You have 100k to invest, would you drip feed 20k into the S&S ISA every year or do 20k in an ISA and use the 80k to buy funds in the ‘FTSE all world’ right now?

[icantwaitforsummer]

If your experienced in investing I would love to know what you would do.

I have put 20k in the s&s ISA in the FTSE all world. But what about the other 80k? Have it sitting in a high value savings account where it is now on 4.6%. And transfer 20k every year?

Or put the other 80k straight into a FTSE all world now?

Its my retirement fund so don’t need it for 15 years at least.

Why not invest much of it in a pension - either additional voluntary contributions to your workplace pension or a SIPP?

I wouldn't put it in a pension because then I don't think you can get it out until retirement?

My Pension is already sorted, this money is just for investment. Just can’t decide what is better, drip feeding or all in one go?

10-20 into FTSE every month this year. History suggests time in the market evens out; but I've been burnt in the past investing a large sum right before a crash (thanks Liz Truss).

Our ifa would invest the 100k now and transfer using full allowance annually to convert over 5 yrs.

If you want it all invested then all at once (or over a few months as suggested) makes more sense.

I’d still think pension was worth considering though, for the tax advantages, unless you have way more than you need in there.

• If you work: max out pension contribution and put into a SIPP, claiming back tax.
• Also ISA for kids?
• Make sure you only invest in ETFs with very low annual charges (NOT funds which have high fees)

Drip feed into the ISA. But don’t keep the funds waiting for the ISA in cash. Put them in another investment like the world tracker and then gradually transfer to the ISA.

Different people will tell you different things. There is no correct answer really, at different points in time limo sum investing would be better and in others averaging into the market would be more optimal. We have no way of really knowing what the market is going to do over the short term.

So it comes down to your own personal risk tolerance. If you put it all in the market on Monday and the week after the market dropped by 20% how would you feel? If you understand that the investment is for the long term then fine, if you are someone that is going to stress and worry about it and then ultimately make knee jerk decisions then maybe a pound averaging approach would be more suited to you.

You don't have to do either of the extremes, you could full your ISA, put another £20k in a general investment account and then keep the £60k in either cash or potentially premium bonds (PB if tax is a concern).

@Lafufufucould you explain your idea to me a bit more, I don’t quite get what this means? Still new at this 😊

@Hitchenswhat is a general investment account? Do you mean do ISA, then invest 20k in the FTSE global ETF, and then transfer that into the ISA in a year? Even though it might go down a lot in a year? And keep the other 60 safe?

What does ‘my pension is already sorted’ mean? If you are a 40% or more taxpayer, there may still be advantages to saving some of this money into a pension even if you already have a workplace pension

This. Most S&S isa providers have a GIC account which is the same thing, but without the tax wrapper. You can then move stuff over once a year.

What @deafleppard and @lafufufu said. £20k into the S&S isa, put the rest in a general investment account (same funds, just no tax wrapper), then transfer £20k into the S&S isa each tax year to use up your allowance.

ISA is just a protective wrapper that keeps the taxman out.

If your money are little fish think of it like a sheltered bay where the shark (Mr taxman) can't nibble at them.

The ISA bay only takes 20k fish per year.
You can keep your fish in a tank but then they don't breed (uninvested cash)
So its better to take your chances at sea (general investments that get taxed like FTSE world) as your shoal will still grow although probably less than in the bay.

So in Yr 1 20k can go in the bay.
all the fish are protected from the shark so when they have babies (interest) and they all live 🥳 so you get a full 8% now you have 21.6k
Your other 80k fish is at sea. The shark eats a few so you have £84.5k now instead of the original 86.4k (80k * 1.08)

In Yr 2 £20k more fish can move over into the bay So you have 41.6k at the start of the year that are protected and all their babies (interest) will survive. Meanwhile you still have some fish at sea (64.5k) but there's less for the shark to eat this year.

Yr 3 another 20k move moves into the ISA and so on and so forth.

It’s a personal thing

i would do 20 in the isa, 50 in premium bonds leaving 30 and pay tax on the left over interest

but that’s because

I am risk adverse - if I lost my 100k that’s a big hit on my future and I am too old to make that back

i don’t have a fundamental objection to paying tax

I don’t like the risk of shares. if it was such a sure thing then you would get companies guaranteeing you a minimum interest rate with the chance of more if the shares did well ( with the company taking a cut of the excess profit ) so it’s clear that’s a risk they won’t take so why should I?

fundamenally I am not a total believer that the stock market based economy is a good thing , a good way to run things. it’s too opaque and it’s divorced from the companies performance - so your profit is dictated by the overall performance of the stock market - really companies don’t gain or lose billions overnight that’s just stock market fiddles - and “the market” determines the value of a company - there is an indirection. By that I mean that a company that doesn’t do as well as someone else thinks it should sees its share price ( and your savings ) crashed even if the company made a huge profit. And often that’s an external body wanting the company split up so they can make a huge short term profit at the expense of long term returns and emolyees and the long term business- too much short term thinking and external manipulation and pressure

The rich have failed to make it work so they want the relatively poor to pump money in for them ?

Just remember if you sell the fish in the open sea and rebuy them in the isa net, you'll pay capital gains tax on the gains from that sale.

Not true if you do it through bed & isa

Given your time horizon I would put £20k into the S&S ISA now and the other £80k into whatever you want (eg FTSE all world) in a general investment account, then move £20k into the ISA every year. Yes we might have a crash tomorrow- that's always true- but you have time for your investments to recover. Time in the market > timing the market.

I have a table somewhere that compares the outcomes of investing a sum for a long period, what you'd have if you stayed invested the whole time v what if you missed the 10 best days v missing 10 worst days v missing both the best and worst days. I will try to find it but in essence, you do better by just investing and staying invested than you do by missing either the best days or both the best and worst days. Given that even professionals can't foresee a crash, unless you are mystic meg and as long as you have time on your side, it's better just to invest and ride it out.

@Lafufufu What does the *1.08 mean?

This is interesting as many ideas here are put 20 in the ISA, and the other 80 in the FTSE all world and then every year move 20 over.

I didn’t consider this as I would have to sell the ETF and pay CGT on it before I move into the ISA won’t I? I thought once you invest you should do it for the long term and leave it alone.

Has anyone don’t this?

1.08 is the factor for calculating the 8% interest

Bed & ISA, as mentioned by a PP above…

https://www.ajbell.co.uk/isa/bed-and-isa

The capital gains allowance of £3000 still applies to bed and Isa, it's only future Capital gains that are completely free of cgt.