About to become a first time investor but should I stick with a cash ISA, because of US/Israel/Iran situation

[adviceatthislatestage]

Hi all, I am 59 and last year attended a pre retirement workshop (I’m in local government)

Plan is to retire at 63/64. Can’t get my works pension till I’m 67, so I’ll have to make my savings work for a few years.

It’s not much but I have £80k in a cash isa.

Following the workshop, I’ve had a couple of meetings with an investments company called MyWealth to discuss increasing my £80k into an amount that will cover me for the years before my pension kicks in.

I’m risk averse but still their advice was to transfer the whole lot, invest with their company and leave it for 5 years. Cue lots of graphs showing how much I’d make in ISA interest over 5 years as opposed to the fabulous money I’d make with them. Said because my investing was via an isa transfer any future profits made would be tax free.

I was initially ok with this, and they now sent me paperwork to sign. However given the current situation in the Middle East, am now worried that the timing is all wrong and I should just leave in a cash isa for another year.

Or is now actually a good time to invest and (hopefully) by the time I need the money the world will have been back on an even keel.

I’m one of these people who have never had money so £80k is a lot for me. If I was to end up with less at the end of five years, it would be quite disheartening to say the least, as likely to mean having to work till the bitter end (67) after all.

Fully aware no one on an internet forum can tell me what to do, but would be interested in all opinions. Many thanks

I don’t know the company but, if the advice of a random MN-er is worth anything - don’t do it.
£80,000 is a hell of a lot of money, I’d keep it in a lower risk place especially in the current climate.

"Your capital 8s at risk" so please do not risk it all.
If this 80k is only part if your savings sure. Do you have another 80k savings elsewhere?
If it is all your savings be much more cautious if you need it in five years
You can get 4% plus on it in a fixed isa

Move it to a trading 212 cash isa and you can then switch it back and forth between a cash isa and a stocks and shares isa in seconds on your phone. I moved all of my money that was in us bonds back into the cash isa a couple of weeks ago. When things are a bit steadier I’ll move it back, don’t pay someone else to handle £80k. You need to be able to react quickly with it.

Could you just invest some of it, I wouldn't invest it all.

Holding money in cash can be risky because of inflation, which is the general rise in prices over time. As inflation increases, the purchasing power of cash decreases, meaning the same amount of money buys fewer goods and services in the future. For example, if prices rise but your cash stays the same, you effectively become poorer because your money cannot buy what it used to. Therefore, leaving large amounts of money in cash without investing or earning interest can cause its real value to gradually decline.

Keep an emergency fund I’ve say £20,000 in your cash as a decent rate if you can find one. Talk to your advisor about phasing your funds into the market than your benefiting from pound cost averaging there is no guarantee that you will see a significantly different return, however the longer you hold the funds the chances are that you are outpace inflation and see real return.

Suggest reading/listening to the book “How to Fund the Life You Want” before making any decisions. Really helps understand retirement planning. Will help set up low cost (most important) investments which don’t need so much management. And advise how much to keep in cash.

Firstly, don’t use that company as they’ve given you horrible advice.

You need the money as cash in the medium / short term, so you don’t want to put it in a high risk situation. Inflation is less over an issue over 4/5 years. Surely sensible to keep some as cash, in the ISA with a decent interest rate. Then something relatively low risk investment wise for the rest, if you want to.

investing is essentially gambling. You can lose your money. Any decent advisor or wealth management company would have done an evaluation of your risk comfort, and you’ve described yourself as risk adverse.

First off, how much is this investment company charging you? What are the ongoing fees? I'd be extremely wary of using an investment company to do something you can do yourself with a stocks and shares ISA on a platform like Vanguard, Fidelity or Trading212 etc.

To answer your specific question about is now the right time to invest...
The market has dropped back to where it was 3 months ago since the war started. It's not terrible just yet. It is still dropping though. The current uncertainty is the problem. Will Trump start a ground invasion? Will he find a way to get oil out? An ongoing war that feels more stable wouldn't be so much of a problem.
The right time to invest would be at the bottom of the dip. I don't think we're there today. I don't think we'll be there in a few weeks time.
You also have a very short timeframe. If you loose money, you don't have years and years for it to grow back.

