UKH

Say you had £10K which you wanted to put aside for a few years certainly two years, maybe five maybe even longer, but wanted to access it within a month i.e. not have it locked in a bond for 5 years, where would you put it?

At the moment a regard a stock market ETS as a bit risky. Brexit could screw up the FTSE (or could help it) and a US/China trade war could mess up stock markets on either side of the Pacific.

I'm getting more sceptical of peer to peer lending. Zopa is currently making me about 3% over the long term and boasted in one of it's newsletters recently about having given X hundred loans in the last month to people who wanted to go on holiday. No wonder I get a lot of bad debts. Other PtP companies seem heavily into the property and retail markets which again could go horribly wrong in the next couple of years.

Should I start speculatively investing in sporting and equestrian events?

A relative of mine is currently making 8% in a US hedge fund (sorry, not sure exactly which). My complaints that she has all her eggs in one basket have fallen on deaf ears, owing to various reasons including the exchange rate and her mortgage balance.

Red

Vintage watches. They've been doing pretty well recently, they're a thing of beauty, you can enjoy them on a daily basis and if you don't cash them in they're a lovely thing to pass on to the next generation to remember you by.

I have a friend who spent several years playing Blackjack for a living.

It ended one night in Hudderfield, standing outside a casino without even enough money in the whole world to put petrol in the car to drive home.

He now bets on football, golf, tennis... as a lifelong Man Utd. supporter he starts off every season by putting a tenner on Liverpool to get relegated.

Yeah, but the next generation needs to have a luxuriant head of hair and a side parting, and who, quite frankly, goes in for that these days?

If you didnt 'watch' antiques roadshow on Sunday afternoon, you should. The last feature was an Omega Moon Watch - cant remembers is proper name but it was nicknamed because of it connection to the moon walks. Bought for £45 in the late sixties. Now worth up to £40k.

A more modern example is a friend of mine bought a Rolex Daytona a few years ago. This particular model is was bought second hand for 5k and its now worth £12k.

Gold could be a good option, in times of international turmoil and tension then it's often seen as a safe place to put money.  Hence the gold price has been flat for the last 6-8 years but is steadily increasing now.  Up around 20% this year already.  You don't have to buy physical gold to keep under your bed but there are plenty of gold trading accounts our there that track the market, or in the case of some like Bullionvault, who store it for you in a secure vault.

The problem with your question is it implies you seek a single instrument in which to deposit your cash. Once you exclude so called safe options, like bank deposits or gilts, any isolated choice imposes an unbalanced binary outcome. You will either win or lose but you have no uncorrelated investment whose movements would tend to offset losses (or gains) to achieve a moderated but more reliable return. In other words, an expert would advise you to distribute your capital across a balanced portfolio comprising cash deposits, shares, bonds, real estate and alternatives (hedge funds).

Of course, that's an unhelpful answer in the context of your desires, but it is one that highlights the challenge of seeking a risk-free investment that will out-perform cash.

Over a five year period I would be minded to put it in a FTSE ETF because you will earn 25% interest over that period before any movements in the market are taken into consideration, ie the FTSE 100 yields 5% pa. Ignoring tax (which you shouldn't) you would lose money only if the index fell more than 25% over the five years, which it still might, but billions of investors are happy with the odds, because a 2% pa rise in the index over the period results in a 35% gain, or 7% pa. You also have the flexibility to withdraw your investment at the drop of a hat, either to take profits or mitigate losses.

For a single investment I would look at property REITs (Real Estate Investment Trusts). This is a way of investing in property without the hassles of ownership. A bit like buying shares in a house-builder like Barratt, but focused on different sectors.

I made 20% in under six months this year investing in a company that builds health centres. You have a secure customer, the government, and a growing market mandated by policy and fed by an ageing population which is a close as you can get to a cast-iron guarantee of rising demand for the services underpinned by the property development.

The other profitable property segments in recent years have been student accommodation and warehousing, but there is concern that the student boom has peaked as vacancy rates are rising in the UK's less prestigious cities. Warehousing has boomed on the back of online retail and Brexit planning, but the latter ought eventually to subside.

Beware retail property. Yields are up to 10% which sounds attractive but I'm not embarrassed to admit to being seduced by the yield of one investment without properly considering the challenges facing landlords in this sector and I got burned through my foolishness.

Right now probably Raytheon, Rockwell and BAESystems...

How much was £45, 50 odd years ago? A weeks wage, a months? I expect if you'd invested a similar amount in property/ the stock market/ art/ antiques/ cars etc with a 50 year time horizon and selectively picked the winners, you could have done alright.

I get the idea of having a nice, precision engineered, bit of art on your wrist. But prices will not go up for ever. I regularly attend meetings, where almost everyone in the room is wearing some sort of divers watch. (I don't suppose they are all PADI qualified).

There is a massive demand for these status symbols, as some think they exude gravitas. However, there are an awful lot of really good fakes out there, and the fakes are only getting better. Why would a salesman spend 10K on a watch, when he can get one from 'tinternet for a fraction of the price? No one will inspect it with any rigor. If it passes the 'pub test', then who cares if it's a fake.

If you want to see how good the fakes are getting, check the vid below. It's no longer a mickey mouse action in an expensive case. It's all about microscopic details and side by side comparisons. If it looks like a Daytona, has almost the same mechanism as a Daytona, would that be good enough for the majority of people who dress to impress?

youtube.com/watch?v=upAJE_XhT2Y&

In my view you have not told us a key point. Are you risk averse or can you afford to adopt a high risk strategy and lose the lot.

Judging by the fact you say you do not want to lock away the money(in other words you want quick access to it), it implies you cannot afford to lose the £ 10,000.

If this is correct then it may severely limit your options.

By the way I would not touch PTP lending with a barge pole.

So how risky do you want to be?Or are you looking for something which in reality is just not realistically available. In other words you need access to the £10k, you want a very good return, but you do not want to lose the £10k.

