What returns can I expect
Discussion
Hi all,
Novice investor here. I've posted a little over the past few weeks as I've considered a few different investments.
My question this time is;
What return could I realistically expect for low, low-medium, medium and high risk investments?
I know there are innumerable variables so please don't reply by saying "it's impossible to say".
I am looking to invest in low or low-medium risk on a long term basis, say 10 years or maybe more. What return can I expect? 1% 2% 5% 10%
Thanks in advance.
Novice investor here. I've posted a little over the past few weeks as I've considered a few different investments.
My question this time is;
What return could I realistically expect for low, low-medium, medium and high risk investments?
I know there are innumerable variables so please don't reply by saying "it's impossible to say".
I am looking to invest in low or low-medium risk on a long term basis, say 10 years or maybe more. What return can I expect? 1% 2% 5% 10%
Thanks in advance.
My aim is for 8%, if I get 8 I'm very happy.
If I get less than 5, I need to look at what went wrong and how I could have avoided it.
To get 8% you need a couple of winners in the 15% and above range.
I am a very diversified investor, my winners for this year were Emerging markets 'til Aug and European Emerging Markets for the whole year, with a recent run up of US banks.(6.2 on my core stuff)
You will not get rich or wealthy by just investing well.
You need to make contributions.
Simple maths.
Invest 5,000 and contribute 100 per month.
5% on the 5K and 2.5% on the contributions gives 6,480 You are now almost 30% richer.
I know most of that is your own money.....but it's the only way to really accumulate assets.
There is no magic formula for getting rich. Consistent contributions whether the Market is up or down (actually down is better).
Starting while the Market is high is not ideal, but not starting is worse.
To address your Low med and high bit.....that is where diversification comes in.
Don't put all your eggs in high, some years could be good others could be very bad.
For your ten year outlook you can ignore low risk.
Actually low risk just got creamed here in the US
(Treasuries)
Aim for medium risk with at least half your funds and then start reading.....maybe pick something out of favour with 10-15% of assets then a bit of high risk.
If I get less than 5, I need to look at what went wrong and how I could have avoided it.
To get 8% you need a couple of winners in the 15% and above range.
I am a very diversified investor, my winners for this year were Emerging markets 'til Aug and European Emerging Markets for the whole year, with a recent run up of US banks.(6.2 on my core stuff)
You will not get rich or wealthy by just investing well.
You need to make contributions.
Simple maths.
Invest 5,000 and contribute 100 per month.
5% on the 5K and 2.5% on the contributions gives 6,480 You are now almost 30% richer.
I know most of that is your own money.....but it's the only way to really accumulate assets.
There is no magic formula for getting rich. Consistent contributions whether the Market is up or down (actually down is better).
Starting while the Market is high is not ideal, but not starting is worse.
To address your Low med and high bit.....that is where diversification comes in.
Don't put all your eggs in high, some years could be good others could be very bad.
For your ten year outlook you can ignore low risk.
Actually low risk just got creamed here in the US
(Treasuries)Aim for medium risk with at least half your funds and then start reading.....maybe pick something out of favour with 10-15% of assets then a bit of high risk.
Edited by jeff m2 on Tuesday 20th December 17:38
I've just switched my kids Trust funds and Cash ISA (I had 3 variants) into some JISA's on some index tracker funds and other managed funds...
I get the very real feeling I've invested at the top of the market and am going to get poor growth from now on, sorry about that world but it's my luck. I bought funds quoted as being either low/moderate or moderate risk and they've all grown over 15% this calendar year - I realise that's no reliable indication of what they'll do in 2017. There is obviously ~1.5% fees associated with all those funds too.
I get the very real feeling I've invested at the top of the market and am going to get poor growth from now on, sorry about that world but it's my luck. I bought funds quoted as being either low/moderate or moderate risk and they've all grown over 15% this calendar year - I realise that's no reliable indication of what they'll do in 2017. There is obviously ~1.5% fees associated with all those funds too.
Thanks for the info guys.
Jeff M2: Correct me if I'm wrong but surely you wouldn't be 30% richer based on those calculations, as 6200 of 6480 is what you put in initially. You would be 4.5% better off...?
Im not investing to "get rich", I just want my money to work a bit harder for me.
Cheers.