In your shoes, I wouldn't want to invest all of it right now. I would make sure I was getting the best possible rate on the cash isa and I'd wait a week or two more to see what happens with the markets. Then I'd probably transfer a set amount monthly into a S+S ISA to flatten out the timing risk. Maybe £500 a month, maybe £1000 a month. The usual advice is to choose global trackers to invest in, but since you're so close to retirement maybe also look at bonds and gold.

I wouldn't be handing money over to what sounds like a bunch of charlatans tbh

No one can guarantee a return so if they're saying that it's a big red flag 🚩

Having said that, the best time to invest in a stocks and shares ISA is generally in a recession/dip/bad economy as you get more for your money, when stocks recover your assets go 📈

However I would a) do it yourself and b) not invest the whole 80k at least not at first.

Cash is NOT low risk, your capital gets eroded by inflation. So that needs to be considered before you think it's "safe" where it is.

You don't need an investment company to manage 80K. It is easy to set up S&S isa and transfer as much as you want. You could set up a cash and a S&S ISA on Trading 212 and transfer half into each.
I wouldn't keep the full amount in cash though, you won't make enough in interest to beat inflation in the longer term in cash.
Now is a good time to invest. The markets are reacting but will stabilise and grow again.

I echo others about checking their charges as it’s likely to be quite high for what is a relatively small amount and they probably will charge you annually and that comes off your investment returns. Generally speaking the more you have under management the less charges you will pay as they are making more from you. That sort of amount you’d be better off managing yourself. The company sounds a bit dubious frankly. Anyone offering fabulous returns over the next five years on a relatively small amount is being optimistic to say the least. Ultimately stocks and shares investment is gambling under another name, especially with the world how it is now.

Do not use this company.
Their approach screams red flag.
Lots of good advice on here. You already have your money in an ISA you just probably need to look around for the best paying ISA and consider moving it.

I'm familiar with this company. They deliver retirement/financial information courses to public sector employees and us these as a "hook" to get people to sign up with them. I attended one of their retirement courses through my nhs employer a few years ago, as part of the course they offer a "free" follow-up call with an advisor. The initial call is free, but they then put together a proposal to manage your money. The charges were very high (there was an initial arrangement fee and an ongoing management fee) and i turned down their kind offer to rip me off manage my money. I would question why they are advising someone who is risk averse to invest all their savings when they will need this money in 4-5 years. I don't believe they are giving you the best advice.

The problem with companies like my wealth is that on the surface they look great. Fantastic trust pilot reviews etc. When you actually drill down though all tbey are doing is investing your money in a global index fund which anyone could do themselves for a fraction of their costs.
Thr reason they have good reviews is that 99% of their customers are people that have signed up to them via a workplace pension info session. They make it sound like you need them. The reason most people go to these sessions in the first place is that they dont understand investing so think, oh that sounds good where do I sign. They think they have been given good advice because they dont know any different. Companies like this rely on the fact that the majority of people attending the sessions have no knowledge and having someone do it for them sounds great.
You would be much better spending a few months learning about various investment options yourself. There is a wealth of information at your fingertips.

I can live with it - the initial charges are 2% + VAT and then annually 2.21% (+ VAT?)

Earlystartsmakemegrumpy - that is exactly what’s happened- as I’m public sector also (local government).

Thanks all. Since Wednesday I have had two emails reminding me to send paperwork back asap and a message. It’s only been 4 days!

Ive replied that I’ve had a change of mind and will not be going through with this set up after all.

On the advice of PPs, I will look into Trading 212 and maybe dip my feet in with a small amount. The rest I’ll put into a cash ISA again for another year.

Will have to get a better understanding re S&S ISAs, as aren’t the rules are changing ext April (2027) for those under 65?

Thanks again

That is very high charges. I would swerve this and just be thankful you asked on here before signing.

The changes coming in 2027 relate to cash ISAs. If you are under 65 you will only be able to pay in £12,000 a year to a cash ISA, the remaining £8,000 can be paid into S&S.
This only applies to new funds going in though so it won't affect anything you currently hold in an ISA. You can still continue to transfer as much as you want between ISAs as long as you follow the transfer process and dont just draw it out to pay to another.