Probably missed the boat on gold at this stage.

... though perhaps most of that is already priced in.  

I'm not entirely risk averse and don't mind spreading my bets, so to speak. The money would buy a new car in a few years time so I'd like to make a decent return on it but if I lost money it wouldn't be the end of the world.

Why are you so anti P2P lending?

I know  people who have used it both to secure funding and like your self to get a return. The latter have moved away from it as the retunrs are poor. In the early days of say the Funding Circle it was a reasonably unique proposition that took care about who it learnt money to. I am no longer convinced.Its almost become a flooded market and that means lower returns.

So what you do you want  quick access? It implies you are more risk averse than you think

Me I would take a gamble and put it into a VCT scheme like with Octopus. But it is high risk and locked away.

If you want to avoid tax and are investing, stick it in an Investment ISA, and go for a collective fund (e.g. ETF as others have mentioned) with a cheap provider like Vanguard, if you want something a bit more upmarket try Hargreaves Lansdown.  If you're investing, you should look at a 5-year horizon.

IMHO, the investment environment is too fragile at the moment: people are sitting on their hands waiting to see the outcome of Brexit and the political shenanigans.  But if you believe the mantra that you should buy when everyone else is fearful ....

For a safe (tax-free) bet (but not forgetting inflation: today's CPI publication showing annual inflation at 1.7%, RPI 2.6%) and want a bit of a flutter: stick it in Premium Bonds.  You might win something, you will get your initial funds back, and whenever you want them, and no tax to pay on any winnings.

Become a Tory PM and short the pound?

If you need money in few years time to buy a car that means you couldn't accept a loss in the short term and wait for the investment to recover.  If that is the case (is it?) then you have a low risk appetite and need to invest in low risk investments, which means low volatility investments.

On basis of the above - you should not put your money into the markets (any of them).  We're in the latter stages of the longest bull market in the last 100 years.  Only one thing certain - it won't last forever.  A typical recession would take ~40% out of your $10,000 and take 2-4 years to recover to its previous high.  

Remember - risk in finance isn't like risk in climbing. 

Example:  Would you rather:

A) 2% pa guaranteed every year for 10 years.  (Low volatility investment)

B) Up to 10% pa possible, but a risk of up -40% in any given year over a 10 year period.  (Volatile investment)

If you're putting your money into the markets you have to be happy to leave it there for 10 years.  There shouldn't' ever be a reason to lock in a loss and walk away.  If that happens - you've put money at risk that you should not have.

Cheers

With brexit in mind, bottled water, tinned food and crossbows? 

Vintage motorcycle.

Much easier to store than a car, tax-free, mot exempt, and if you do drive it then it can be insured on limited mileage.

Also much more fun than stocks, investments and so on.

Jesus H Christ. You need to complain louder, this is EXACTLY what nobody should ever, EVER do with all their savings. It's impossible to mitigate all risk of course but putting all their money in a single hedge fund is exactly what ruined the people Bernie Madoff "invested" for (and he isn't an exception, frauds like that are discovered regularly, his just happened to be incredibly big) and even if you want to ignore the risk of outright fraud, the freedoms hedge funds have mean that they can literally take positions which could lead them to be 100% wiped out in a sudden and unexpected market movement.

If it's only 8% that is also an appallingly bad return for the extra risk in the generally pretty good market conditions of recent years.

Umm... I think there is more than one mistake with this. You haven't included compounding in your interest calculations and more importantly, where does this 5% sort of guaranteed number come from? I know it doesn't come from any chart of how the FTSE 100 performs that I have ever seen. And also, I think you have not factored in that a FTSE ETF (tracker?) type of fund does not exactly mirror the performance of the FTSE and I think there has been research in recent years that has shown that a lot of tracker funds have been falling short of the benchmarks they are supposed to be tracking, has there not?

The rest of your post sounded like pretty good advice though.

Also, in reply to all that chat about watches and other specific items that did great, just imagine that for every watch that increased 100 fold in value, there were 100 other models or makes that are barely worth what you paid for them and at the time you make the choice it's basically a guess as to which one will become bizarrely sought-after/valued in latter years. These are fun anecdotes to share at cocktail parties, not investments worthy of your consideration.

US equities. Aside from that, anything tangible and that's not government paper.

A Speedmaster or "Speedy".

There's a much-reported shortage of Rolex professional steel watches at the mo. The right one might be a great investment, maybe a blue Milgauss or the discontinued polar Explorer II. Some decades ago you couldn't give away a Daytona, v unfashionable. Then came the Paul Newman watch, sold at auction for $17m or something. Two years ago a nice blue Patek 5711 could be had for £25k; now £60k+, I think.

I always find these type of OP fascinating as its always interesting what you learn, which is never enough.

Hargreaves are good option, but looking at the OP's age maybe a SIPP would be better than an ISA as you can now drawdown on these 50 i think? 

i think

cheers

mark

Not really. Unless you really do stick it all on 3 Legged Camel in the 2:15 at Doncaster it's unlikely you'll lose the lot. IIRC my pension fund lost 25% of its value in 2007/8. If I ended up with £7.5K in the car fund rather than a hoped for £12.5K then it wouldn't be the end of the world. I think the 40% you mention is very pessimistic.

These days when you can buy something that tells the time more accurately than a Rolex did 40 years ago for twenty quid, expensive watches are really pieces of male jewellery. As such I'd see them as subject to fashion and their value therefore rather unpredictable. Possibly OK if you buy the right watch at the right time for the right price then sell it at the right time in the right place but I suspect the chances of making a killing are very uncertain.

Same goes for art by way. As an investment, avoid like the plague.

It's been very hard not to make good money on any Rolex steel sports watch since 2008. I don't think anyone is saying "buy a watch" and you will do well. Of course it needs some thought and research like any investment.

