How risky are ISA's?

I wouldn't say there are any risks involved, except perhaps some might say that it's a risk that you wouldn't get as much interest as you might from a higher risk investment.

There are some shares ISAs that guarantee the capital, but you need to leave them invested for a certain number of years, take a hit on the interest rate, and possibly get back much less than you would (if you'd put it in a cash ISA) if the market performs poorly.

I've always wondered this, are there many occasions where a shares ISA has really bombed and done worse than a mini cash ISA?

Marcus

In message , snipped-for-privacy@hotmail.com writes

No more risk than saving put in any other account with A&L

Yes, but if you need a guarantee of capital safety before you can invest in the stock market, then dont do it.

"Marcus Fox" wrote in message <

If you got your timing wrong then yes! If you took out a FT100 tracker in

2000 then you will still be in the red.

I knew somebody who took out a guaranteed tracker in 1999 and the term expired before the current bull run so they just returned the capital (eroded by half a decade of inflation). At least with a "proper" tracker you receive the dividends and you can sit out any fall in the market as they're open-ended, the guaranteed trackers are basically just instruments on the derivatives market.

But not, of course if you'd drip-fed it monthly between then and now. Some of the 'specialist' equity ISAs/PEPs from that year could easily still be down by 50%.

Interesting.

I suppose guaranteed/FTSE-linked bonds *are* derivatives...

How about with-profits endowments? ;->

It's quite obvious that when you see, say RBS, advertising a 100% return of capital + up to 25% over 3.5 years[0], depending on FTSE100 performance, that they *expect* the FTSE to gain more than that.

rgds, Alan [0] the other one they're offering is 114% capital guaranteed + 50% of FTSE100 growth over 6 years - interestingly, that FTSE growth factor is based on "growth over the term of the plan averaged over the last 12 months"

A+L high interest rate includes a bonus that only lasts for the next

12 months. You can of course always transfer out if another provider has a higher rate. there are no exit penalties with A+L

Provided A&L doesn't go bust, no. Even if they do, most of it is protected by the deposit protection scheme.

The biggest risk is inertia once the 'bonus period' runs out...