The Investment Thread

[TxRover]

16 minutes ago, Hedgecutter said:

Over half a year and no action here.  Are any posters still active in the market?

 

I keep seeing things about index funds and people saying to get involved regardless of timings... but how exactly?  "Do it!" they say.  "Where do I go?!" I want to say back.

Any recommendations for a lazy fecker like me wanting to throw a bit of spare cash on the S&P 500 rollercoaster with any profits paid into a (so far non-existent) Stocks & Shares ISA?  I've already paid into a cash ISA this year (nothing near the £20k limit though) so unsure if that prevents me paying into a new S&S ISA this financial year.

There are as many strategies as advisors, and every one will say they have the secret. They generally don’t.

For your basic strategies you have to decide on passive or active. Passive is the classic buy and hold, which is simply putting money into stocks or funds and letting it ride. The classic suggestion here is an S&P500 fund, as it captures the biggest market companies and reduces exposure, but it’s also lacking international exposure and an assured rollercoaster. You can elect to substitute a FTSE or DAX or whatever, but they are narrower. Optionally, you can look to a small cap index fund like a Russell 3000. In any index fund case, the advise is usually buy and hold, as missing even the 5-10 largest up days a year can result in very low or negative returns.

Active investing is guided purchases and sales of funds or stocks, as planned by either you or your advisor. The results almost always lag passive investing, because (as noted above) if you miss a couple of good days or hit a couple of bad days, you’re f**ked for the year.

There is a hybrid approach where you generally buy and hold, but move between fixed income, bond, and investment funds depending upon signals from proprietary formulas, but again these can be iffy…and picking the right one is a crap shoot.

 

In my experience, it’s a matter of risk tolerance and comfort. If you can put money into a fund and sleep at night with it at risk, then a good index fund is easiest. Make sure it’s broad enough to capture the market action and has a low enough fee structure to not neuter your income. Examples are like the Fidelity and Vanguard index investment funds, with expense ratios generally below 0.1%. A coworker set up her account to take the maximum yearly, into the S&P 500, for 32 years and she never looked at it. When she checked it after 32 years, she simply retired because it was more than enough for her. She could possibly have had more money if she’d moved it around some, but more likely would have had less.

ISA rules I have no idea about.

[TheScarf]

I opened a stocks and shares ISA in February and it's doing not bad. Getting about the usual average returns for a year in the stock market.  I just dollar cost average my portfolio and I'll see where it takes me in 10-15 years.  Not bothered about dividends at the moment and the pennies I do get from them I just auto reinvest into my portfolio. 

[Granny Danger]

1 hour ago, Hedgecutter said:

Over half a year and no action here.  Are any posters still active in the market?

 

I keep seeing things about index funds and people saying to get involved regardless of timings... but how exactly?  "Do it!" they say.  "Where do I go?!" I want to say back.

Any recommendations for a lazy fecker like me wanting to throw a bit of spare cash on the S&P 500 rollercoaster with any profits paid into a (so far non-existent) Stocks & Shares ISA?  I've already paid into a cash ISA this year (nothing near the £20k limit though) so unsure if that prevents me paying into a new S&S ISA this financial year.

https://markets.ft.com/data/funds/tearsheet/charts?s=GB00BMN91T34:GBP
 

14 minutes ago, TheScarf said:

I opened a stocks and shares ISA in February and it's doing not bad. Getting about the usual average returns for a year in the stock market.  I just dollar cost average my portfolio and I'll see where it takes me in 10-15 years.  Not bothered about dividends at the moment and the pennies I do get from them I just auto reinvest into my portfolio. 

According to Einstein, “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn't … pays it.” At first this quote might seem like a bit of an exaggeration but the math behind it shows that it is not.
 

Reinvestment is another form of compound interest, it’s absolutely the correct strategy.

[Hedgecutter]

20 minutes ago, Granny Danger said:

https://markets.ft.com/data/funds/tearsheet/charts?s=GB00BMN91T34:GBP
 

 

 

All well and good thanks, but for me this is like seeing the Alton Towers adverts with no idea how to find a ticket office.

Edited September 18, 2023 by Hedgecutter

[Bairnardo]

1 minute ago, Hedgecutter said:

 

All well and good thanks, but for me this is like seeing the Alton Towers adverts with no idea how to find a ticket office.