Jeff M2: Correct me if I'm wrong but surely you wouldn't be 30% richer based on those calculations, as 6200 of 6480 is what you put in initially. You would be 4.5% better off...?
Im not investing to "get rich", I just want my money to work a bit harder for me.
Cheers.
To give another view
I have been investing in a FTSE100 tracker for the last 16 years and average return per annum is about 6.25% (this year has been particularly good though)
Additionally I started investing in a global equities fund for the last 18 months and the return is about 17% per annum.
Many moons ago I had a share scheme at work, and I actually lost some money on this because I needed the money quick....
It is very much luck of the draw as I have no specialist knowledge and rely on fund managers to do the hard work.
Obviously valuing my funds in GBP, whilst investing elsewhere in the world has proven fruitful (for the moment) - however I am a long term investor now so I am aiming to diversify my investments. I am just unsure where to spread the risks to at the moment.....
Mike
I have been investing in a FTSE100 tracker for the last 16 years and average return per annum is about 6.25% (this year has been particularly good though)
Additionally I started investing in a global equities fund for the last 18 months and the return is about 17% per annum.
Many moons ago I had a share scheme at work, and I actually lost some money on this because I needed the money quick....
It is very much luck of the draw as I have no specialist knowledge and rely on fund managers to do the hard work.
Obviously valuing my funds in GBP, whilst investing elsewhere in the world has proven fruitful (for the moment) - however I am a long term investor now so I am aiming to diversify my investments. I am just unsure where to spread the risks to at the moment.....
Mike
JapanRed said:
Hi all,
Novice investor here. I've posted a little over the past few weeks as I've considered a few different investments.
My question this time is;
What return could I realistically expect for low, low-medium, medium and high risk investments?
I know there are innumerable variables so please don't reply by saying "it's impossible to say".
I am looking to invest in low or low-medium risk on a long term basis, say 10 years or maybe more. What return can I expect? 1% 2% 5% 10%
Thanks in advance.
Novice investor here. I've posted a little over the past few weeks as I've considered a few different investments.
My question this time is;
What return could I realistically expect for low, low-medium, medium and high risk investments?
I know there are innumerable variables so please don't reply by saying "it's impossible to say".
I am looking to invest in low or low-medium risk on a long term basis, say 10 years or maybe more. What return can I expect? 1% 2% 5% 10%
Thanks in advance.
Unable to answer your question Rob, because the only accurate investment facts available to me, are those which have already happened. After many years experience of the equities market, including several recessions, it has become clear that forecasting is a guessing game. Look back at some forecasts a year after they were made. Some will have been right and some wrong.
I recently spotted an amusing forecasting gaff by Goldman Sachs. A famous name, having an impression of -------. A sell recommendation on a very large defensive company, must have cost their clients a lot of money. Such a shame having sold, to see the shares zoom upwards so much. Their next recommendation on the same company was buy, then not long afterwards the share price drifted down 12%.
If I remember, I will post the 2016 results of my own equity fund, after the year end closing prices are available. By then the fund will have been running for 29 years.
You might be surprised at the average percentage return achieved, but such high figures have not been possible in recent years. Circumstances have changed, including much lower interest rates and inflation. Having said that (tempting fate now with still two weeks to go) 2016 looks likely to be an exceptionally good investment year, mainly due to the reduced value of Sterling.
Edited by Jon39 on Thursday 22 December 09:13
In theory long dated bonds provide a good proxy for long run equity investments in large companies. That would yield something like 3.1% in America and 2% in the UK. The years of 5-10% returns were due to quantitative easing and technological/financial change since the 1970s, and it appears we are unlikely to experience another 40 years of such rapid growth, given the aging of the population.
I reckon a low risk equity investment might yield 3%, medium 5% and high risk ????, over the long LONG term. In the near term, we are at all time highs, so if you buy here, you probably will have to wear a market correction or two....
I reckon a low risk equity investment might yield 3%, medium 5% and high risk ????, over the long LONG term. In the near term, we are at all time highs, so if you buy here, you probably will have to wear a market correction or two....
contango said:
8% return seems fairly optimistic going forward in my view.
If you were continually invested in the S&P500 for the last 10 years to 30/6/16 you would have received 7.4% return. That doesn't include buying the low or highs, but a static investment.
The important part of this investment is compounding, which would have seen your initial investment effectively double over this term.
