Stocks and shares ISA - low risk, low maintenance option?
Discussion
I am deciding on what to do with my savings from the start of the new tax year.
I have paid my mortgage off and I currently have 2 different cash ISAs with about £10k in each. I'm looking to continue saving £1000/month from April. The Cash ISA rates are pretty dire, so I have been looking into Stocks & Shares ISAs as an alternative.
Most of the comments have been around selecting the right funds and ensuring you don't pay too much for transaction fees, etc. It all sounds a bit high maintenance!
Is there such a thing as an easy, low maintenance S&S ISA that I could put money into and leave alone for a few years? Something like a relatively low risk collection of FTSE100 companies where you don't need to make any further transaction and you could get a typical return of 5%?
If this is available, where can I arrange this?
Thanks
I have paid my mortgage off and I currently have 2 different cash ISAs with about £10k in each. I'm looking to continue saving £1000/month from April. The Cash ISA rates are pretty dire, so I have been looking into Stocks & Shares ISAs as an alternative.
Most of the comments have been around selecting the right funds and ensuring you don't pay too much for transaction fees, etc. It all sounds a bit high maintenance!
Is there such a thing as an easy, low maintenance S&S ISA that I could put money into and leave alone for a few years? Something like a relatively low risk collection of FTSE100 companies where you don't need to make any further transaction and you could get a typical return of 5%?
If this is available, where can I arrange this?
Thanks
Firstly others on here who know far more than me may disagree but quite simply using the fact the market is at an all time high right now and you buy in at the top you might wait years and years to get back to thus level if a bad election slides the market.
I think (and so does my stockbroker I use for my trustee duties) that being in cash or at least a degree of cash at election time is no bad thing. If it dips then buy it, if it surges jump on ASAP .
I think (and so does my stockbroker I use for my trustee duties) that being in cash or at least a degree of cash at election time is no bad thing. If it dips then buy it, if it surges jump on ASAP .
DSLiverpool said:
Firstly others on here who know far more than me may disagree but quite simply using the fact the market is at an all time high right now and you buy in at the top you might wait years and years to get back to thus level if a bad election slides the market.
I think (and so does my stockbroker I use for my trustee duties) that being in cash or at least a degree of cash at election time is no bad thing. If it dips then buy it, if it surges jump on ASAP .
True enough. I'd be surprised if the market continues upwards over the next few months given the uncertainty of an election, especially since we may have weeks of horse-trading if nobody gains a majority. If we get a Labour government in that does almost automatically mean a drop in sentiment by big business, so that will also lead to a negative impact. I think (and so does my stockbroker I use for my trustee duties) that being in cash or at least a degree of cash at election time is no bad thing. If it dips then buy it, if it surges jump on ASAP .
That said, dividends will likely remain somewhere around their current level (about 3%) since that's not far off the historical average. Note the 2008 blip is due to the share price dropping rather than the actual amount paid out going up.
http://www.bestinvest.co.uk/media/113586/ftse100gr...
That 3% is what I based my investment decision upon - any capital growth I'm seeing as a fringe benefit.
DS,
Mate, sorry.. I had decided to delete my reply. But with your reply in mind, I'll put it back and then answer you.
<<There is more to market than equities, and although I have a view in respect of timing the market, I respect that others will differ. Which is good! So, this is just my personal view.
Back in 2007/08, when I started training as an adviser (I know, great timing, right?), I saw the insidious churning of clients money. "Sell high, buy low.. suits you sir". Investors were encouraged to switch, sell and buy at will. The result was that many chased hard sold equities, funds and stocks, bought at the top of the bubble and then suffered appalling losses.
The academic evidence about behavioural investing is quite clear. We are programmed to make mistakes with our money, our savings and our investments. We get sucked in to buy at the top, and to despair and sell at the bottom. We try to be contrarian and objective, but it is still hard, and nigh on impossible for investors making profound decisions about their retirement to get it right. Aha, the market is high? Time to sell then!
Discipline and consistency are far more important than the details of how much to sell or buy in which asset class and when. The evidence is becoming compellingly clear. Any plan that keeps a diversified range of assets should work well in the long run - not just equities, sure.. they are easy to nail because we see the FTSE - but how many understand the principles of Gilts? They're just as important.
