Stocks and shares ISA

[ManchesterBeatrice]

I would say that I am moderately risk adverse, I already have an ISA with 40,000 in it, and I'm looking for next year's investment….

I think as stocks and shares ISA might work for me, as I will not need to access the money, I would be intending to invest £20,000, or £16,000 if I use £4000 for my lifetime ISA.

What is the actual genuine chance of it going down to 0? I think I am just spooked because it's linked to stocks and shares…

I'm quite happy to weather an up and down, but the thought of losing between 16 and £20,000 leaves me cold. 🥶

Has anybody any experience that they wouldn't mind sharing?

Enormously unlikely, unless you choose to buy individual shares in a single company (which then goes bust and pays absolutely nothing creditors - which is quite a rare event).

With a broader tracker fund it will go up and down, but it's almost impossible to lose the lot.

The sort of events that would send a global index tracker actually to 0 would mean you had bigger problems than where your £16k had gone.

Have a look at the historical US data here - especially the Wall St Crash of 1929-32 https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart - even that didn't wipe it to 0. The 2008 crash was only a 1/3 drop. The UK's 1980s Black Friday crash doesn't even register in the US, showing why it's important to be spread across different markets.

This is why it's better to invest in a fund rather than a single share, and also why if you can wait out the market it pretty much always recovers.

Eg if you had invested £10k in a FTSE tracker in late 2007, when the FTSE was around 6700, then cashed it in in early 2009 because of being spooked by the drop to 3800 ish, you would have lost 44% or £4.4k. If you hung in there, by the end of 2013 it had recovered to 6700s and is currently 7900 ish, so your £10k would be £11.8k

Plus you would have had dividends, minus the opportunity cost of investing elsewhere (but the was the period of super low interest)

There's lots of advice and tools online, especially if you pick someone who does not have a vested interest in selling you a product eg money saving expert or www.thetimes.co.uk/money-mentor/investing/stocks-shares-isa/cash-isa-or-stocks-and-shares-isa

Just invest either in S&P500 ETF or Vanguard FTSE All World ETF. The highest weighting will always be for US tech stocks.