iSA question . I have never had money before and don't know how it works.

[newtomoney]

I have always been poor. I rent. V rural but still £1000 per month for a 3 bed. Will never be able to get on the housing ladder as I am now 65... I have a decent income. Take home £1800. Took occ pen at 60 which is £795 pm.

I won 2x 10k on my 10k premium bonds in the space of 2 months. Incredibly lucky. I put it in my NatWest bank account and paid into a stocks and shares ISA . The Maximum amount ..

My question is this.

My ISA goes up and down. One time it was £20578... two weeks later £19778..
there is a facility to withdraw .

When I see it go up to 20578 what is the problem in me skimming off the 578 and putting it in my savings account .. will I still have my original investment in there ? Can I continue to skim off the amount above the original investment and use it as an income ?

I think I may have this wrong as it keeps saying to get the best return it needs to be in there for 5 years or more !

I think I may have no understanding of investing 😳

No women understand this ? Ok

Let's try to simplify it.
If you have 100 units which cost £1 each, you have £100.
If the value of a unit goes up to £2 you have £200.
If you sell £100 worth, so sell 50 units, you now have £100 worth in 50 units and £100 in your pocket.
If a unit dropped to £1, you have £50 in units and the £100 is still in your pocket.

So yes, you could take the gain out.
There are fees to consider, that will depend on your ISA provider. Selling units may or may not cost you a fee, it may take time to process during which the market can shift.

The leave it for 5+ years thing is to do with how global stock market goes up and down. There can be periods of time when it goes down quite a bit, then up again. You may get back less than you put in if you were to sell during a down period.

Yes you can do this if you need to. However it’s not the best way to approach things if you can afford to leave the money untouched- by leaving the gains where they are you’re likely to end up with more overall as you’ll get tax-free growth on growth.

Congratulations! 2x10k is very lucky!

there’s nothing “wrong” with skimming a bit off the top like that. But had you taken the 578, when the market dipped it would have gone down further than 19778, like maybe 19198 (not done the maths). And then would take a bit longer to build back up to 20k.

but that doesn’t make it “wrong”. It just depends what you’re trying to do with the money.

The corollary of this is if you skim off any return every time the capital value of your fund goes up by a little, you don't have much of headroom if that fund goes down in value.

As you know, what goes up will come down. If you cream off what comes up, then in a prolonged slump, you are going to take a lot longer to have your capital come up to the same amount you started with.

How often do you plan to skim? If it is once a year, that is probably ok ... for retirees who need a regular income. Whilst retirees would like to preserve capital value, they are not overly bothered if the capital value starts to dip down because they are closer to the end of their days on earth.

If you plan to skim every week or month, not sure that a shares ISA is the best vehicle for your investment. It is best if you leave it for 5 years, taking only a little out if you need to, to give the fund time to grow and offset short term volatility.

You'll not get much help if you're rude.

Plenty of women understand it, but you've posted on a Friday night in a not particularly busy board. And you're not entitled to a reply.

I started writing a reply soon after your opening post, but deleted it when I realised how much I would have to write. It's now morning and I have more time.

What exactly are you expecting from your ISA? ie regular income/capital growth
Have you opted for automatic reinvestment of dividends to maximise growth?
How much are selling fees?

@nannynick's example explained about the value of shares going up and down but did not touch on shares falling below the initial buying cost. Yesterday, global stock markets started to fall on fears about the US economy, meaning that when markets open on Monday, your shares isa, could potentially be worth less than you paid for it, but there might be a correction the following week.

This is why the advice is to keep it for 5+ years - to ride out the short term ups and downs. If you need to skim off gains on a regular basis, I agree with pp that this isn't the best investment vehicle for you.

However, if you're not panicked by a scenario where you've skimmed off the gains, then the value of your isa falls to a level that wipes out the gains and more, but you don't need the money now, so are confident and prepared to wait for the shares to recover, then go for it.

You will be eligible for a state pension very soon. If I were in your shoes I would have kept the money in my pb account and let that build up and then used it as an instant access cash account for savings and lived off both the state and my other pension.
personal finance can be complicated and I think you need to put your money where you understand it. Stocks and shares isas are for investing for the long term and leaving the money there. They don’t sound like quite the right product for you at this tîme.

Starting to invest in stocks and shares at the age of 65 isn't the best idea as the value of the investment is so volatile.

The value changes every day, so by time you know you're 'up' and give instruction to sell, the value will have changed and might have dropped.

Is there a cost when selling, eg either a flat fee or percentage?

How long have you had it? Personally I would think about getting out and transferring it to a cash ISA instead. But check the current value - as a PP has said, markets have fallen this week.

I am sorry for being so thick !

I just don't understand this so perhaps I shouldn't have the money in here ?

I paid in £20k it's currently worth £20,253

So I am looking to boost my monthly income.. should I skim off the £253 ? It not ?

You can skim the money off but the consequence is that if it goes up again you won't be gaining as much as if you left it in.