Those fees are insane! Absolute daylight robbery. For comparison, I would consider 1% fees high. I generally look at funds which charge around 0.2 to 0.4%. I'm so pleased for you that you posted hear to confirm your gut instinct

As an aside, I would complain to the management at your workplace for allowing this firm to have access to you. It's awful they're giving them the opportunity to take advantage of you and the appearance that your workplace endorses them

Rules on ISAs are changing for under 65s, but only to restrict the amount we can put in a cash ISA to £12k a year. Your total ISA limit remains 20k and you can put the full 20k in a S&S ISA if that's what you want to do

Agree with you on this. The fact that this company has such access to a huge number of public sector employees is scandalous

2% + vat?! Well done for turning them down. That's scandalous

If you need this money in 4 years’ time, then your timeframe for investing is too short.

Don’t try to time the market, however, when markets are down it could be a good buying opportunity IF YOU WERE GOING TO BUY ANYWAY!

Whilst you can currently switch easily between cash and S&S Isas, I don’t think you will be able to do it when the rules change as there’s just no way this can be administered. Anybody could just pay £20k into S&S and then switch into cash.

I would be careful suggesting to someone who is nearing retirement and has never invested to DIY. Of course paying an adviser will cost more but then you should be getting value for that and don’t need to spend your own time researching and rebalancing.

Generally the advise is not to invest money that will be needed in less than 5 years, stocks and shares on average outperform savings accounts by quite a bit
however any money in the stock market can go down as welll as up, very few funds rountinely utperform a standard FTSE 100 or S&P500 tracker
Vanguard and trading 212 have much much lower fees

is the 80K your only savings, if so you first need an emergency fund in the best paying cash ISA you can find trading 212 is just over 4%
it is better to drip feed money into stocks ISA is the market is down your £100 might buy 10 shares at £10 when the market is up your £100 might only buy 8 shares but altogether you have 18 shares so it averages out over time, but if the thought of your 80K being worth 79K in 6 months worries you even if it then goes up to 84K next year then maybe investing is not for you, but I would not place all 80k in one place if investing but you can place 20K in a cash ISA before 5th Aprl and another 20K after 6th April , then after Arpil 2027 you can only put 12K in cash ISA

where are your savings just now?

if you a public sector you can take your pension anytime after 57 ( 10 years before your offical age) but it will be reduced by roughly 4% per year so if it was going to be 10K index linked if you take a year early it will 9600 for life index linked if you took it at 63 ie 4 years early it would be 16% less so about 8400 a year, so if you life to be 80 with 10K from 67 total 130,000, or if from 63 17 years at 8400 or 142,800 but if you live to 90 you get 230,000 by waitng until 67 but only 226,800 in total by retiring early ( this doesn't allow for inflation or index linking but it would apply to both but a 2% inflation rise on 10,000 is moe than 2% on 8400

80K at 4% compound interest monthyl for next 5 years would be about 97700 and approx 93800 after 4 years assumng you do not add any further money to it

however investing 60K in stocks and shares keeping 20K as emergency in cash ISA
20K in 5 years 24000
60K in 5 years at average growth of 8% is 89500
total of both 113,000 instead of 97,700 from a cash ISA only

Crikey that’s high. That wipes out at least half and , probably more , of any gains, plus you may also have pay tax. I saw your later post where you turned them down. Good move. Honestly even a building society savings account at 2.5% is better. Don’t just leave it in the bank - as they are making interest on your deposit and keeping it!

No you won’t be able to do this as of April 2027. You will be able to get the cash out, but not put it back into a cash ISA to keep the tax free wrapper, until you are 65.

Definitely don’t invest in anything right now. Put your money somewhere safe where it can earn interest with zero risk of losing anything.

I have just had some financial advice as well OP although I paid a fixed fee for it. Also risk adverse, they have been very clear that there is a chance for balance to go down as well as up, your company saying it will generate 5% seems like a red flag. They also haven't pushed to manage my money for me, they have suggested investment accounts and indexes (I'm sure they get a bump for this like a mortgage broker) but there is no ongoing fee from themselves.

Anyway I've decided to invest a 3rd of their recommendation to start with due to the war etc with the aim to increase this over the next few years.