
    Gold. Jeez. Flip a coin. Why do you think thats a good idea? Golds done nothing the last 5 years so in real terms its lost about 15-20%. Since its priced in dollars then its probably appreciated that much in Sterling, which means you broke even but have now become a currency speculator ! But this apparently doesnt worry you though a minor dip in investments does.

    Either pick a level with VLS and dont look at it for ten years (and you'd be very unlucky if it hadn't gained more than savinsg rates over ten years* , or get out and go back to savings accounts.


    * because thats what companies do, otherwise theres no point investing in them if the money would be better in the bank. But its a long plan not a 5 minute job.
    Last edited by AnotherJoe; 07-11-2018 at 11:04 AM.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • vigman
    • By vigman 7th Nov 18, 11:53 AM
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    vigman
    Ive done well with gold bought at c 5 grm for 9ct, now 10-11 and Kruggerands bought for 400 which last time I checked were about 1000 (have been to 1300.)

    It was only a small investment of C 5000 now worth more than 10k. I don't think that is too bad a return?

    Vigman

    PS .....and yes I realise I put gold before the SS ISA in my value list. Happy to flip a coin with the sovereigns that were bought c 140 and now are c 220!

    PPS What puts all this into perspective is having paid 1200 per week for my F-I-L to be in a specialist care home for nearly 4 years. Was it worth owning a nice house just to have most of the proceeds spent on care!?
    Last edited by vigman; 07-11-2018 at 12:14 PM. Reason: Added PS and PPS
    Any information given in my posts or replies is intended to be of interest and/or help to members of the forum. I cannot guarantee that this is accurate or up to date.
    • AnotherJoe
    • By AnotherJoe 7th Nov 18, 12:14 PM
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    AnotherJoe
    Ive done well with gold bought at c 5 grm for 9ct, now 10-11 and Kruggerands bought for 400 which last time I checked were about 1000 (have been to 1300.)

    It was only a small investment of C 5000 now worth more than 10k. I don't think that is too bad a return?

    Vigman

    PS .....and yes I realise I put gold before the SS ISA in my value list. Happy to flip a coin with the sovereigns that were bought c 140 and now are c 220!
    Originally posted by vigman
    My point is, gold is just a coin flip. So you are happy gambling money on a coin flip ( i make no criticism with that on a stand alone basis ) but then you are wobbling about a mere 6.5% drop in investments when in the long term, investments have a clear upward trend and gold doesn't and gold routinely fluctuates up and down by 20%. There's no logic to your worry about VLS80 given your attitude to gold.

    Why arent you selling your sovereigns that are now 220 up from 140 when that was your proposal as to what to do with VLS80 if it went back up a mere 20%, yet when golds gone up 50% you are happy to hold??
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • vigman
    • By vigman 7th Nov 18, 1:58 PM
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    vigman
    My point is, gold is just a coin flip. So you are happy gambling money on a coin flip ( i make no criticism with that on a stand alone basis ) but then you are wobbling about a mere 6.5% drop in investments when in the long term, investments have a clear upward trend and gold doesn't and gold routinely fluctuates up and down by 20%. There's no logic to your worry about VLS80 given your attitude to gold.

    Why arent you selling your sovereigns that are now 220 up from 140 when that was your proposal as to what to do with VLS80 if it went back up a mere 20%, yet when golds gone up 50% you are happy to hold??
    Originally posted by AnotherJoe
    I don't see gold items and coinage as a gamble (as opposed to pure bullion) as you do. With many up and down spikes gold has always been on an upward trend. I bought coins to keep in a dip at a good price. I have previously traded by buying low and selling high and then buying low again. I have never lost money on gold over 30 years+. It will go to $2000 per gram 24 carat. I'm not selling the sovereigns or Kruggerands as they will be worth at least double in ten years time.

    Given my poor state of health I don't think I will be able to 'meet' you here then for one of us to say "I told you so!"

    Vigman

    PS. If we get a bad EU exit deal and if we start using 'Corbyn Credits', I believe gold price is going to go sky high
    Last edited by vigman; 07-11-2018 at 2:00 PM. Reason: Added PS
    Any information given in my posts or replies is intended to be of interest and/or help to members of the forum. I cannot guarantee that this is accurate or up to date.
    • Herbalus
    • By Herbalus 7th Nov 18, 11:22 PM
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    Herbalus
    PPS What puts all this into perspective is having paid 1200 per week for my F-I-L to be in a specialist care home for nearly 4 years. Was it worth owning a nice house just to have most of the proceeds spent on care!?
    Originally posted by vigman
    I have had relatives in similar positions, and whilst it seems an extreme amount of money:

    Point 1 - you will have the use of a nice house whilst your health enables you to enjoy it.
    Point 2 - you can afford a specialist care home without relying on the local council to put you wherever they can and potentially a lower quality of care if the choice is theirs and not yours.
    • vigman
    • By vigman 8th Nov 18, 10:22 AM
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    vigman
    I do understand and appreciate those comments, Herbalus.

    There were people in the same home who were completely paid for by their local authority which does grate a bit when having to sell a house and pay 4,800 a month for 4 years.

    In context of this thread, if my family were in the same situation with me it doesn't really matter if I lose the S&S 25k as this will just be a quicker way to the 'below 23,250 savings' limit!

    Vigman
    Any information given in my posts or replies is intended to be of interest and/or help to members of the forum. I cannot guarantee that this is accurate or up to date.
    • AnotherJoe
    • By AnotherJoe 9th Nov 18, 9:16 AM
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    AnotherJoe
    PS. If we get a bad EU exit deal and if we start using 'Corbyn Credits', I believe gold price is going to go sky high
    Originally posted by vigman
    Why on earth would the UK's exit from EU and what Corbyn does affect the price of gold?
    Other than on a currency basis ( to $) it won't raise a ripple.
    Please dont criticise my spelling. It's excellent. Its my typing that's bad.
    • jimjames
    • By jimjames 10th Nov 18, 5:51 PM
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    jimjames
    I don't see gold items and coinage as a gamble (as opposed to pure bullion) as you do. With many up and down spikes gold has always been on an upward trend.
    Originally posted by vigman
    It's interesting that you state that about gold but are twitchy about a tiny drop in the value of a stock market investment. Stock markets also have up and down spikes and have been on an upward trend. You wouldn't say gold was always on an upward trend if you bought in 1980.
    Remember the saying: if it looks too good to be true it almost certainly is.
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