Background
07/02/2021– This is my Stocks & Shares ISA consisting of over 30 managed funds. I charge the ISA 3% on each contribution plus 0.5% per annum of fund value for an investment performance review. The yellow line shows value after costs and the blue dotted line shows gross contributions. Green block shows money taken out. Everyone’s ISA will perform differently depending on funds held, amount invested, timescale and charges. £350 per month goes in (at the start it was only £50pm.) I sometimes make additional, lump sum contributions and have withdrawn money in the past. Last year, £6,000 was added in March and £5,000 was withdrawn in November.
Commentary
The graph does not show values dropped by 20% to 30% at the beginning of the pandemic. I invested £6,000 in March to take advantage of cheaper assets and sold £5,000 in November with a profit. Stock markets have risen in the last three months on optimism of a successful vaccination programme, a Brexit “deal” and the hope of further stimulus.
There are concerns much of the growth has been driven by amateur speculators buying and selling shares online during lockdown. Real company earnings have been badly affected during the Covid-19 crisis and may take a while to recover. Values could fall again if investors believe the medium to long term is not as rosy as predicted.
ISA benefits
The 2020/2021 UK ISA allowance is £20,000. Consider using up as much of this as possible before the 5th April 2021 deadline. If you do not wish to invest the full amount, you can fill up any unused allowance with a Cash ISA
The obvious advantage of an ISA is the fund is invested in a virtually tax free environment. If you are a non tax payer, have capital gains below the annual allowance, receive less than £2,000 p.a. in dividends, or make a loss – these may not seem like advantages. However, it may still be worth placing money into an ISA to protect you from future tax charges and admin. ISA money does not need to be included in a tax return..
Warnings & Caveats
This investment suits me but may not suit you. It’s value can fall, so can the amount of income it produces. I never recommend you invest in anything without first seeking proper regulated advice – unless, of course, you fully understand the risks and have the capacity to accept the loss.
If you have your own ISA, it may perform differently for the reasons given above.
Please note, I also keep a Cash ISA going for Emergencies. Returns are not great at present but the capital value should be safe.
I can’t predict the future..