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2018/19 ISA Money - Tracker or Cash or something else?

Investment discussion for beginners. Why you should invest your money, get help getting started
Clariman
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2018/19 ISA Money - Tracker or Cash or something else?

#136679

Postby Clariman » May 3rd, 2018, 9:27 pm

We have some money languishing in an Ulster Bank e-saver at 1% which I want to move somewhere better. Now that the new year's ISA allowance is upon us, I may as well take advantage.

So what would you go for at the moment - Tracker, cash or something else?

Thanks
Clariman

AleisterCrowley
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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136681

Postby AleisterCrowley » May 3rd, 2018, 9:39 pm

Bitcoin...



No, not really.
Impossible to say - how long are your timescales and what is your attitude to risk? What is your tax situation ?
You can get 1.5% risk-free on cash tied up for a year outside of an ISA - you should be able to find similar in an ISA.
I think my Nationwide one pays 1.4%

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136719

Postby kempiejon » May 4th, 2018, 6:52 am

With a minimum 5 year time frame I suggest a tracker offers better chance of return than cash - but a tracker is at the vagaries of a stock market so cash is much safer. 1% plus capital assurance is better than a tracker declining any percentage.
As the previous poster notes it would depend on your time frame, other assets, tax status, attitude to risk etc.
For me, I stick my ISA allowance into the stock market I keep cash unsheltered.

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136720

Postby johnhemming » May 4th, 2018, 7:02 am

Aviva prefs are probably a reasonable option to look at. Yield above 5%. The risk is that interest rates more generally go up and the value of the prefs goes down.

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136724

Postby TimR » May 4th, 2018, 7:08 am

johnhemming wrote:Aviva prefs are probably a reasonable option to look at. Yield above 5%. The risk is that interest rates more generally go up and the value of the prefs goes down.


What is the best way of buying prefs (are they similar to Corporate Bonds) ? - Can they be purchased on a platform like iWeb ?

TimR

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136727

Postby johnhemming » May 4th, 2018, 7:29 am

Most stockbrokers/platforms should enable buying prefs.

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136736

Postby kempiejon » May 4th, 2018, 7:56 am

johnhemming wrote:Aviva prefs are probably a reasonable option to look at. Yield above 5%. The risk is that interest rates more generally go up and the value of the prefs goes down.

The Aviva ords are yielding above 5%, the risk is that they halt or reduce the dividends and/or the share price declines - unlike the prefs the dividend can increase and in the short term is predicted to rise. I hold some prefs in banks and have mulled over the idea of swapping them for ordinary shares, taking a profit and because the dividend can rise.
I think, if the question is tracker or cash or something else, individual company specific picks need a little more fleshing out. For a newer investor, share picking will benefit from some research and risk mitigation could be achieved by having a broader spread of choices. The "something else" in the title is very broad and could include most anything. I'll proffer investment trusts, a global ETF or a handful of regional ETFs as potentially interesting for Clariman to look at, I think they would have more in common with a tracker than cash or preference shares. The question of time frame, risk attitude etc still hold for any investment choices even cash.

Clariman
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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136747

Postby Clariman » May 4th, 2018, 8:23 am

Thanks everyone. Broadly speaking I am risk averse, but understand that some risk is needed to meet what my objective would be i.e. I want to protect savings from inflation.

Without going into specific numbers, the breakdown of our savings and investments are:
Property 35%
ISAs Equity 9%
ISAs Cash 20%
Cash(taxed) 23%
AVC Value 13%

Thanks
C

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136762

Postby AleisterCrowley » May 4th, 2018, 9:14 am

The cash is (almost) certainly falling in real value every year.
Not advice as such, but I'd be inclined to drip-feed into a cheap tracker- using cheap dealing/regular investment plans to reduce frictional costs.
As to which tracker...that opens up another debate. Vanguard have a good selection, including the LifeStrategy family which have a bond element (apart from the LS100..)

To answer another question above, I bought AV prefs on HSDL without any bother, no different to any other shares.

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136774

Postby swill453 » May 4th, 2018, 9:56 am

Clariman wrote:Thanks everyone. Broadly speaking I am risk averse, but understand that some risk is needed to meet what my objective would be i.e. I want to protect savings from inflation.

Without going into specific numbers, the breakdown of our savings and investments are:
Property 35%
ISAs Equity 9%
ISAs Cash 20%
Cash(taxed) 23%
AVC Value 13%

Thanks
C

I think you (as a couple) probably have some defined benefit pension income as well (apologies if I've remembered that wrong). If you show that in your net worth capitalised at, say, 30 times the annual payment, then your cash element would show up as a lot less than the 43% shown above.

That's how I'd picture it. But then, I don't have any DB pensions :-(

Scott.

Clariman
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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136788

Postby Clariman » May 4th, 2018, 10:36 am

Scott, you're right that we have DB pensions - which we are now taking. Very roughly speaking your 30x formula would make pensions 3/5 off our aasets/savings.

