07/02/2023– 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. £500 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 I sometimes make additional, lump sum contributions and have withdrawn money in the past.
Virtually all asset classes and geographical regions fell in value last year. This started in January 2022 as fears of rising inflation and rising interest rates pointed to an economic slowdown. Russia’s invasion of Ukraine in February caused worldwide supply issues and obvious geo-political worries. China’s output was hampered due to ongoing Covid-19 problems. Closer to home, the mini budget in September resulted in major jitters amongst investors of UK shares and particularly UK Gilts. More recently, China has opened up and there is a sense interest rate rises will slow and stop. This has lifted asset values – for the moment.
As this is a long-term investment, I try not to worry too much about dips in the market and console myself with the thought I am buying fund units more cheaply and hope they will recover at some point. I added £4,550 in 2022 whilst markets were down and have just withdrawn £5,000.
The 2022/2023 UK ISA allowance is £20,000. Consider using up as much of this as possible before the 5th April 2023 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..
* this figure is due to drop to £1,000 next tax year and £500 in the following tax year increasing potential ISA advantages.
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..