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Should I make regular ISA and pension investments?

18 July 2019

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Question by Andrew

Holly, in the current COVID-19 turmoil would you still advocate making ongoing regular investments in stocks and shares ISAs or pensions, or is it better saving to cash?

Answered by Holly Mackay

The best advice I think I was ever given (for a long-term savings pot of money - I’m talking stuff you can set aside for at least 10 years here) was simply to invest as much as you can, as often as you can. Drip-feeding in avoids buying at the highest point. (Not much risk of that at the moment!) It also imposes discipline – that direct debit means you don’t have to remember to action this every month and it just ticks away in the background.

Markets are hugely volatile and the FTSE is like a yo-yo. This morning it has been up 3% and down 2% in the last 2 hours alone. No-one can time these markets.

You win some and you lose some. One month you might buy in just before things slide. Another month you might buy in the day before things jump. But we tend to look at this in the short-term and not over a longer timeframe, which isn’t always helpful.

The fact remains that the FTSE is over 30% cheaper today than it was about a month ago. If you were going to buy something long-term like a Le Creuset pan (to use a very middle class analogy!) would you buy it in November at full price? Or in the Boxing Day sale?

Cash is limp right now. Safe. But limp. This is not a time to change from shares to cash if you have a long-term timeframe for these savings. If you need the money in a years’ time, for example, then it’s a very different story. If you are worried about your job security for example then do make sure that you have enough of a cash buffer for this. It’s generally very sensible to have 6 months’ salary in cash, to protect you when things go pear-shaped.

This is a general view, I’m not allowed to make personalised recommendations, I’m not a financial adviser and I don’t know your circumstances like other debt, your timeframes, your employment status or your broader scenario etc. But in general – for long-term savers – now is not the time to cancel that direct debit. Keep calm and carry on. That’s what I’m doing… as spooky as it is.


Answered by

Holly Mackay

Founder and CEO of Boring Money

I’ve worked in investment markets for over 20 years. I started out at Merrill Lynch Investment Management and worked at a few big names before setting up my first business in 2008.