But the OP wants reasonable quick access to the cash. If the market collapses then the OP will be stuck with a useless watch.

Have you thought about buying £5,000 of USD,£5,000 of Euros. Just hang on to them and take a gamble on the future exchange rate.

Horology is a passion for lots of people with loads of money (or more often it becomes a passion once they have loads of money) so buying well and rare can pay well, and buying obviously is a good store of value (like a Daytona)

Jewellery, art, equities, bonds, cars, wine, shotguns....who cares? As long as the value goes up

It's not ...

S&P500 Peak->Trough 2000/2001/2002 = -49%

S&P500 Peak->Trough 2008/2009 = -56%

If you can't afford for to loose that much of your 10k or you can't afford to wait until it comes back up again (run your car a bit longer) ... you shouldn't put it in the markets.  The markets is for your long term savings that you don't have something else to spend it on anytime soon.

If it's of any value, my car pot is in P2P.  Fairly low risk, not very volatile ... grows a little every month.  I don't think I've ever lost money over a 2/3 month period.  Risk in P2P is, primarily, a platform risk i.e. what happens if the whole platform (Zopa/Funding Circle) goes bottom up.  Lendy was the last one to fail:  https://www.p2pfinancenews.co.uk/2019/06/25/survival-of-the-fittest-are-mor...

Funding Circle did a good write up on how they stress test their loans:  https://www.fundingcircle.com/blog/2017/11/digging-into-the-data-stress-tes...  Let's be honest though ... they would tell us their platform is sound and they aren't lending to ever more risky customers in order to juice up their rates to investors ..

My post was all accurate, including the part you quoted. I just thought my overall post was already long-winded and complicated enough without worrying about explaining compounding over what is a rather short period (5 years) for it to have any real impact. Nevertheless you are correct to mention it. Also don't worry that I might not have done my research on ETFs. Allow me to illustrate

The two largest FTSE100 tracker ETFs are the iShares and Vanguard versions, from the two largest ETF providers in the world (certainly not Bernie Madoff). They track incredibly closely because they carefully replicate the constituents of the index by owning the same physical securities in the same proportion. The Vanguard is the one I use, chiefly because I use iShares for my US ETF. The Vanguard ETF pays a dividend today of 4.706%. This is not fixed. It reflects the relationship between asset prices and distributions by the individual companies as it stands today. But if you invested today you would secure that yield and benefit in several ways:

a) assuming that underlying distributions of profit remain constant (they won't, see c)), you lock in that dividend yield with today's purchase for the duration of your ownership.

b) if the calculated yield falls over time, this is usually because the asset prices, ie your fund value, have risen in value but, (see a)) you are still getting the same yield while new investors earn a lower percentage while buying your asset at a higher price.

c) well established companies of the type that populate the FTSE aren't growth companies like Facebook or Google. They are dividend growers like Shell, BP, Unilever and Diageo. A high proportion of these companies make it a primary objective to increase the dividend each year by small increments, 3-5% typically. This compounding over time has a positive impact on your original yield. So, unlike a bond which pays a fixed level of interest on your principal investment, your ETF yield percentage rises relative to the initial investment. Result.

To go back to your valid point about compounding. Earning 4.7% over 5 years gives a return of 25.8%, slightly higher than my off the cuff figure.

This is all good advice but a lot of people are confused about what they own. I'm no fan of hedge funds having worked out that they make lower returns in good times and would be better handing your money back in the bad. But it's not out of the question that freeflyer's relative actually owns a well diversified mutual fund from a respected US provider. She just doesn't know what name to give it. In freeflyer's shoes, I'd check that detail first before offering advice. Of course, if it turns out to be a hedge fund as city types would recognise the term, then I'd quit while ahead, as you advise, and seek a balanced portfolio.

For a return across a whole balanced portfolio of stock, bonds and other diversifiers, 8% would actually be a superb profit if maintained over a reasonable period.

Quite. I wasn't speaking to the OP in particular, just waffling generally.

(Not useless, tbf, although you never really own one.)

I met a guy offshore who has done quite well with this over the years.

https://www.dailyinvestor.co.uk/whisky-investment/?sub=how%20to%20invest%20...

FWIW, I've always assumed that this sort of option was actually the best thing for people who are looking for a reasonably safe investment rather than a new hobby? That the cost of having someone else manage your investments is made up for in the long run by the fact that that person actually knows what they're doing...

Very funny.

Or not. If someone doesn't realise you are not being serious.

I hope this page is a joke only and the form doesn't actually forward someone's details to anyone who is going to try and take advantage because if it does you might find yourself being charged with aiding and abetting a crime.

I can't agree with that. Over a decent period of time the stock market should average about 10% per year with a relatively low risk strategy like using index funds (of course there is such a massive volatility that even the average over 5 years jumps about all over the place). We don't have any way to quantify the extra risk involved in this US Hedge fund (because we don't know which fund it is) but I can't imagine how it could be lower risk than an index fund of the ftse 100 or dow jones or whatever. So it is delivering a lower return for a higher risk profile.

In reply to Ramblin dave:

There are all sorts of opinions on this but in the end, probably "yes". I would say to make sure you are not going into a fund of funds though otherwise the compounded management fees are probably going to damage the competitiveness of your returns (i.e. paying two sets of management fees sucks balls).

give it to organisations fighting to avert the climate crisis. your cash/investments will be worth nothing if we don't sort it out. or invest it in renewable energy firm, you will at least be doing something moderately useful, rather than damaging, with it then

Thanks for your comments, which roughly echoed mine when I found out. I'll make some more enquiries, especially as she has a lot more than the OP in there :/ but she seems pretty happy and I believe got some reasonable advice at the time.

ff

You're challenging a lot of my statements for someone who doesn't know the yield on the FTSE100 or the workings of the most popular ETFs. Over the 100 years since 1917 the average annual return for the UK index has been 7.0%. But that's equities. When you throw in the bonds and other diversifiers like real estate that balance the portfolio (see my last post), you'd be happy with 5% or 6%.