Simply put, any portfolio that keeps a diversified range of assets should work well in the long term, and if you're that worried about equities, don't invest in them. If you haven't got a long term, then save - don't invest. And if you're doing it yourself, then self discipline, objectivity and consistency are far important than the buy/sell/call/put tactic.>>
Mate, sorry.. I had decided to delete my reply. But with your reply in mind, I'll put it back and then answer you.
<<There is more to market than equities, and although I have a view in respect of timing the market, I respect that others will differ. Which is good! So, this is just my personal view.
Back in 2007/08, when I started training as an adviser (I know, great timing, right?), I saw the insidious churning of clients money. "Sell high, buy low.. suits you sir". Investors were encouraged to switch, sell and buy at will. The result was that many chased hard sold equities, funds and stocks, bought at the top of the bubble and then suffered appalling losses.
The academic evidence about behavioural investing is quite clear. We are programmed to make mistakes with our money, our savings and our investments. We get sucked in to buy at the top, and to despair and sell at the bottom. We try to be contrarian and objective, but it is still hard, and nigh on impossible for investors making profound decisions about their retirement to get it right. Aha, the market is high? Time to sell then!
Discipline and consistency are far more important than the details of how much to sell or buy in which asset class and when. The evidence is becoming compellingly clear. Any plan that keeps a diversified range of assets should work well in the long run - not just equities, sure.. they are easy to nail because we see the FTSE - but how many understand the principles of Gilts? They're just as important.
Simply put, any portfolio that keeps a diversified range of assets should work well in the long term, and if you're that worried about equities, don't invest in them. If you haven't got a long term, then save - don't invest. And if you're doing it yourself, then self discipline, objectivity and consistency are far important than the buy/sell/call/put tactic.>>
DSLiverpool said:
Ginge with respect to the forthcoming election would you say we are in new territory ?
I think we've been in new territory almost relentlessly for the past 6-8 years. The markets are so highly strung, they're so connected and so instant, that anything can either give them the wide eyed, terrified jitters or send them into throws of euphoric ecstasy. One thing though, they have shown themselves to be surprisingly resilient, and shrug off even the most depressing news a lot more quickly.This 'response alpha', the heightened frequency with which markets react, make it far harder for amateur investors to act. It's like having a yoyo on the end of a six foot rubber band. You can't beat the markets at its own game, so you have to dictate the rules, make it your game instead. So, in that sense, yes.. we are in new territory. I'm an IFA, I don't profess to know all of the 4000 funds out there, and I missed some fed news about its monetary policy last week too.
Truth is, I'm not an economics expert.
Sure, I know it better than 99% of other people, I understand QE until the cows come home, the different types of correlations and how the workd's economies act and react, but planning is my game. This afternoon, looking at the regulations surrounding annual and lifetime allowances, and using a very sneaky loophole to allow people to divest themselves of IHT liability very very quickly. Now, that's what I enjoy doing! ;-)
The two things which I would bear in mind, are firstly, the US elections (yes, next year) because that will impact and influence Fed policy in the run up (I have a US tracker too ;-) ), but more immediately, a Grexit. HMT officials are now briefing (this evening) of the likelihood being 50/50. A couple of weeks ago, it was 20/80. If that rumour gets traction, the markets will be frisky. Our election, like the budget, doesn't mean much in compsrison.
I've just seen some data from a well known online sales brokerage. Between 25 and 30% of ISA savings are going into AIM/Microcap. Given that analysis in this new micro-cap sector is practically non-existent, the risk for investors (should that be 'speculators'?) is much, much higher.
That’s not to say one shouldn’t invest in AIM. But this is a trend, a bubble and when/if it does burst, and when everyone realises that we really are programmed to keep making the same old same old investing mistakes, has anyone given any thought to their AIM ISA liquidity?
That’s not to say one shouldn’t invest in AIM. But this is a trend, a bubble and when/if it does burst, and when everyone realises that we really are programmed to keep making the same old same old investing mistakes, has anyone given any thought to their AIM ISA liquidity?
Ginge R said:
has anyone given any thought to their AIM ISA liquidity?
Totally agree. Since the utterly illiquid buy-to-let has become the default investment choice for half the nation I guess we have to accept that people either haven't thought about it or aren't too bothered.Me? I haven't been able to stand cash for the past 5 years so relatively liquid (and hopefully reliable) equity funds are my investment of choice. During those 5 years the main market has paid nice dividends while also increasing from 5,500 to 7,000 (up 25%) so it's all worked out quite nicely to date.
