FTSE100 tracker
Discussion
Badda said:
You keep talking about it as if it's a stock. Remember your fund simply tracks the actions of the top 100 companies on the FTSE. Your observations might seem to make sense but they're looking at 100 separate, enormous companies that are constantly being exposed to market forces, news and earnings data etc.
No, I get that completely, and if anything that just makes it more bizarre. A huge glut of very established top companies, collectively worth more than yesterday, no, less. LESS!! Wait, the same. No, more, MORE! 
Meanwhile British Airways are flying the exact same planes along the exact same routes and the MD of BT still takes sugar in his tea, just as he did yesterday.
I get that there are all sorts of external dynamics at play, but by and large these are big big companies just going about their day to day business.
As I say, bizarre!
Pretty much back to where it was when I put the big (comparatively!) chunk into it in January (it was a few days before it hit that peak - I had about a week of feeling good about it! )
For the moment at least it seems the old adage Time in the market beats timing the market holds true. Shortly after I put it in, it seemed like I should have waited, but now it's back to where it was, and it will have been earning something in dividends in the meantime and I got the chance to sink a bit more in while it was down. It certainly feels like a better move than it did a month or two ago!
Where it goes next is anyone's guess of course...
)For the moment at least it seems the old adage Time in the market beats timing the market holds true. Shortly after I put it in, it seemed like I should have waited, but now it's back to where it was, and it will have been earning something in dividends in the meantime and I got the chance to sink a bit more in while it was down. It certainly feels like a better move than it did a month or two ago!
Where it goes next is anyone's guess of course...
July update for anyone interested, - it's slipped back a little but still 'in the black'.
Due to my monthly payments, the funds (97% of which is FTSE100, keep meaning to boost the world tracker, hopefully will add to that this month) are now up to £7,807.72 invested and current value is £7,976.40 which is £168.68 up, which (it tells me) is a return of 2.99% which is triple what I'd be getting from a savings account - albeit that could all change (and indeed is constantly changing).
I think it will get more interesting from December onwards, as I'll have had it a year then, so dividends (which get paid annually) should start kicking in. I'm not entirely sure how that works, whether each pay in gets a dividend payment on each anniversary, or whether there's simply a date when everything that's been in 12 months at that point gets a payment. Time will tell I suppose.
Due to my monthly payments, the funds (97% of which is FTSE100, keep meaning to boost the world tracker, hopefully will add to that this month) are now up to £7,807.72 invested and current value is £7,976.40 which is £168.68 up, which (it tells me) is a return of 2.99% which is triple what I'd be getting from a savings account - albeit that could all change (and indeed is constantly changing).
I think it will get more interesting from December onwards, as I'll have had it a year then, so dividends (which get paid annually) should start kicking in. I'm not entirely sure how that works, whether each pay in gets a dividend payment on each anniversary, or whether there's simply a date when everything that's been in 12 months at that point gets a payment. Time will tell I suppose.
The 2.99% is indeed over six months, so yes, doing far better than the circa 3%/year I originally compared it to.
And of course, that's been dripped in, so it wasn't like there was about £8,000 there from day one. I put a £5K chunk in early on (just in time for the big dip!), the rest has been fed in gradually, the latest payment only a few days ago.
So yes, bit misleading of me to compare 3% with 1% from a savings account because that 1% is assuming all of it all in for a year.
Equally, it may of course be minus 3% (or anything else) next week, that's the risk.
And of course, that's been dripped in, so it wasn't like there was about £8,000 there from day one. I put a £5K chunk in early on (just in time for the big dip!), the rest has been fed in gradually, the latest payment only a few days ago.
So yes, bit misleading of me to compare 3% with 1% from a savings account because that 1% is assuming all of it all in for a year.
Equally, it may of course be minus 3% (or anything else) next week, that's the risk.
Thought it worth an update on this for anyone interested.
As you probably know, the FTSE100 slipped a lot last year, with inevitable results for my tracker. I think at one point I was at about -£900. It's recovered a bit, currently -£440.
I'm still putting in the regular £250/month, there is £10,900 into it currently, and it's worth £10,470 (in round numbers). I've also been adding a few extra chunks when I think it's particularly low, although it is currently close to as low as its gone so far, so those haven't been advantageous, yet at least.
As said right at the beginning, it's a long term thing, so I'm seeing these lows as a good thing in that I'm getting more for my money than would be if it were riding high. Time will tell of course how that works out in practice.
My world tracker I've not done much at all with, it's currently got about £1,000 in it and is about £40 down. Probably should put some more that way in future.
It will be interesting to see if and what effect Brexit, and post Brexit has.
As you probably know, the FTSE100 slipped a lot last year, with inevitable results for my tracker. I think at one point I was at about -£900. It's recovered a bit, currently -£440.
I'm still putting in the regular £250/month, there is £10,900 into it currently, and it's worth £10,470 (in round numbers). I've also been adding a few extra chunks when I think it's particularly low, although it is currently close to as low as its gone so far, so those haven't been advantageous, yet at least.