Or it's a mutual fund delivering the index-like performance it was intended to produce for the same risk as the index. We don't know.

This is the hot hand fallacy.

The past is not a guide to the future.

What you are saying is exactly what leads people to get into trouble!! Anything that shows good or excellent returns again and again over time attracts more and more people who view it as a good investment "it can never go down", when you reach critical mass, someone suddenly goes "oh, er, maybe this thing isn't worth anything after all" and the crash begins. It's happened with tulip bulbs, mortgage bonds, digital currencies, etc. etc.

And you can't hope to avoid this crash, the people who spend their lives up to their eyeballs in the above examples didn't see the crash coming, you, as a layman doing a little research don't have a hope.

Look at it another way: Lets say you have 512 companies that perform randomly but you don't know it; in any given year half gain money and half lose money. After 1 year 256 gain money, 128 gain money again next year... in the end, after 8 years, there are 2 companies which gained money _every single year_. So those companies look like the mutts nuts but in reality, if you invest in them, you still have a 50:50 chance of gaining money the next year and a 50:50 chance of losing money.

Everything is based on sentiment in the end but while a genuine company like Apple who make electronics goods have some sort of quantifiable underpinning for their valuation - the stuff they sell, their intellectual property, their contracts with other companies, etc. etc. - the bottle of rare whisky or artists painting really is just based on peoples whimsical opinions.

I strongly recommend that someone who doesn't just want to wildly gamble sticks much closer to quantifiable things, things you can understand. I think Warren Buffet has said a variety of things about investing in stuff where you can see and understand where the value comes from, not fancypants stuff where money seems to be being made but nobody can quite explain why (see also Enron). I'd like to meet the person who can explain to me convincingly why a £2000 bottle of whisky is worth £2000.

In the US they have Target Date funds from top providers like Vanguard which invest you in a proportion of stocks and bonds which alters over time to keep you on the right point of the risk/reward curve throughout your engagement. In other words, lots of stocks in your 20s and 30s reducing over time to make room for lots of bonds in your 50s and 60s. I think it's a really good implementation of a common sense approach..

I didn't realise that the 5% was based on dividends rather than share price. I think I understand what you said a lot better now.

10% seems very optimistic. My pension (which is obviously low risk) has done about 7%. Your comments about multiple sets of fees are very apt, but unavoidable for the lay person unfortunately. I currently pay: my IFA, my pension provider, and the fund managers of the investments, which total about .75 - 1.25% per year, which in the context of 4% returns or less is a lot...

Needless to say I'll be looking at a SIPP when I have something to 'gamble' with later this year. Yours and BnB's comments are instructive in this regards - thanks.

I am not sure a SIPP is worth it for £10K investment .

10% wasn't meant to be a figure for the FTSE 100, nevertheless, it was a mistake, I was trying to find a global number online because depending on what your number takes into account the percentage can vary a lot. I felt it was more accurate to try and compare an American hedge fund to a global average return rather than a totally UK-centric one. I don't know what the global rate of return is though, the 10% for for the S&P 500.

Your original post didn't mention dividends. I'm sure it's partly my fault for reading through it too quickly but I was left with the impression that you were talking about the changing share price rather than dividends, hence my disagreement.

There is as much reason to think that a hedge fund would have leveraged itself to multiply profits as there is to think it would have balanced its portfolio with real estate and bonds... Ah, it's all speculation without knowing what freeflyer's relative has but 8% is just not that great. A few days of research should let you pick a basket of mutual and/or ETF funds that can get you a 10% return over the medium/long term if you are prepared to spend a little time every now and again, say every 6 months evaluating whether your stuff is doing well or not.

True. But a reply on an online forum has to be based on the information you have and all we know is what freeflyer said. If he comes back and says "it's a passive mutual tracker fund", I'd change my response completely.

It's a 12k investment if you put it in a SIPP

Give it 32 years at 7% and you have 100k

'the cost of having someone else manage your investments is made up for in the long run by the fact that that person actually knows what they're doing'

Like Neil Woodford, for instance?

Your pension has done well. If fee reduction is your aim (and it should be) you'd be best off moving to a platform like Hargreaves Lansdown or AJBell and investing in an index ETF. You can bring your total charges under 0.5% pa. That's for the platform fee and the management of the most popular ETFs. Both facilitate SIPPs as far as I know.

There's also a product called Transact which does a similar job but is compatible with numerous tax-efficient wrappers, including a SIPP. You may need an IFA to set that up though. Not so with the first two.

It's all good

All your eggs in one bottle, then. Now, can I interest you in two gallons of freshly made Somerset cider, at all? Very good prices...

Robin the IFA can't see why I want to be bothered when I can pay him his fee and leave him to do the work and lunch with fund manager starlets (Woodford) while I enjoy the life of riley. Or maybe he's not looking forward to comparisons with the SIPP, and with the stakeholder fund not under his wing, which we've left in place for various reasons.