DSLiverpool said:
Firstly others on here who know far more than me may disagree but quite simply using the fact the market is at an all time high right now and you buy in at the top you might wait years and years to get back to thus level if a bad election slides the market.
I think (and so does my stockbroker I use for my trustee duties) that being in cash or at least a degree of cash at election time is no bad thing. If it dips then buy it, if it surges jump on ASAP .
Sorry, but this is utter nonsense.I think (and so does my stockbroker I use for my trustee duties) that being in cash or at least a degree of cash at election time is no bad thing. If it dips then buy it, if it surges jump on ASAP .
The level of the market (I assume you mean the FTSE 100) is completley arbitary, the companies that make up the FTSE 100 today are very different to the component companies when the market last peaked in 1999.
Back at the end of 1999 the price-to-earnings ratio (P/E) of the market was about 30, today it is around 15 This means, on a relative basis the market is trading around half of its valuation level from 15 years ago. The long term average is around 20, so if anything its undervalued at the moment.
By comparsion, if you look at the FTSE 250, that regained its pre-tech boom peak (around 7000) back in 2005. Should you have sold then? It's at 17200 today.
The election is likely to cause to short term uncertinatly, particularly if there is no clear majority, and this could cause markets to wobble. That said if there is a clear, decisive outcome the market is more likely than not to rise.
It's a very hard decsion, but consider in 5 of the last 6 election years, the market has risen (including in 2010).
I would strongly suggest speaking to a professional financial adviser, or doing a lot of reading/research yourself. There is a lot of 'mis-information' on the net about investing, as this thread demonstrates. It's an important decision, and you'll potentially be investing a lot of money, so you don't want to cock it up.
DISCLAIMER: I am not a financial adviser, but I do work in the invesment industry.
CaptainSensib1e said:
DSLiverpool said:
Firstly others on here who know far more than me may disagree but quite simply using the fact the market is at an all time high right now and you buy in at the top you might wait years and years to get back to thus level if a bad election slides the market.
I think (and so does my stockbroker I use for my trustee duties) that being in cash or at least a degree of cash at election time is no bad thing. If it dips then buy it, if it surges jump on ASAP .
Sorry, but this is utter nonsense.I think (and so does my stockbroker I use for my trustee duties) that being in cash or at least a degree of cash at election time is no bad thing. If it dips then buy it, if it surges jump on ASAP .
The level of the market (I assume you mean the FTSE 100) is completley arbitary, the companies that make up the FTSE 100 today are very different to the component companies when the market last peaked in 1999.
Back at the end of 1999 the price-to-earnings ratio (P/E) of the market was about 30, today it is around 15 This means, on a relative basis the market is trading around half of its valuation level from 15 years ago. The long term average is around 20, so if anything its undervalued at the moment.
By comparsion, if you look at the FTSE 250, that regained its pre-tech boom peak (around 7000) back in 2005. Should you have sold then? It's at 17200 today.
The election is likely to cause to short term uncertinatly, particularly if there is no clear majority, and this could cause markets to wobble. That said if there is a clear, decisive outcome the market is more likely than not to rise.
It's a very hard decsion, but consider in 5 of the last 6 election years, the market has risen (including in 2010).
I would strongly suggest speaking to a professional financial adviser, or doing a lot of reading/research yourself. There is a lot of 'mis-information' on the net about investing, as this thread demonstrates. It's an important decision, and you'll potentially be investing a lot of money, so you don't want to cock it up.
DISCLAIMER: I am not a financial adviser, but I do work in the invesment industry.
DSLiverpool said:
Totally disagree with your nonsense comment, if you make a large capital investment at the top of the FTSE or invest in funds at their all time high would you say its a good move or would it be better to wait and see what a potential political upheaval does to the market first? Even if your in it for 20 years it does no harm buying on a dip. You may not agree because you look further into it than I do but it doesn't mean I am talking nonsense.
Yes, but the market isn't at an all time high. If you read my post you'd understand that. The companies that make up the FTSE 100 are very different to the companies that made up the FTSE 100 15 years ago, you are not comparing like with like - you are essentially comparing one basket of shares with a different basket of shares.The election could cause short-term volatility, as I said in my post, but longer term the election result has pratically no affect on the market. Whether you should invest today or wait is essentially a binary gamble on what you think will happen in the election.
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