What to do if your stocks and shares ISA is losing value
Turbulent markets can affect the value of your stocks and shares investment, but the worst thing you can do is panic and lose sight of your long-term goals.
We explain what fluctuations in the stock market mean and what to do if you feel like you’re losing money.
Why has the value of my ISA gone down?
When you invest in a stocks and shares product, like our ISA, Junior ISA, Lifetime ISA and some of our Child Trust Funds, you’re putting your money into a fund that invests in the stock market on your behalf.
The value of your investment depends on how well the assets the fund invests in perform. Put simply, when they do well, the value of your investment goes up, when they don’t do well, it goes down.
Recently, many factors have made things difficult for companies and rapid changes in politics have impacted the economy.
As a result, we’ve seen what we call “turbulence” or "high volatility" in the stock market. Some volatility is normal, but sometimes the value of investments goes up and down by more than we’d normally see.
Just like turbulence in a plane, this can be unsettling.
During times like these, there’s one golden rule to follow:
Stay focused on your long-term goals
Is my ISA losing money?
Try not to think of dips in the market as “losing” money. You “lose” money if you cash in your ISA at a time when your investments are worth less than the amount you’ve paid in.
Until you sell your investments, ie make a withdrawal, you still have the same number of shares and their value will keep changing – it might go down further but it also might come up.
It’s therefore worth stepping back and remembering what you planned to use the money in your stocks and shares ISA for.
If you planned to use it for a future event or for a rainy day that hasn’t yet arrived, then you’re still on track. It's not until you withdraw money that the value of your shares affects you.
And, as we often say, past performance is not a reliable indicator of future results.
We tell you this to make you aware that even if a stocks and shares product has made money in the past, it might not do so in the future. But it also means that if a product has lost money in the past, the future could be very different.
Should I cash in my stocks and shares ISA?
It can be tempting to cut your losses and withdraw your money when you see the value of your investment go down.
But no-one can accurately predict what’s going to happen, so withdrawing now could mean you end up selling your investment when its value is at its lowest.
The only way to guarantee your stocks and shares ISA won't go up or down any more is to withdraw it, but keep in mind this also stops your ISA from recovering if the cause of the dip changes.
How can I find out more?
If your ISA is with OneFamily, you can log into your account to see how the fund you're invested in is performing.
It can also be reassuring to view past performance of the fund, you can find this in the investor information.
You may also be interested in:
How does the annual ISA allowance work?
Individual savings accounts (ISAs) allow UK residents to invest or save their money without paying tax on any money they make.
Is it better to save or invest your money?
You can choose to put your money in a savings account, where it will grow with interest rates, or you can invest it in an investment fund, which buys shares in the stock market.
Should I withdraw my investments?
The best time to withdraw money from your investments is actually quite simple – it should be once you've reached the financial goal you started with.
How many ISAs can I have?
You can have as many ISAs (Individual Savings Accounts) in your name as you like, even if they're the same type of ISA.