Indeed, I have a couple of mates using Hargreaves Lansdowne who say it's expensive but swear by it as a vehicle.

researching rare watches to buy as investments is not hot hand fallacy IMO. of course, a rolex can go out of fashion, just like companies. It's just a different strategy (and obviously one you don't like or use...fair enough)   

But I think you are too quick to write off luxury investment. I was in Beretta a few weeks back on St James , three old shotguns in there between £150k to £250k each. Shooting is not a whimsical fashion ...it's a pastime enjoyed by the privileged gentry and very popular in the ME. Horses? whimsical fashion? of course not. Centuries of passion for horses. Same with watches. Don't think of it as a piece of crappy jewellery ( of course it is to some). Think of it as a passion for time, time keeping and the art and magistracy of complications in a clockwork design. There is a reason Harrisons watches are behind bullet proof glass in the Royal Observatory and it's not because a Kardashian has one and the Towie cast all wear borrowed rolexes  

Here's a quote from Neil's recent letter to investors. Personally it seems to me that he knows what he's doing (but has obviously made some errors of communication and short-term planning):

"Prior to the suspension being instigated, I had already announced an intention to implement a shift within the fund’s portfolio, away from unquoted and less liquid holdings, towards a portfolio consisting of larger, more liquid stocks. That shift started in February and further carefully-managed activity is anticipated in the weeks and months ahead to execute the rest of this shift. The suspension affords me time and space to execute this in a way that ensures I can achieve the best possible outcomes for you, our investors. When the fund re-opens, you will see a much more liquid portfolio, but one which reflects the same investment strategy. It will continue to demonstrate a strong and selective bias towards undervalued companies that are exposed to the UK economy. The global economy is evidently slowing and this represents a considerable near-term challenge for equity markets. The UK is one of the few regional economies that has enough internal momentum to withstand the growing global headwinds. At the same time, many companies that generate most of their revenues from the UK economy are as cheap as I can ever remember. In my view, every position within the portfolio will continue to be united by one thing: under-valuation. Every asset in the portfolio has a fundamental value that significantly exceeds its share price. In some cases, in my judgement, the gap between value and price is as wide as I have ever seen in more than 30 years of public equity market investing. The fund’s challenges have arisen because of performance and I now have a window in which I need to deliver to retain your confidence. Once again, I sincerely apologise for the anxiety that the suspension has caused you and I will keep you regularly updated via our website as we progress through the shift outlined above."

Ok, so, I have a SIPP and I'll give you my 2 cents - what I did to pick funds. This is NOT a recommendation that this is a good idea or that I really know a lot about what I'm caught up in, I don't have any kind of financial qualifications or background, so take advice from lots of other people as well!

1) Go to the morningstar site and list all the funds that you can put in an ISA that get 4 or 5 morningstar stars.

2) Copy and paste all the information for these (I think 2000 or so) funds into a spreadsheet, this takes an hour or two.

3) Start making calculations of average returns (and the standard deviations on these) and use the information you have to order all of the funds by how well they have been doing.

4) Read some summaries by financial experts for countries, regions (e.g. SE Asia) and industries (e.g. technology or biotechnology or mining) on their outlook for that market.

5) Pick some of the funds near the top of the list that have a history of good and steady (lower standard deviation) performance that hold investments in the markets and countries that the experts think have a good outlook. Avoid funds with more than about 1 or 1.5% management fees. Prioritise funds that achieved outsize returns relative to their risk.

6) Spread your investments over these funds.

7) PROFIT (lol)

8) Check how things are going every few months but be prepared to really live by that mantra of leaving things for the long term. If you are even 10 years away from when you think you might start drawing the SIPP down or taking a lump sum, I'd say, start looking at bonds and other lower risk investments. If you invested in something and it's just not going up or down at all after a year or two, consider selling it.

My investments are only between 2 and 3 years old but the average has been 12% in my SIPP, I'm happy but in no way do I credit myself with some sort of market-beating acumen, at certain points over the time I've held them, they have lost value in a worrying way and I'm prepared for them to bounce up and down over the next decade or more. I picked relatively high risk funds but nothing insane.

I also:

- Read the sort of mission statement of a fund I was going to invest in to check that it sounded reasonable and not some sort of bizarro weird plan.

- Check what companies the fund holds shares in.... I really didn't do this very much though, I kind of view that part as being the part that the fund manager is being responsible for and why they get the megabucks.

Also, nobody so far highlighted that ETFs are kind of a new fashionable thing and, well, even the experts don't know what sort of weird things they might start doing if the market does weird things - they are a level divorced from their underlying investments in a way that mutual funds are not. So it's best to read a bit about that and decide if you want to get into them or not.

You are probably right.

I should look into it properly before writing it off!

In case you were considering it right now whatever you do definitely don't invest in down as down is up so wait until down is down. Although some wait until down is neither up nor down but don't listen to them. 

 For £10k per the OP I would seriously question whether your method is actually good value.

granted it’s very interesting. 

And I then wonder why people go and invest in gold etc. It’s easier  to understand.

Oh Lord, what do you expect him to say?

His Patient Capital Trust, launched at 100p a share is now quoted at 45.25p a share.

His suspended Equity Income fund, launched at 100p a unit, is now quoted at 85.75 (it will bomb when trading reopens).

Woodford had a pretty successful run when he managed funds for Perpetual, but felt frustrated because the Perpetual company rules did not allow him to invest in unquoted shares. Perhaps there was a reason why Perpetual had that rule.

Very miffed to find that the Harrison clock at Nostell Priory is not being wound any more.

The Americans have just paid a substantial sum of money for some unquoted shares of mine (unconnected with NW) so maybe there’s something in it. Time will tell. Whatever he is, he’s neither an idiot nor uninformed. It is less visible though which no doubt puts off many, plus the short term returns and liquidity issues obviously.

Indeed it does sound like an awful lot of effort when I’m supposed to be outside somewhere...

You're obviously a very sophisticated investor. I tell you what, you give me ten grand and in five years' time I will give you five grand back. You will have done better than you would have done investing in Woodford's Patient Capital Trust.

Christ, I've posted loads of objectionable shit over the last few months and not garnered half this many dislikes. What's the issue? Millennials feel a timepiece without a PC attached is somehow infra dig?

What he forgot to tell you is that these are the average returns, not the real returns.
Sure you'll get 5% dividend if you are lucky but you can also lose your capital or a significant chunk in one go. The FTSE is made up of many companies. And companies collapse, get merged, and breakup all the time.

In fact if I take the FTSE from year 2000 less than half of the constituents companies survived. 

