Vanguard - Index invesetment

ThePrettyDamned

stickyfiddle said:

ThePrettyDamned said:

ToneControl said:

There's a lot of people expecting the stock market (and ISAs) to drop by 30%, even 50% in the next year or two

I'm keeping my investments in cash funds for now

I lost 50% of my pension fund in the last crash, so this isn't as unlikely as people think

Ouch  that's pretty nasty  

How do you account for the fact that that can happen? For example  long term you can probably ride it out but if you were nearing retirement and that happened it would be crushing.

If you aren’t planning on cashing out in the next 5 years, you celebrate and buy more because the market will rise again and you canwill buy cheap right now. 

If you want to access that money in the next 5-10 years it should be in potentially volatile stocks & funds but moved towards bonds and gilts. Lower returns but much less likely to fall over 

Ahhh okay, that's why drip-feeding is encouraged right? Spreads risk and the increased shares when prices fall makes up for when it does fall to some extent. 

Really interesting thread - I must admit, I've learnt a lot in the last couple of years about this stuff but it still fills me with fear. I think I'm not in a position to invest to any extent beyon pension right now but it is something I will probably do one day  

stickyfiddle

ThePrettyDamned said:

stickyfiddle said:

ThePrettyDamned said:

ToneControl said:

There's a lot of people expecting the stock market (and ISAs) to drop by 30%, even 50% in the next year or two

I'm keeping my investments in cash funds for now

I lost 50% of my pension fund in the last crash, so this isn't as unlikely as people think

Ouch  that's pretty nasty  

How do you account for the fact that that can happen? For example  long term you can probably ride it out but if you were nearing retirement and that happened it would be crushing.

If you aren’t planning on cashing out in the next 5 years, you celebrate and buy more because the market will rise again and you canwill buy cheap right now. 

If you want to access that money in the next 5-10 years it should be in potentially volatile stocks & funds but moved towards bonds and gilts. Lower returns but much less likely to fall over 

Ahhh okay, that's why drip-feeding is encouraged right? Spreads risk and the increased shares when prices fall makes up for when it does fall to some extent. 

Really interesting thread - I must admit, I've learnt a lot in the last couple of years about this stuff but it still fills me with fear. I think I'm not in a position to invest to any extent beyon pension right now but it is something I will probably do one day  

Exactly. If t drops and you’re still buying your £100 might buy 120 shares rather than 110 a month earlier. That’s a good thing in the long run as historically markets always rise. 

If you’re buying you actually want cheap shares - same as buying anything. It’s only really people who want their money out who should ever want a really high market. Of course most people don’t understand this, and get scared when anything drops and sell out, crystallising that dip into a cash loss

spark240

If you’re buying you actually want cheap shares - same as buying anything. It’s only really people who want their money out who should ever want a really high market. Of course most people don’t understand this, and get scared when anything drops and sell out, crystallising that dip into a cash loss

The the shares drop and we hoover them up and wait for the next rise ;-)....Barclays ...

ToneControl

RaymondLin said:

ToneControl said:

There's a lot of people expecting the stock market (and ISAs) to drop by 30%, even 50% in the next year or two

I'm keeping my investments in cash funds for now

I lost 50% of my pension fund in the last crash, so this isn't as unlikely as people think

Ouch, has it recovered to before the crash since? 

Mostly, but the trouble is that if you start trying to actively manage it, you can act too late when the market drops, and vice versa. Sometimes being a chicken works, sometimes not, I think that bit of savings has recovered enough to not be so upset now, but I've paid in much more since, so hopefully will be able to retire one day

RaymondLin

So, update.

Since opening an account with £500, and added £200 in on Monday.  In the past 2 weeks from my £700 investment, I have made a gain of £20.

Not bad!

Johnnyseven

I thought that about my S&S ISA too, until the first time the value crashed.

Brocco

Most people expect stock market and fixed income returns to struggle going forward. In what may be choppy markets I suggest investing in a fund or asset manager that explicitly seeks to preserve capital as part of their investment objective (the majority do not).

spark240

Brocco said:

Most people expect stock market and fixed income returns to struggle going forward. In what may be choppy markets I suggest investing in a fund or asset manager that explicitly seeks to preserve capital as part of their investment objective (the majority do not).

That almost sounds like you know what your doing ;-)

FastEddie

A single premium pension.
You'll get tax relief and can spread your risk globally.

Not sure £500 will get you into many funds. You may have to be narrow until you can top it up or get growth.

With the new pension rules, you're IMHO able to get an extra 5% tfc on vesting and can, if you are cute, potentially get it all tax free. 

Elwood

If it is a retirement plan, can you afford to lock it away until you are 55 in a Self Invested Personal Pension (SIPP)?

The benefit is you will get tax relief based on you current tax status. If you are a 20% tax payer then £400 in a SIPP will be bumped up by the Government to £500. This gives you are larger pot up front to grow. If you are a 40% tax payer the you only need to pay in £300 and the Gov will add £200 to give you the £500 to invest. 

There are considerations, such as taxes on removing the money, but it's worthy of some thought.

On a morbid note and have a lot of wealth, a SIPP is a good way to pass on money to family/loved ones if you die before you are 75. As the recipient will receive it tax free. 

There are loads of little know things about investments out there. It's interesting to read some of the knowledge and wisdom people have. 

RaymondLin

Elwood said:

If it is a retirement plan, can you afford to lock it away until you are 55 in a Self Invested Personal Pension (SIPP)?

The benefit is you will get tax relief based on you current tax status. If you are a 20% tax payer then £400 in a SIPP will be bumped up by the Government to £500. This gives you are larger pot up front to grow. If you are a 40% tax payer the you only need to pay in £300 and the Gov will add £200 to give you the £500 to invest. 

There are considerations, such as taxes on removing the money, but it's worthy of some thought.

On a morbid note and have a lot of wealth, a SIPP is a good way to pass on money to family/loved ones if you die before you are 75. As the recipient will receive it tax free. 

There are loads of little know things about investments out there. It's interesting to read some of the knowledge and wisdom people have. 

Thanks for this info, very helpful.  I've not heard of SIPP before.