Do you think we will see similar returns with low rates over the next 10 years? Are you comfortable being invested in stocks at current levels?
I don't understand this. Whilst I agree the stock markets are reaching a peak, the FTSE250 has almost doubled in value in the last 10 years and so has the S&P500, where do you get the "7.4%" from - dividend yields?If you were continually invested in the S&P500 for the last 10 years to 30/6/16 you would have received 7.4% return. That doesn't include buying the low or highs, but a static investment.
The important part of this investment is compounding, which would have seen your initial investment effectively double over this term.
Do you think we will see similar returns with low rates over the next 10 years? Are you comfortable being invested in stocks at current levels?
Or do you mean 7.4% per year... That makes sense, that's probably what you mean... ignore me.
Edited by FredClogs on Thursday 22 December 08:52
contango said:
8% return seems fairly optimistic going forward in my view.
If you were continually invested in the S&P500 for the last 10 years to 30/6/16 you would have received 7.4% return. That doesn't include buying the low or highs, but a static investment.
The important part of this investment is compounding, which would have seen your initial investment effectively double over this term.
Do you think we will see similar returns with low rates over the next 10 years? Are you comfortable being invested in stocks at current levels?
P/E ratios don't look unduly toppy, which is a good sign, but the eventual rise in interest rates will cause things to drop off. Hopefully the money I've left in cash will start to do something at that point though.If you were continually invested in the S&P500 for the last 10 years to 30/6/16 you would have received 7.4% return. That doesn't include buying the low or highs, but a static investment.
The important part of this investment is compounding, which would have seen your initial investment effectively double over this term.
Do you think we will see similar returns with low rates over the next 10 years? Are you comfortable being invested in stocks at current levels?
It would be a mistake to look at recent returns and assume that they will continue. Whilst, imho, there are still good reasons to believe in the equity risk premium, the usual caveats apply. As ever, it's the volatility, and your own reaction to it, that can be the killer.
MSCI World index since 1970 (gross returns including re-invested divis)
How would you feel about a 20% fall in the value of your holding? What about 40%? What about three years of double digit % losses?
MSCI World index since 1970 (gross returns including re-invested divis)
| Year | Index |
| 1970 | -1.98% |
| 1971 | 19.56% |
| 1972 | 23.55% |
| 1973 | -14.51% |
| 1974 | -24.48% |
| 1975 | 34.50% |
| 1976 | 14.71% |
| 1977 | 5.00% |
| 1978 | 18.22% |
| 1979 | 12.67% |
| 1980 | 27.72% |
| 1981 | -3.30% |
| 1982 | 11.27% |
| 1983 | 23.28% |
| 1984 | 5.77% |
| 1985 | 41.77% |
| 1986 | 42.80% |
| 1987 | 16.76% |
| 1988 | 23.95% |
| 1989 | 17.19% |
| 1990 | -16.52% |
| 1991 | 18.97% |
| 1992 | -4.66% |
| 1993 | 23.13% |
| 1994 | 5.58% |
| 1995 | 21.32% |
| 1996 | 14.00% |
| 1997 | 16.23% |
| 1998 | 24.80% |
| 1999 | 25.34% |
| 2000 | -12.92% |
| 2001 | -16.52% |
| 2002 | -19.54% |
| 2003 | 33.76% |
| 2004 | 15.25% |
| 2005 | 10.02% |
| 2006 | 20.65% |
| 2007 | 9.57% |
| 2008 | -40.33% |
| 2009 | 30.79% |
| 2010 | 12.34% |
| 2011 | -5.02% |
| 2012 | 16.54% |
| 2013 | 27.37% |
| 2014 | 5.50% |
How would you feel about a 20% fall in the value of your holding? What about 40%? What about three years of double digit % losses?
basherX said:
It would be a mistake to look at recent returns and assume that they will continue. Whilst, imho, there are still good reasons to believe in the equity risk premium, the usual caveats apply. As ever, it's the volatility, and your own reaction to it, that can be the killer.
MSCI World index since 1970 (gross returns including re-invested divis)
How would you feel about a 20% fall in the value of your holding? What about 40%? What about three years of double digit % losses?