Moreover, you never know what your investment horizon actually is.
Sure there is a good chance that if you keep your money in the FTSE for more than 5 years you'll make some money. But there is also a very good chance that you are forced to exit in just one year when the market is in the doldrums.

Do you feel good about that?

What do you suggest?

Depends what is important to you.

If what is important to you is to have cash for a rainy day later on, just put it in a saving accounts ! Get the best rate you can and make sure there is FCFS. Marcus by Goldman Sachs offers one of the best rate and is a really neat simple product, for example, but there are others.

If you already have enough cash saved for later and just want to make some extra, then by all mean ETFs can work well. Just make sure you know what you are doing and remember that 90% of individual investor lose money.

Rom does gilts and bonds. He’s not a gambler.

I feel pretty good about it.

Actually the best suggestion on this thread was the Premium Bonds. Good access and somewhat guaranteed returns. Otherwise a S&S ISA is a no-brainer.

When a company is relegated from the FTSE 100 the tracking fund sells the shares. Other companies do not survive because they are taken over or merge - usually this is very positive for the shareholders. The likelihood of losing a significant chunk of capital from investing in a FTSE 100 tracker is minuscule.

Unfortunately this is bollocks. If I had put all my money in the FTSE in 2018 in 2019 I would have lost something like 10%. I you had put your money in 2007 you would have lot in the order of 30% the following year.

4.7% is the actual dividend on the Vanguard FTSE 100 that you would get if you invested today. And which you could reasonably expect to enjoy into the future for the reasons I explained upthread. Nothing average, let alone illusory, about it.

True but I did not conceal the possibility of a loss despite your baseless accusation. I specifically envisaged a 25% capital loss as one scenario to point out how important the dividend is to the total return.

This point highlights the beauty of an index-tracking ETF. The losers get dropped and replaced by up and coming, more dynamic businesses, all without the individual ETF investor having to make any changes. This ruthless capitalism supports the value of the index.

The OP seemed to have a good idea. I’m a very active investor and I certainly know my horizon.

Where is this “good chance of being forced to exit” coming from? It’s for the OP to decide whether he’s likely to need to tap his nest egg. A temporary fall in the market isn’t a reason to duck out at a loss. It’s a reason to stay patient. The OP can decide whether he has the requisite temperament without you or I pre-judging.

I can definitely confirm from experience this is true. 

If you think you do, you're a fool. And I say that kindly.

Unfortunately life decides for you. You never know when you are going to need to exit. You could get sick, you could get divorced, your house could need repair, your children might need urgent help, you might have a sudden urge to buy a Ferrari, you might have a golden investment opportunity you need to jump on, you might die -  whatever.

That's the point of having a nest egg. It's a sum of money that is there when you need it to smooth out the unpredictables of life. For the vast majority of people, this will or should be the first priority, before you can even think about trying to grow your pot through investing.

But as I've said, it depends what the OP wants to do, if the OP is already financially secure and he has an extra 10k he wants to play with then ETF etc etc make sense. But given that we are talking about 10k my intuition is that this wasn't the case.

Agree I was simply making the point that you can never capture the average return of a market over a long enough period time, and quoting average returns is very dangerous. You shouldn't cross a river if all you know is that it is on average one foot deep.

Do you imagine I’ve got just one investment with one horizon? What an odd assumption.

Honestly Rom. You jumped onto my post in a disparaging manner, and a swift and decisive rebuttal from me sees you resorting to insult and insinuation. I’m happy to own up to my investing disasters. I’ve highlighted two just on this thread. But don’t make a fool of yourself trying to score points off me. I’d rather discuss the yield curve with one of the few posters who I’d expect to understand it.

Fool, I can swim!... Oh, wait, the river might be acid, or on fire... but I could rent an plane and fly across it..... 

See, this is the problem with bad analogies :P

I'm not sure what is the relevance of this, you can have multiple investments with multiple expected horizons it doesn't mean they will be correct.

I find it quite funny that every time I challenge some of your assumptions you immediately take it as a challenge to your self worth or as an insult.

?

Actually it's a very good analogy, I didn't make it up it's the classic one that is used when you get taught the concept of ergodicity, which is fundamental to the understanding of financial risk.

Ok, in all seriousness, this thread is a great place to see some ideas people have about investing and hear a few advantages and disadvantages of each of these ideas but in the end, if you are considering anything more advanced than dumping it in a bank account, you should be doing quite a lot of research on websites like moneysavingexpert and others to get a proper professional view of what is a good fit for you in risk/reward terms, not using a UKC thread where a bunch of financial noobs like us air half-baked ideas as your main evidence base. It is a good sounding board from which to get ideas to go off and investigate though.

I think I've said enough on this thread so I probably won't check it again.

It is a well established strategy to invest on a long enough duration to hope for success but with multiple maturity dates so that in each year you have money coming back to you. Imagine 5 x 10k invested with maturities of 2019/20/21/22/23. You then reinvest or spend according to whim or need as they mature. I’ve been doing this for 22 years and it’s a very effective way of staying in the market, but liquid.

To be clear, it’s not my whole strategy because I’m a more active investor than that. Nor do equities make up my whole portfolio which means I can choose not to be bounced out by unwelcome market moves. 

I challenged your assertion that there were any assumptions in my OP. I only relayed factual data which you then misinterpreted (it appears you confused yield and average returns) and were quick to challenge, incorrectly. If anyone misrepresents me, I will pick them up on it.

I’m trying to suggest that you and I could enjoy a far more productive conversation if there were less of an effort to score points. You talk the talk on a wide number of topics and, while I doubt that I’m as bright or as widely informed as you, there are a few areas where many UKC posters, me included, genuinely walk the walk.

Investment happens to be one of those topics for me. And you would elicit a more constructive conversation by adopting a less confrontational   approach, which I would welcome.

