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Itinerant Wanderer

That old ISA at the back of the cupboard

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Although I STR'd a few years ago and put much of my money (after too long of a delay) into precious metals, I've still kept going my little UK Growth ISA which was my 'endowment' on my house. This ISA (Norwich Union) has performed exceedingly mediocrely but I thought it worth hanging onto in case I needed to buy a house back and the Bank wanted to see a 'repayment vehicle'.

 

Anyway, I'm in a position where I am under no pressure to buy now (lucky me) and so don't NEED this ISA. I thought of cashing it in a couple of months ago with the FTSE at 6400 'cos I thought it was defying gravity. But anyone who has followed my trading on here will know without me writing that whilst I thought of selling it I didn't.

 

Now the FTSE is at 5400 and I'm thinking of selling it again. I know this might be stupid so I've started this thread for views.

 

Should I:

- keep paying into the ISA my monthly payments and so take advantage of 'averaging' ('traditional' advisors tell me this is good!)

- not sell the ISA but not pay any more into it (perhaps paying into a different sort of ISA vehicle e.g. cash)

- sell the ISA and put in other things e.g. PM, cash etc.

 

I've a three year time horizon. To put it in perspective this ISA is about 6.5% of my assets whilst PMs are c. 30% and the bulk of the rest in cash.

 

All the usual caveats just to reinforce I'm not mindlessly going to do what you say and then sue you etc. I post because I suspect quite a few of us have got these sort of 'back of the cupboard' investments and its a good time to consider them.

 

CS

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I view my ISAs as an essential part of my retirment financing. I use iii.co.uk which is the cheapest self investment ISA I could find, and which allows me to buy and sell at the touch of a button. I can buy into stocks and shares, funds and ETF's.

 

However, I have changed my investment strategy of late, and my retirement is probably not for another 20 years, so my view is probably different from yours. I have invested in a UK ETF high dividend fund IUKD.L, and intend to transfer more money into this fund and others. My ISA should over the longer term be invested 30% UK, 30% US S&P 500 tracking ETF IUSA.L, and 30% BRIC - might buy individual shares, or frontier emerging markets, with the other 10%. I intend to reinvest the dividends without fail, good times or bad, and see what happens. Will also (funds permitting) invest the full annual allowance from here to retirement, although I usually invest in the summer when the markets crash.

 

I doubt that I will ever use a managed fund of any kind in the future, as the Total Expense Ratios in the UK are far too high.

 

 

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Should I:

- keep paying into the ISA my monthly payments and so take advantage of 'averaging' ('traditional' advisors tell me this is good!)

 

Dollar cost averaging only makes sense in a long term Bull market.

I would rest it for a while, or switch to gold or gold shares maybe

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For the long term investor, what is the problem with cost averaging into a bear market? Surely it's much better than doing it in a bull market unless you think you can call the bottom and throw all of your money in then? It is in bear markets that fortunes are to be made, not bull ones, I believe.

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I am 39 and if I was in your position, I would sell the isa and invest it in a diversified commodities etf. I have invested in LALL which is a leveraged commodites ETF so you get twice the return. My reasoning being we are in a long term commodities bull market and from what I have read stock markets dont perform as well as commodities during these times.

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I am 39 and if I was in your position, I would sell the isa and invest it in a diversified commodities etf. I have invested in LALL which is a leveraged commodites ETF so you get twice the return. My reasoning being we are in a long term commodities bull market and from what I have read stock markets dont perform as well as commodities during these times.

 

Twice the DAILY return. So be careful! :-)

 

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Maybe I can answer that with a chart :D

 

The1929StockMarketCrash.gif

I've seen a few predictions, including one that argues the FTSE will fall to about 3200, but I have a serious problem with this, in that around 40% of the index is now made up of metals, utility, commodities, oil and energy companies. So, for these type of predictions to happen you have to believe that we are about to go into a bear market for commodities, unless you somehow believe that the remaining 60% of the FTSE will be wiped out totally and if that happens, remember, it is re-jigged every quarter, miners, oil, etc from the FTSE 250 will come in and replace them as they have done recently with the likes of Tullow Oil, etc. Not going to happen.

 

FTSE100

% Sector

21.65 Oil And gas

21.61 Financials

14.98 Basic Materials

9.85 Consumer Goods

7.86 Consumer Services

7.48 Health Care

7.08 Telecommunications

4.95 Utilities

3.57 Industrials

0.2 Technology

0.01 Other

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Also used to have what could be described as "core" but underperforming uk growth type investments when i started investing, then i decided unless they were new funds, they didn't really outperform and i was being lazy. Why pay commission for someone else to get same results i could was my logic, so d.i.y was my motto, even if i didn't have has broad a range of investments as the funds could.

 

Kept a few trackers, but sold those when considered they too would underperform. But i do believe in tax efficient ISA's as unless you feel complete financial armageddon is on the cards which i don't just yet, might as well keep some and save on tax. Take a look at Naked Trader to see just how one guy has built up a massive profit free of tax. You could say he's better positioned and spends all day monitoring his positions, whilst he's certainly not faultless, he has made tax free returns.

 

My goal is similar albeit smaller, if you believe in your ability to pick winners, why not keep an ISA open? Looking on the negative side, you just have to believe you can outperform inflation.

 

Can't remeber the thread where we debated eligible investments, but it's here somewhere.....No6 might remember.

 

Riggers

 

 

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Thanks for this. I should clarify I'm not about to retire - about 30 years away in fact! However I'm not in the UK and so don't need my house-fund for a house for about 3 years and hence the 3 year timeline.

 

No-one seems that excited about the UK Growth style ISA. I'm quite tempted to rest it for a while as Dr B suggests. I could put more into a commodities ETF but feel I might be well enough exposed to the sector at about 30-40% of net wealth. (most of rest in cash, the odd Premium bond etc.).

 

However I'm not that sure WHAT else I'd put money into. I had daft thoughts about the Chinese Stockmarkets last year (thank goodness I didn't). Nothing else looks particularly cheap. Japan will come good one day 'ere long but I'm not sure this year is the year (I know a little about Japan). Perhaps in two years time. The fact nothing really 'feels' cheap give me the sense that we are in for continued financial turbulence.

 

Wind Turbine Manufacturers? Ethanol producers?

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OK, I've now taken it from the back of the cupboard - I am transferring it into my main Selftrade A/c (where I keep my PMs, Junior miners etc.).

This gives me the option to freeze it (keep it but not add more funds), sell it and re-invest in something else (not sure whether I should add to my gold etc. - eggs in one basket - but if its the right one hey!) or simply cash it in.

 

Everyone in the media seems exceedingly bullish/resigned to further increases in oil. Time for an Oil ETF or better still for shorting oil?

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