Are these your own investments? If they are you've done well, and with some balls too. MSCI World index since 1970 (gross returns including re-invested divis)
| Year | Index |
| 1970 | -1.98% |
| 1971 | 19.56% |
| 1972 | 23.55% |
| 1973 | -14.51% |
| 1974 | -24.48% |
| 1975 | 34.50% |
| 1976 | 14.71% |
| 1977 | 5.00% |
| 1978 | 18.22% |
| 1979 | 12.67% |
| 1980 | 27.72% |
| 1981 | -3.30% |
| 1982 | 11.27% |
| 1983 | 23.28% |
| 1984 | 5.77% |
| 1985 | 41.77% |
| 1986 | 42.80% |
| 1987 | 16.76% |
| 1988 | 23.95% |
| 1989 | 17.19% |
| 1990 | -16.52% |
| 1991 | 18.97% |
| 1992 | -4.66% |
| 1993 | 23.13% |
| 1994 | 5.58% |
| 1995 | 21.32% |
| 1996 | 14.00% |
| 1997 | 16.23% |
| 1998 | 24.80% |
| 1999 | 25.34% |
| 2000 | -12.92% |
| 2001 | -16.52% |
| 2002 | -19.54% |
| 2003 | 33.76% |
| 2004 | 15.25% |
| 2005 | 10.02% |
| 2006 | 20.65% |
| 2007 | 9.57% |
| 2008 | -40.33% |
| 2009 | 30.79% |
| 2010 | 12.34% |
| 2011 | -5.02% |
| 2012 | 16.54% |
| 2013 | 27.37% |
| 2014 | 5.50% |
How would you feel about a 20% fall in the value of your holding? What about 40%? What about three years of double digit % losses?
Jon39 said:
Unable to answer your question Rob, because the only accurate investment facts available to me, are those which have already happened. After many years experience of the equities market, including several recessions, it has become clear that forecasting is a guessing game. Look back at some forecasts a year after they were made. Some will have been right and some wrong.
I recently spotted an amusing forecasting gaff by Goldman Sachs. A famous name, having an impression of -------. A sell recommendation on a very large defensive company, must have cost their clients a lot of money. Such a shame having sold, to see the shares zoom upwards so much. Their next recommendation on the same company was buy, then not long afterwards the share price drifted down 12%.
If I remember, I will post the 2016 results of my own equity fund, after the year end closing prices are available. By then the fund will have been running for 29 years.
You might be surprised at the average percentage return achieved, but such high figures have not been possible in recent years. Circumstances have changed, including much lower interest rates and inflation. Having said that (tempting fate now with still two weeks to go) 2016 looks likely to be an exceptionally good investment year, mainly due to the reduced value of Sterling.
Thanks Jon. I'd be interested to see results of your own funds, if you have time when they are available. Is there a general consensus that stocks and shares are due for a fall? Possibly doesn't matter, as maybe the best thing to do is risk going against consensus.
Edited by Jon39 on Thursday 22 December 09:13
JapanRed said:
Jon39 said:
Unable to answer your question Rob, because the only accurate investment facts available to me, are those which have already happened. After many years experience of the equities market, including several recessions, it has become clear that forecasting is a guessing game. Look back at some forecasts a year after they were made. Some will have been right and some wrong.
I recently spotted an amusing forecasting gaff by Goldman Sachs. A famous name, having an impression of -------. A sell recommendation on a very large defensive company, must have cost their clients a lot of money. Such a shame having sold, to see the shares zoom upwards so much. Their next recommendation on the same company was buy, then not long afterwards the share price drifted down 12%.
If I remember, I will post the 2016 results of my own equity fund, after the year end closing prices are available. By then the fund will have been running for 29 years.
You might be surprised at the average percentage return achieved, but such high figures have not been possible in recent years. Circumstances have changed, including much lower interest rates and inflation. Having said that (tempting fate now with still two weeks to go) 2016 looks likely to be an exceptionally good investment year, mainly due to the reduced value of Sterling.
I will post my 2016 results Rob, using a new Finance topic, so look out for it, probably in the second week of January. Hopefully a very good year. Over 20% so far, but still one week to go. Anything can happen!
Last year when I posted results for the first time, I was amused by one comment. 'You have done well with equities for 28 years, but it won't last'. Someone obviously thought they could forecast the future. Wonder how their investments performed in 2016?
My own thoughts on your question Rob.
Due for a fall. - No one can tell, even though they might think they can.
In the long-term, individual company profits growth is far more important, than the market average movements.
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