Rightly or wrongly we do the reverse on our business loan, it's split into chunks, fixed rates or tracking, so if rates change rapidly we aren't suddenly faced with a large increase in the next quarter and we decide annually (face to face with local handelsbanken manager) what's best for each segment that matures. 

Well said.

Sensible. 

absolute state of this thread

Very well, so it seems you were offended for no reason. The fact that you understand that you need to invest for multiple horizons suggest you do in fact understand that you can never know your investment horizon.

So we basically agree.

I clearly meant average total returns, which include yield.

Relax, nobody is questioning that.

Seriously if we can’t challenge each other’s assumptions or arguments it’s going to make for a very dull conversation.

What would be welcome is you not getting systematically all offended and protective every single time someone challenges a point. Every time that happens it seems that you think we are questioning your competence, as you systematically feel the need to remind us of your credentials. 

I think it’s a bit childish. I don’t really mind but it makes the conversation a lot less interesting than it could be.

I have no idea what you mean, seriously. 

I have met a couple of guys who, using auction apps and in store purchases, made a bit of money.

For this thread I Googled 'whisky investments' and this was an advertised search result.

If you were prepared to learn from those who have experience in different fields you would be able to make more worthwhile contributions to threads such as these yourself. As it is you simply have a determination to crudely put down anyone who disagrees with you, whatever their level of expertise.

I’ve not tried to put down anybody, the only person who made this personal is BnB and yourself. Note that my initial pot wasn’t even addressed to him but somehow he felt the need to jump at the gun. How many times do I have to repeat that I don’t question BnB competence or success in this domain ? I simply addressed a particular point.

I note that he essentially accepted the thrust of my argument. Why did he need to to it so reluctantly and inelegantly, I don’t know.

Sensible. A tried and tested approach to manage interest rate risk. However I think BnB was referring to market risk in that situation.

Just an observation made in good faith, but this reply to John2 probably demonstrates some of the issues you encounter with others chatting on here.  The opening line could be deemed as unnecessarily aggressive. You make a good point which would have been just as powerful without the first sentence. Even worse, it can have the effect of affronting the recipient making them act in a similar way, 

I'm not saying you are aggressive, i'm sure you see it as chat room banter , maybe you enjoy a more adversarial approach which is fine with me btw...just it's understandably not everyones cup of tea to debate and share ideas on a benign subject such as investment ideas in such a fashion.

Frankly, I may be wrong, but my feeling is that BnB reaction was more driven by him feeling somehow attacked in his pride than from any sort of aggressive behaviour, real or perceived, on my part.

"somehow attacked in his pride.."

I doubt it, but anyway..only trying to help

Back on topic. Whilst we are sharing ideas. I have done well over time with an investment in SMT LN (Scottish Mortgage Investment Trust) and also have my childrens junior ISAs reasonably invested in it too. Its not been so great recently but i'm happy enough to leave money parked in it.

Top holdings are Amazon, Illumina, tencent, Alibaba,Tesla, ASML, Kering, Ferarri, Netflix,Ant Intl

I think you are attributing too much knowledge to Rom. The highest point that the FTSE 100 attained in 2018 was 7778 on May 18th. It currently sits at 7356, so the most that he could conceivably have lost by holding it is 5.42 percent, which would be largely offset by the almost 5% dividend yield. For large parts of 2018 it traded below its current level - exactly a year ago today it traded at 7331, so he would be in profit if he had bought it then. On December 24th it traded at 6685.

If he would stop telling people more knowledgeable than himself that they are talking bollocks then he might learn something and have something of value to say.

Well you are almost making my point by showing the wide disparity of earning you get between different dates. 

So my point is very simple, if you got 10k  saved away for a rainy day, I would simply not suggest to play with the stock market. You never know when you are going to need to the money. In fact chances are, you're more likely to need it in a downturn when the market is down !

I am not sure why such a basic statement if the obvious is attracting so much hate.

My idea of a nightmare portfolio. Except Ferrari.

You said that if you had invested in the FTSE 100 in 2018 you would have lost 10%. I have pointed out that that is entirely untrue - in fact if you had invested on most days that year you would have made a decent profit.

I know people in real life who are as ignorant and pig-headed as you, and rational conversation with them is impossible.

Maybe it's because you come across as a pompous, arrogant self righteous tw*t. 

SMT has superb track record but, as you can see from the names you've quoted, currently has a high exposure to tech. This exposure has driven the good returns over the last five years but tech is taking a bit of a rest at the moment which explains the recent slow performance. Of those names, only ASML and Ferrari have performed well over the last 12 months. They are mostly admirable companies however and I personally hold half of them in my portfolio of stocks.

More pertinently, it's worth pondering the absence of any UK companies. Anyone who has picked up my observations about China's arrival on the global business scene might be interested to see 30% of SMT's list consists of Chinese companies, of which two are in the three largest names listed.

I only recommended the FTSE ETF in my first post because it would be familiar territory, offers the lowest fees, does not entail any currency risk, and is more defensive. However it's worth considering other indices, be it the S&P500 or global. Ishares offers a currency-hedged ETF for both.  

And you come across as an angry, hateful, rude man

Before saying that you should have read better. I've said between 2018 and 2019.
Now you are trying to extricate yourself of your hole through pedantry and insults to avoid having to address the thrust of the argument. The unmistakable mark of desperation and cluelessness.

Maybe you should say something useful and interesting of wasting your energy with poorly devised ad hominem attacks.

Rude certainly, angry and hateful, nah. Meanwhile you can sit in your ivory tower and convince yourself you're always right.

You didn't. 

I got out of SMT some time ago, when the FAANGs began to suffer. I am still invested in Terry Smith's Fundsmith fund, whose performance has recently been affected by the fact that its largest holding is Paypal.