As said right at the beginning, it's a long term thing, so I'm seeing these lows as a good thing in that I'm getting more for my money than would be if it were riding high. Time will tell of course how that works out in practice.
My world tracker I've not done much at all with, it's currently got about £1,000 in it and is about £40 down. Probably should put some more that way in future.
It will be interesting to see if and what effect Brexit, and post Brexit has.
That is really interesting, thank you.
With regards to not checking it regularly, I was checking it every day at the beginning, but now the novelty is wearing off I check it probably once a month or less. It is irrelevant, I do get that. What it's worth in 15 years time (and what it's hopefully made by then) is what's relevant.
putonghua73 said:
Back to the bolded bit of Ari's post. There are two elements that I wish to extract:
- how do you determine if the market is over-valued, undervalued or somewhat fairly valued? Rises and dips do not necessarily correlate to the market being overvalued or undervalued.
- adding extra money to your investment [index tracker] can affect your price cost average because buy price (valuation) matters more
I'm determining it based purely on how it compares historically. You're absolutely right, just because it has dipped a bit doesn't mean it is 'undervalued', or that it isn't going to dip a bit (or a lot) more. However it does (presumably) mean I'm getting more for my money than I had been, and if it goes back up, I 'win'. (But of course if it doesn't, and continues to drop, I 'lose').- how do you determine if the market is over-valued, undervalued or somewhat fairly valued? Rises and dips do not necessarily correlate to the market being overvalued or undervalued.
- adding extra money to your investment [index tracker] can affect your price cost average because buy price (valuation) matters more
With regards to not checking it regularly, I was checking it every day at the beginning, but now the novelty is wearing off I check it probably once a month or less. It is irrelevant, I do get that. What it's worth in 15 years time (and what it's hopefully made by then) is what's relevant.
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hstewie said:
hstewie said: I'm still puzzled why you'd go with a FTSE100 tracker and ignore the world one?
I suppose because I foolishly believe that the FTSE100 market is depressed by Brexit at the mo, so a good place to be putting funds as it could bounce back a bit once the dust eventually settles (bearing in mind we're talking about a 10-15 year plan here). This is based on absolutely zero financial acumen and flies completely in the face of the logic of investing this way, which is not to speculate. But there it is.
Very interesting article about Vanguard here: https://digitaledition.telegraph.co.uk/editions/ed...
So close to breaking even!
Personal rate of return -0.01
Currently £4.87 down.
The temptation now, having run it for over a year, seen it slip to over £800 down and finally stagger back to having recovered all my losses is to cash out with all my money (bar £4.87) while I can.
Which would of course be a stupid idea as the whole point is a long term investment. On the basis that it's at (close to) zero, I'm actually in the same boat as if I'd just put all the money in today, what it's done historically is, at this point, irrelevant. The past has no bearing on where it goes from this point in time.
Whether it still seems 'stupid' (cashing back out now) in six months or six years remains to be seen!
The other thought I had is that those oh so regular 'opportunity cost' posts from people financing their cars because 'it's easy to place your money and get 4% return, just need to make a little effort' are the bullst I always thought they were. Sure, you could argue that I put my money in the wrong place, or at the wrong time. But that's like saying 'it's easy to win at horse racing, anyone who doesn't win easily obviously just put their money on the wrong horse or on the wrong day'.
Anyway, sticking with it, not putting any extra in at the moment over my £250/month currently though.
Personal rate of return -0.01
Currently £4.87 down.
The temptation now, having run it for over a year, seen it slip to over £800 down and finally stagger back to having recovered all my losses is to cash out with all my money (bar £4.87) while I can.
Which would of course be a stupid idea as the whole point is a long term investment. On the basis that it's at (close to) zero, I'm actually in the same boat as if I'd just put all the money in today, what it's done historically is, at this point, irrelevant. The past has no bearing on where it goes from this point in time.
Whether it still seems 'stupid' (cashing back out now) in six months or six years remains to be seen!
The other thought I had is that those oh so regular 'opportunity cost' posts from people financing their cars because 'it's easy to place your money and get 4% return, just need to make a little effort' are the bulls
t I always thought they were. Sure, you could argue that I put my money in the wrong place, or at the wrong time. But that's like saying 'it's easy to win at horse racing, anyone who doesn't win easily obviously just put their money on the wrong horse or on the wrong day'. Anyway, sticking with it, not putting any extra in at the moment over my £250/month currently though.
Dr Mike Oxgreen said:
Ari said:
I have a World Tracker, 31st Dec 2017 - 31st Dec 2018, -6.67% 
And since then you’ll have seen significant gains through Jan and Feb. I’m betting it’s in positive territory now.putonghua73 said:
I did wonder when we would start to see people's faith in passive trackers start to waiver on the back of very choppy economical waters. The psychological aspect has not been given enough considered attention in that although we may be rationally aware that markets - and returns - fluctuate and that there is a high probability of growing returns over the long-term (10+ years) to allow compound interest sufficient time to work, people's faith starts to waiver on the back of paper losses.