Get an account with Hargreaves Lansdown or similar. Open a stocks and shares ISA. Fire some coin in and tell them to reinvest the profits. They will allow you to search an absolute arseload of funds. I save for my daughters in one of those. I can check the name of the fund I use if you want, but that's a personal choice. Mines is a sort of mid risk, diverse fund iirc. Clever people manage that side of it. It's none of my business

[Granny Danger]

20 minutes ago, Bairnardo said:

Get an account with Hargreaves Lansdown or similar. Open a stocks and shares ISA. Fire some coin in and tell them to reinvest the profits. They will allow you to search an absolute arseload of funds. I save for my daughters in one of those. I can check the name of the fund I use if you want, but that's a personal choice. Mines is a sort of mid risk, diverse fund iirc. Clever people manage that side of it. It's none of my business

^^^ This, though I’d use Interactive Investor who have better rates than HL.  That said I still use the Hargreaves Lansdown app on my phone for checking on things, you don’t need to have an account with them.

If you choose a accumulation fund (most funds will offer the option of accumulation and income) then the profits will automatically be retained, no need to instruct for reinvestment.

ETA - a tracker fund, such as the UBS S&P 500, is about the best option you can get imo.  Low fees and not dependent on one sector.

 

Edited September 18, 2023 by Granny Danger

[TheScarf]

My Stocks and Shares ISA is with Trading 212. I'd recommend them over HL (who my SIPP is with) as HL charge far higher fees. 

[TxRover]

All very good ideas, but the most important one is dollar cost averaging. If you are going to start, start putting in money on a regular basis. A lump sum deposit for the initial is a reality, but after that you need to be adding to the fund in a regular basis to grow things best. Now, if you have a large lump sum, I wouldn’t bung it all in at once, I’d make a deposit of perhaps 25%, and then put the remainder in over the next year, always keeping contribution limits in mind. The whole concept of dollar cost averaging is that by spreading your inputs over time, you buy more when the market is down, and inevitably buy less when it’s up, but you avoid depositing £20,000 on Monday and having £15,000 on Friday if the market hits a slump that week.

Be cautious about people who constantly chat up their rate of return without carefully looking at how they define things. For instance, if the market drops 20%, and then rises 20%, you are still down 5% from your starting position (£20,000 - £4,000 + £3,200 = -£800), but shady types will define their periods of return to exclude the drop and only include the rise.

[Granny Danger]

22 minutes ago, TxRover said:

All very good ideas, but the most important one is dollar cost averaging. If you are going to start, start putting in money on a regular basis. A lump sum deposit for the initial is a reality, but after that you need to be adding to the fund in a regular basis to grow things best. Now, if you have a large lump sum, I wouldn’t bung it all in at once, I’d make a deposit of perhaps 25%, and then put the remainder in over the next year, always keeping contribution limits in mind. The whole concept of dollar cost averaging is that by spreading your inputs over time, you buy more when the market is down, and inevitably buy less when it’s up, but you avoid depositing £20,000 on Monday and having £15,000 on Friday if the market hits a slump that week.

Be cautious about people who constantly chat up their rate of return without carefully looking at how they define things. For instance, if the market drops 20%, and then rises 20%, you are still down 5% from your starting position (£20,000 - £4,000 + £3,200 = -£800), but shady types will define their periods of return to exclude the drop and only include the rise.

That’s crap.  You can just as easily buy in when the market is at a high as when it is at a low and vice versa.  Only very well informed investors can judge market movements at a time to maximise when they should invest.

 

[O_Kahn]

I'd agree that the HL platform is very easy to use.

I started off about 6 or 7 years ago with a few simple index trackers, split between different parts of the world.  Then after a few years I started getting cute and trying some of the more specialist ones, the highlight being a 2 x leveraged oil tracker when the price went down to $18 a barrel in 2020. 

Unfortunately my more recent decisions have not been as good, the poorest being the decision to invest in a Baillie Gifford global fund in spring of 2021.  As you can see from the chart below, that was a bad choice, and the £2,000 I put in is now worth about half that.

 

[TxRover]

3 hours ago, Granny Danger said:

That’s crap.  You can just as easily buy in when the market is at a high as when it is at a low and vice versa.  Only very well informed investors can judge market movements at a time to maximise when they should invest.

 

Exactly what I said, and why I suggest a lump sum investment should be put in in several deposits. As for the idea a well informed investor can time the market, that’s the crap.

[resk]

15 hours ago, Hedgecutter said:

Over half a year and no action here.  Are any posters still active in the market?

 

I keep seeing things about index funds and people saying to get involved regardless of timings... but how exactly?  "Do it!" they say.  "Where do I go?!" I want to say back.

Any recommendations for a lazy fecker like me wanting to throw a bit of spare cash on the S&P 500 rollercoaster with any profits paid into a (so far non-existent) Stocks & Shares ISA?  I've already paid into a cash ISA this year (nothing near the £20k limit though) so unsure if that prevents me paying into a new S&S ISA this financial year.

The ISA allowance is 20k per tax year (April to March) and you can split this across Cash and S&S ISAs (but you can't pay into more than one of each).

