S+S to Cash ISA

[Spydaman]

Between myself and Mrs Spydaman we have some money in S+S and cash ISA's. in the last year the S+S have lost about 9%. I note that Santander are offering a fixed rate at 4% for 18 months. I cant see why not to transfer out of the S+S ISA and into the cash ISA's. What am I missing?

[LordGrover]

That loss only materializes if you sell.
If you are able to wait it's a pretty good bet* that its value will return and increase.

*Still a gamble though.

[Spydaman]

But the S+S could lose even more whereas the cash ISA is guaranteed to make 4%?

[bitchstewie]

Basically yes but that's the nature of investments.

It comes down to your timeframe and appetite for volatility.

Fully appreciate 9% feels like a lot but this year (to date) has been brutal to most asset classes.

[boyse7en]

Spydaman said:

But the S+S could lose even more whereas the cash ISA is guaranteed to make 4%?

Yes. That is the risk you take with investing.

A 4% return is around half of the rate of inflation, so effectively your cash will be eroding while it is sat in the account.
Whether the stock markets will recover by a bigger amount by 18 months time is anyone's guess.

[T6 vanman]

Just had a look at mine
If we say June 9th I was up/down 0%
7th July I was down 25%
16th Aug regained all the loss and was up 2.5%
now down 8% ..... but up 1.5% today.

Do you need the funds in the short term or can they be left longer?

Now where's that crystal ball

[simong800]

Why crystallise a loss right now?

Do you need the money?

In a volatile market where global indices can go up or down by 2-3% in a day I'd be very reluctant to sell.

With inflation at 10% a 4% savings rate is a guaranteed loss of 6%...

[mike13]

I've done what you're thinking about, I have crystallized a loss but recently retired through Ill health, I now know how much I am getting in interest, 100% my choice and I'm happy with it.

[river_rat]

Another option is to move all the money from the cash ISA into the S+S ISA bearing in mind how much the market has dropped, so you are buying in cheap!

[T6 vanman]

Or buying into the upper rebound of the "dead cat bounce"


I'm in for the long haul with mine ... minimum of 7 and probable 12~20 years before touching .... Mine's going nowhere ... well apart from the AML & CINE shares

[Mr Whippy]

Spydaman said:

Between myself and Mrs Spydaman we have some money in S+S and cash ISA's. in the last year the S+S have lost about 9%. I note that Santander are offering a fixed rate at 4% for 18 months. I cant see why not to transfer out of the S+S ISA and into the cash ISA's. What am I missing?

The big question is what was the average purchase price of what you’ve got.

You could be up 50% right now, and have only lost notional value from an anomalous spike.


Ignore the period from Jan 2020 until now, how is it looking?

[Spydaman]

Mr Whippy said:

Spydaman said:

Between myself and Mrs Spydaman we have some money in S+S and cash ISA's. in the last year the S+S have lost about 9%. I note that Santander are offering a fixed rate at 4% for 18 months. I cant see why not to transfer out of the S+S ISA and into the cash ISA's. What am I missing?

The big question is what was the average purchase price of what you’ve got.

You could be up 50% right now, and have only lost notional value from an anomalous spike.


Ignore the period from Jan 2020 until now, how is it looking?

We transferred into the S+S based on advise from our IFA this time last year so they have lost about 9% in that time.

[Jiebo]

river_rat said:

Another option is to move all the money from the cash ISA into the S+S ISA bearing in mind how much the market has dropped, so you are buying in cheap!

Depends which market.

The US indexes aren't cheap, they've just come down from a huge bubble, and are now around fair value, from a historic forward earnings metric perspective. A lot of the big tech stocks are still incredibly expensive.

Things like the FTSE 250 is cheap, especially if you take into account GBP is about 20% its fair value.

[Jawls]

Depends hugely on what you need the money for.

If you need it in the short term (so the 9% loss hits you hard), you shouldn’t be in equities.

[okgo]

Isn't this sort of behaviour often cited as the reason most people never really build any real wealth via investing? I'm sure I read that on here.

[bitchstewie]

okgo said:

Isn't this sort of behaviour often cited as the reason most people never really build any real wealth via investing? I'm sure I read that on here.

Yes.

[LeoSayer]

Jawls said:

Depends hugely on what you need the money for.

If you need it in the short term (so the 9% loss hits you hard), you shouldn’t be in equities.

The OP said the investment was made based on IFA advice so presumably the money isn't needed in the short term.

[Jawls]

LeoSayer said:

Jawls said:

Depends hugely on what you need the money for.

If you need it in the short term (so the 9% loss hits you hard), you shouldn’t be in equities.

The OP said the investment was made based on IFA advice so presumably the money isn't needed in the short term.

Then in which case, selling out of equities doesn’t strike me as sensible.

In any case, it should be your broad investment strategy and requirements that drives decisions. Not day to day market moves.