American shares have performed very well since the crash, but the p/e of the S&P500 is currently 22.36, against 16.1 for the FTSE 100. Most think the S&P overvalued, whereas the FTSE will hopefully perform better once Brexit has resolved itself. The FTSE has probably priced in most of the Brexit damage already, as shown by its strong performance so far this year despite the antics of the worst collection of politicians in living memory.

I'm intrigued by that statement. That view is entirely consistent with your previous observations and there's sure to be a moment in time when your aversion is validated, although that assessment will always depend on the entry point as much as the exit.

Nevertheless, having just posted that I hold a sizeable stake five of those ten names I'm genuinely interested in your thoughts. They are mostly highly valued names, some would say downright expensive, and that would be a sound reason to steer clear. They have further to fall after all than boring but reliable household goods stocks for example. And if that is your logic, I would not argue. Although I could explain why I rate their prospects enough to buy a piece of them.

But Ferrari's stock is actually more expensive than most of them and is in a structurally challenged industry. It has a superb image and great pricing power, but its brand is certainly weaker than Amazon, Alibaba, Tencent, Illumina and ASML, who sit at the top of their respective markets but with much bigger market share and are not confined in their potential growth by the need to restrict distribution, ie stay exclusive. Alibaba and Tencent in particular are relatively inexpensive and have logarithmically superior growth prospects.

So I don't need to ask you to justify your aversion to 9 out of the 10. They are pricey, no doubt. Although I'm interested to hear other reasons for your discomfort. Always good to reality check my investment decisions. But, why Ferrari? Are you just a fan of the marque?

I'm a big fan of the Fundsmith portfolio and I make no excuses for copying some of TS's investment choices. He's hoping to beat the market (who isn't) but his aim is above all to own some great companies and keep them for a long time. As a former business owner that's how I like to see my portfolio, often to my advisor's frustration. He wants me to trade more often. Paypal happens to be another holding of mine and I'm not currently concerned by the recent pullback. It's more a result of sector rotation than any bad news about the company or fintech in general. I topped up when it fell.

I agree with all of this and it's quite a frustration that most of the outstanding corporations happen to be in the US. It's hard to get excited investing in UK miners and insurers. Europe is where good value and good quality meet and I am disproportionately invested there.

I am not as active as you guys seem to be in regards to investing and (if I’m honest) very lazy. I also have a terrible track record (money trapped with Woodford for example, I even had money in Landsbanki lol) but am fortunate to be reasonably liquid in cash so I can ride these errors out and hope some eventually come good before I die

i am comfortable with SMT in my kids ISAs as they have a distant horizon and it only makes up around 30% of their portfolios . Actually 30% is kept as cash because the pessimist in me keeps wondering if there could be a horrible crash at some point presenting a lovely buying opportunity, but equities seem pretty resilient at the moment (until they aren’t of course)

anyway, this thread has given me food for thought...all good

Surely USA shares will have done well in the context of £$ exchange rates?

Isn't the point of a hedge fund, in theory at least, that all the eggs aren't in one basket, the investments are hedged providing security at the expense of return rate? Doesn't guard against hidden or misunderstood connections between seemingly different investments of course and there is always the option to favour risk over security in exchange for a higher return.

jk

Quite, they have done well up until now so assuming that the pound strengthens against the dollar they will do less well in future. In fact, the returns from US shares have been heavily biased towards tech stocks - conventional industrial shares have not performed very well recently.

An instructive event was the recent pulling of the WeWork IPO -  the founders initially hoped to raise $47 billion, but couldn't drum up much interest in a $20 billion IPO. Investors are beginning to look for solid profits from conventional companies.

WeWork is just a dressed up office rental business and was hardly earth shattering.

Originally yes I think so, but not now. They can be just about anything they want to be. You could be giving your money to a "fund" that simply places bets on the financial markets.

Yes, but it's indicative of a change in market sentiment. It wasn't so long ago that any company with the word Blockchain in its name was rocketing, regardless of whether it either created or made use of blockchain software.

https://www.zerohedge.com/markets/wework-fraud

Yes, the hedge fund may be ‘hedged’ however the main problem that I and possibly others have is that she has basically one provider, so there is risk in that, and secondly I don’t know what data she based her decision on, and have done no research myself, largely owing to not being asked to do so! See also the fund manager experience as discussed upthread

Love it, thanks

This is such a shit-fest of a thread.

With only 10k? Instant access and (what sounds like to me) you have little risk appetite?

The 'least worst' solution is a couple of high interest paying bank accounts. TSB, NWide, rest in a Marcus e.t.c.

OP - premium bonds pal.

Rom and the wanderer -  youtube.com/watch?v=yRJ4HOD4U8M& 

The OP mentions putting it on the horses and peer to peer, and you say little risk appetite. Nice.

I do agree that it's been largely taken over by folks defending their savings strategy though, but I've learnt a few things, so I wouldn't call it a shit-fest, personally, ymmv. Your advice seems reasonable, if a bit boring. Marcus is great.

OP regards index etfs as risky. That either means he was being facetious about sports betting or he doesn't understand the concept of, well, risk? Numeracy?

Assuming he's the brighter of those two cookies, then I think my read is valid.

Lol

Important to not confuse risk with returns.

An ETF can be a lot riskier than a portfolio of sports bets. However you’re unlikely to make any returns on sports betting...

Its not really the companies themselves I have anything against but more the composition of the portfolio. These are all highly potentially highly correlated stocks exposed to similar systemic risks.

Ferrari is the odd one out for me in that list. They start each FY with full order books, their net margins are huge, and the demand for their cars far exceeds capacity.

I agree that growth potential is not as high as some of the tech companies mentioned, but as you probably have now noticed, I always advocate managing risks before seeking return.

I certainly did, 22:28, Wednesday.

Thanks for your thoughts. Ferrari was certainly a good buy in January of this year. It's a superb company. Of that list I think Illumina is the most interesting (80% of the fact-expanding genetic sequencing market). But man it's expensive at 51x fc earnings.