So, if you have remaining ISA allowance, open a S&S ISA with Vanguard, pay in what cash you have, find the FTSE Global All Cap Index Fund (accumulation), and buy that fund with the cash you've paid in.  That's it - you are investing passively in the global market.  If you really want the S&P 500 rather than something more global, Vanguard has a fund called S&P 500 UCITS ETF too. 

I found that the biggest thing was just getting started.  You can always move to a different provider, transfer Cash ISAs into S&S ISAs and so on, and learn as you go.  It's not an exact science by any means, but just getting into the market is the main thing.  Don't forget pensions too.  

(I picked Vanguard because they have a percentage fee of 0.15% compared to HL's 0.45%.)

 

[hk blues]

12 hours ago, TxRover said:

Exactly what I said, and why I suggest a lump sum investment should be put in in several deposits. As for the idea a well informed investor can time the market, that’s the crap.

I'm really struggling with your logic here.  Sure, you can choose to invest more slowly or to invest more quickly according to the current market but that only applies to the initial period you talk of i.e. one year - thereafter your subject to the ups and downs of the market with 100% of your money invested.  I'm not convinced it makes that much difference given the likely long-term nature of investment. 

[TxRover]

1 hour ago, hk blues said:

I'm really struggling with your logic here.  Sure, you can choose to invest more slowly or to invest more quickly according to the current market but that only applies to the initial period you talk of i.e. one year - thereafter your subject to the ups and downs of the market with 100% of your money invested.  I'm not convinced it makes that much difference given the likely long-term nature of investment. 

The market will likely move up or down between your initial investments, if you make three or four deposits it is likely both will occur. If you make one deposit, it’s literally a crap shoot that you may lose money rather than gain money after your initial deposit, so it’s a strategy to smooth market gyrations. It’s more applicable for larger investments, and sometimes is enforced by contribution limits. It’s very similar to the idea that moving all your money from one investment to another is riskier than moving tranches of money. If you are absolutely committed to buy and hold, the principle is less important the longer you hold.

[Granny Danger]

3 minutes ago, TxRover said:

The market will likely move up or down between your initial investments, if you make three or four deposits it is likely both will occur. If you make one deposit, it’s literally a crap shoot that you may lose money rather than gain money after your initial deposit, so it’s a strategy to smooth market gyrations. It’s more applicable for larger investments, and sometimes is enforced by contribution limits. It’s very similar to the idea that moving all your money from one investment to another is riskier than moving tranches of money. If you are absolutely committed to buy and hold, the principle is less important the longer you hold.

Your initial post was nonsense and now you’re just doubling down.

[thistledo]

19 hours ago, Hedgecutter said:

Over half a year and no action here.  Are any posters still active in the market?

 

I keep seeing things about index funds and people saying to get involved regardless of timings... but how exactly?  "Do it!" they say.  "Where do I go?!" I want to say back.

Any recommendations for a lazy fecker like me wanting to throw a bit of spare cash on the S&P 500 rollercoaster with any profits paid into a (so far non-existent) Stocks & Shares ISA?  I've already paid into a cash ISA this year (nothing near the £20k limit though) so unsure if that prevents me paying into a new S&S ISA this financial year.

Legal & General International Index trust is well worth a look if you're looking for an index fund, it's been one of my best performing for a long time now. 

I've got a mix of active and passive, seems to work well, some active stuff has taken a tanking but others are keeping the overall growth high. If you work for yourself or have your own limited company, which I think you may have based on some of your previous posts I've seen it would be worth looking at a SIPP, I invest in one through my company, very tax efficient way of getting money out, I use Vanguard for that and it's been slowly on the up for years now, again mostly index funds. 

I don't work for L&G, this is not financial advice, funds can increase or decrease over time. 

[TxRover]

10 minutes ago, Granny Danger said:

Your initial post was nonsense and now you’re just doubling down.

Nope.

https://investor.vanguard.com/investor-resources-education/online-trading/dollar-cost-averaging-vs-lump-sum

[Granny Danger]

Just now, TxRover said:

Nope.

https://investor.vanguard.com/investor-resources-education/online-trading/dollar-cost-averaging-vs-lump-sum

Yeah I thought your ‘opinion’ was noting more than a cut and paste.

[TxRover]

56 minutes ago, Granny Danger said:

Yeah I thought your ‘opinion’ was noting more than a cut and paste.

My opinion was a discussion of the technique of dollar cost averaging. As you can see, I accurately described the method, and you dislike it. That’s your opinion, and right. As for your incessant need to attack, perhaps your med mix is off. Now run along and leave investment discussion to those talking facts instead of yelling at clouds.

[Molotov]

There is a term that many good investors abide by:

“Time in the market is worth more than market timing”. 

If you have a sum of money ready to invest for a long duration it really makes no sense to drip feed into the stock market. 

It all comes down to human psychology and the relationship between markets and volatility.

Time in the market beats market timing every time.