What are peoples thoughts on surpassing the limits of the FSCS protection on a single platform?
I’m not talking lump sums, I mean reaching the limit with contributions and gains over time. Is it wise to continue after say 60k OR stop, giving it space to grow and using a different platform? The day my account reaches 85k I think I’d be a little nervous, but then don’t fancy managing 10+ accounts in 30 or so years.
Not asking for advice, more just what others thoughts are when/if they approach the protection limit on a platform?
I am not that bothered because the FSCS protection is, IMHO, largely irrelevant.
Do remember that IE are required to keep your cash separate from their business accounts at NatWest Bank (see https://help.investengine.com/hc/en-gb/articles/4909991377437-Are-my-investments-and-money-protected).
More importantly, once invested your funds are initially with the fund manager (Invesco, Vanguard etc) but are soon changed to be shares in the ETF’s underlying companies.
So if IE and Natwest bank and the fund manager were to go bust then you would still own the shares in the underlying companies which, eventually, another fund manager would take over the management of. So IMHO any recourse to the FSCS protection is unlikely to be needed.
Obviously if an underlying company were to go bust then you would lose those shares, which is the risk of investing in stocks (ETFs).
There is no protection for losing capital by reduction in value, This is why there are many warnings about your capital being at risk.
Thanks for the detailed reply!
Yeah completely understand stocks go down and that’s not covered of course.
I just thought if there were anything to think about as you approach FSCS figure. What you said gives me alot more confidence in that it’s highly unlikely it would ever need to kick in.
I’m assuming that you’re referring to the value of a S&S ISA or a general investing account.
I think that you are thinking about this incorrectly. The total “value” of your account is largely irrelevant. Warren Buffett says that you are a part owner of a company, no matter how small of a part and those shares are yours. It really doesn’t matter what happens to the platform, the paper trail leads back to you.
The value of the account will fluctuate over time, but concentrate on building your positions and not so much on the value.
I am not concerned at all, I had more then 85k in both IE and Vanguard UK Platform. Once I decided to sell the IE thematic ETC, I moved the funds back to Vanguard
So I figure if Vanguard Platform that sell Vanguard ETFs crashes, then there are alot more problems in the world to worry about.
I feel very secure and with the recent gains over the last year, I have 7 figures with the one platform. So it would be awkard to start splitting it up onto different platforms and time consuming to keep them under 85k