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136795

Postby IAC2016 » May 4th, 2018, 10:47 am

When considering the proportion equities I should have - I look towards the normal 100 minus age rule ( or the racy 120 minus age rule) for calculating the amount of equity verses fixed income in my portfolio.

I consider my :- ( DB pensions capitalised value + investment property value + Cash ) all to be on the fixed income side.

With AVCs - it Depends on Equity / Fixed Income split of the investment

By the way I use the more conservative 20 x annual payment figure to value my DB pension in payment even though it is index linked with widows pension payable to my wife.

For example a 65 year old should have 35% of their portfolio in equities (or 55% using the more racy rule)

IAC

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136863

Postby JNC3 » May 4th, 2018, 2:00 pm

Clariman wrote:Thanks everyone. Broadly speaking I am risk averse, but understand that some risk is needed to meet what my objective would be i.e. I want to protect savings from inflation.

Without going into specific numbers, the breakdown of our savings and investments are:
Property 35%
ISAs Equity 9%
ISAs Cash 20%
Cash(taxed) 23%
AVC Value 13%

Thanks
C


With your proportion of Fixed Income which includes DB Pensions I would put (or phase) the 2018/19 ISA money into low cost 100% Equity Global Tracker. Is the amount shown in the above breakdown shown as '35% Property' the house you live in or an investment in property as this would affect the proportions in this asset class.

Clariman
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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136935

Postby Clariman » May 4th, 2018, 6:49 pm

ap8889 wrote:Clariman,
Cash is for victims.

Not how I see myself but hey ho.
43% of your stash is prone to getting destroyed by inflation, every. single. day.

Agreed. Hence the question.
...This makes me feel good because you are paying for this parasitical policy with 43% of your dough, while I am 100% not going to be their host.

Is it schadenfreude that makes you feel so good or an 'I'm all right' Jack attitude or something else?
Good luck. Your risk aversion is subsidising the services I use... hopefully my needling will cause you to act!

It's my great pleasure to subsidise you. I hope you also enjoy this site which Stooz and I have provided free too. Sometimes doing things for others without the desire for personal gain is a good thing.

But you needn't worry too much about me. I've done OK despite my risk-aversion. Retired in mid-50s, decent pension, decent savings and investments although never got heavily into equities. All I want to do is to protect what I have from inflation as best I can. Hence the original question. Now if you have any good practical suggestions how I can do that, the fire away. Consider it your way of repaying my favours to you :lol:

Clariman

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136960

Postby Alaric » May 4th, 2018, 8:19 pm

ap8889 wrote: A lot of people seem to feel multiple years of expenses in cash is needed, but that seems like overkill, especially when consumer credit is readily available.


Also if your money is in assets where potentially you could get their value in cash to your bank account within a week. So that's tradeable bonds and equities or equivalent in funds, but not property.

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136961

Postby Clariman » May 4th, 2018, 8:26 pm

Factoring in the value of our pensions, then our overall asset split looks as follows, excluding the home we live in ....

Tax free cash - 8%
Tax free equities - 4%
Cash savings - 10%
AVC (not taken) - 5%
Property - 15%
Pension (being taken) - 58%

Probably best to move some of the cash into Equities ISAs, but our index trackers haven't performed that well over the years.

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#136986

Postby JNC3 » May 4th, 2018, 10:22 pm

Clariman wrote:
Probably best to move some of the cash into Equities ISAs, but our index trackers haven't performed that well over the years.


I agree with moving some of the cash into equities. Which index trackers do you have that have not performed well ?

My Vanguard Global index Trackers have performed well over the years and also been boosted by the fall in value of the pound since the Brexit vote.

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#137127

Postby BobbyD » May 5th, 2018, 4:14 pm

I've heard you can spend this money stuff. Not my personal choice, but possibly worth considering.

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#137193

Postby AleisterCrowley » May 5th, 2018, 9:22 pm

Blasphemy!

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Re: 2018/19 ISA Money - Tracker or Cash or something else?

#137784

Postby hiriskpaul » May 9th, 2018, 1:54 pm

Clariman wrote:Factoring in the value of our pensions, then our overall asset split looks as follows, excluding the home we live in ....

Tax free cash - 8%
Tax free equities - 4%
Cash savings - 10%
AVC (not taken) - 5%
Property - 15%
Pension (being taken) - 58%

Probably best to move some of the cash into Equities ISAs, but our index trackers haven't performed that well over the years.

I am surprised you say your index trackers have not performed well. For example, the MSCI Developed World Index is up 81% over 5 years in pounds, with dividends reinvested, and up 159% over 10 years. Had you invested at the peak of the dot-com boom in August 2000, you would still be up 145%, equivalent to 5.2% annualised. The various trackers will have performed differently according to the market, but even lagards such as the UK market should have given good returns unless you were very unlucky with your timing. Perhaps you are in very expensive trackers? This is well worth reviewing in case you are in older expensive trackers with trail commission, or being stung with broker charges.


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