This is why I was attracted to Dremen because he focuses on the psychological aspect re: red and green rooms of the casino. This will become increasingly more relevant if / when a slow-down becomes a full-on bear market. When people have had a relative benign investment period (similar to the UK housing market) over a long period of time, any kind of slow-down, becomes worrying - especially if we enter into a proper bear market.
One of the hardest things to do psychologically speaking is to sit on one's hands either when one gets fidgety out of boredom or anxious in turbulent periods - provided that nothing has materially changed in terms of one's investment strategy. With a passive index tracker, absolutely nothing changes during a bear market - you keep on making regular contributions and you buy into the market at a lower price. The time to become anxious is when you transition from an accumulation period [contributions ] and enter into a withdrawal period [retirement], and the global outlook turns bearish. The latter scenario requires prior understanding [sequential risk] and planning e.g. 1-2 years cash reserve to avoid withdrawing during a bear market and allow compound interest a couple more years to do its work, and hopefully you mitigate yourself against the worst.
Needless to say that there are other options to consider [withdrawal period], but you - nor I - are set to retire anytime soon!
One other thing to point out, Ari, is that you have had an extra year in the market than if you invested the same amount now i.e. more units. They may be worth less at this moment in time, but the more time in the market w/ a passive index tracker - irrespective of the price now - the more your investment will grow [compound interest]. The more that you begin to understand compound interest and returns over longer investment periods (10, 20, 30 and 40 years), you'll soon start wishing that you hadn't been so frivolous with your money in your 20s, and stuck it in a passive index tracker.
It just isn't as exciting as dreaming of that lottery win or blackjack and hookers.
That's really interesting, thank you. My plan is very much to simply continue 'dripping' £250/month in to the FTSE100 and putting any spare cash into the World Tracker to build that up. Totally agree that if it drops, that's a good thing for me (although it doesn't feel like it) in the short term at least because I'm effectively getting more for my money.This is why I was attracted to Dremen because he focuses on the psychological aspect re: red and green rooms of the casino. This will become increasingly more relevant if / when a slow-down becomes a full-on bear market. When people have had a relative benign investment period (similar to the UK housing market) over a long period of time, any kind of slow-down, becomes worrying - especially if we enter into a proper bear market.
One of the hardest things to do psychologically speaking is to sit on one's hands either when one gets fidgety out of boredom or anxious in turbulent periods - provided that nothing has materially changed in terms of one's investment strategy. With a passive index tracker, absolutely nothing changes during a bear market - you keep on making regular contributions and you buy into the market at a lower price. The time to become anxious is when you transition from an accumulation period [contributions ] and enter into a withdrawal period [retirement], and the global outlook turns bearish. The latter scenario requires prior understanding [sequential risk] and planning e.g. 1-2 years cash reserve to avoid withdrawing during a bear market and allow compound interest a couple more years to do its work, and hopefully you mitigate yourself against the worst.
Needless to say that there are other options to consider [withdrawal period], but you - nor I - are set to retire anytime soon!
One other thing to point out, Ari, is that you have had an extra year in the market than if you invested the same amount now i.e. more units. They may be worth less at this moment in time, but the more time in the market w/ a passive index tracker - irrespective of the price now - the more your investment will grow [compound interest]. The more that you begin to understand compound interest and returns over longer investment periods (10, 20, 30 and 40 years), you'll soon start wishing that you hadn't been so frivolous with your money in your 20s, and stuck it in a passive index tracker.
It just isn't as exciting as dreaming of that lottery win or blackjack and hookers.
Finding all of this stuff fascinating. (And yes, if only I'd started doing this 20 years ago!)
Derek Chevalier said:
emicen said:
Article just landed in my inbox talking about FTSE being a good buy at the moment:
https://www.ii.co.uk/analysis-commentary/three-rea...
Been thinking about putting some funds in to a FTSE tracker in the run up to Brexit, with the pound strengthening the unit cost has gone down but I still feel the political climate is deflating the underlying prices as well.
Why focus on the FTSE when it's only 6% of global cap? Good luck with picking which countries/regions outperform going forwards https://www.ii.co.uk/analysis-commentary/three-rea...
Been thinking about putting some funds in to a FTSE tracker in the run up to Brexit, with the pound strengthening the unit cost has gone down but I still feel the political climate is deflating the underlying prices as well.
Quick monthly(ish) update.
FTSE100 tracker is up £420 and the World Tracker up £28 (plus a few quid in dividends) for a total return currently of 5.57%.
Monthly amount is still going in to the FTSE100 plus the (very) occasional top up of the World Tracker (which I intend to top up more, but keep having other expenses taking priority).
FTSE100 tracker is up £420 and the World Tracker up £28 (plus a few quid in dividends) for a total return currently of 5.57%.
Monthly amount is still going in to the FTSE100 plus the (very) occasional top up of the World Tracker (which I intend to top up more, but keep having other expenses taking priority).
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