Investment timing
Discussion
I have some capital (20k+) sitting in a current account not doing very much. A friend has recommended 'Vanguard' as a good company to invest with, so I've looked at their funds. A lot of them are down at the moment. Is this a good time to invest, or is buying premium bonds a better idea for the short/medium term?
Thanks in advance
Cad
Thanks in advance
Cad
historically the best time to invest is during the downturns (common sense really - the market is cheaper)
It does take more "mettle" for most to invest during downturns, however.
All investments should be a long term play, 5 years min.
Vanguard are an excellent, well priced platform, especially for those with smaller pot sizes.
Always use your tax wrappers first to make investments. ALways.
It does take more "mettle" for most to invest during downturns, however.
All investments should be a long term play, 5 years min.
Vanguard are an excellent, well priced platform, especially for those with smaller pot sizes.
Always use your tax wrappers first to make investments. ALways.
From a market timing pov cheaper now to invest but then depends on how far market further falls so depends on ultimate time of investment you are thinking of.
PB’s are obviously 100% safe but your return assuming averages will probably be less than a boring cash account - yes of course you could win a big prize but ?
With interest rates seemingly due to continue rising it could well be depending on your desired timeframe and risk desire some form of fixed rate bond might be worth considering.
I had this brief chat with my IFA the other day when he wanted to know about my ISA funding requirements for the current tax year - I said based on my average return over the past 5 years it was a tough call as to whether I went cash or indeed Equity Funds.
PB’s are obviously 100% safe but your return assuming averages will probably be less than a boring cash account - yes of course you could win a big prize but ?
With interest rates seemingly due to continue rising it could well be depending on your desired timeframe and risk desire some form of fixed rate bond might be worth considering.
I had this brief chat with my IFA the other day when he wanted to know about my ISA funding requirements for the current tax year - I said based on my average return over the past 5 years it was a tough call as to whether I went cash or indeed Equity Funds.
caduceus said:
I have some capital (20k+) sitting in a current account not doing very much. A friend has recommended 'Vanguard' as a good company to invest with, so I've looked at their funds. A lot of them are down at the moment. Is this a good time to invest, or is buying premium bonds a better idea for the short/medium term?
Thanks in advance
Cad
Firstly I would be really clear if you want to save or invest.Thanks in advance
Cad
Vanguard offers investment products so simply put if you put in £1000 today and need it in six months time it might be worth £1200 or it might be worth £600.
Premium Bonds are a savings product so if you put in £1000 today you may or may not win a prize but if you go back in six months you're absolutely guaranteed that your original £1000 is there.
I'd be very clear about this distinction because if you aren't and you invest and then panic and sell when your investment loses money (and it will lose money at some point) because you'e not prepared for it you will lose real money.
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hstewie said:
hstewie said: Firstly I would be really clear if you want to save or invest.
Vanguard offers investment products so simply put if you put in £1000 today and need it in six months time it might be worth £1200 or it might be worth £600.
Premium Bonds are a savings product so if you put in £1000 today you may or may not win a prize but if you go back in six months you're absolutely guaranteed that your original £1000 is there.
I'd be very clear about this distinction because if you aren't and you invest and then panic and sell when your investment loses money (and it will lose money at some point) because you'e not prepared for it you will lose real money.
Are there any 1yr gilts offering decent yields?Vanguard offers investment products so simply put if you put in £1000 today and need it in six months time it might be worth £1200 or it might be worth £600.
Premium Bonds are a savings product so if you put in £1000 today you may or may not win a prize but if you go back in six months you're absolutely guaranteed that your original £1000 is there.
I'd be very clear about this distinction because if you aren't and you invest and then panic and sell when your investment loses money (and it will lose money at some point) because you'e not prepared for it you will lose real money.
Simpo Two said:
BorkBorkBork said:
1 year fixed savings bonds are currently at 4.5%, or just under 4% for a fixed rate ISA. I’d be doing that for the next year, and then looking again in 12 months.
Knowing how luck goes that will be the year the markets do +20%... 
Who knows what will happen, but equites are a gamble. 1 year in a fixed rate bond isn’t. And as rates increase, fewer and fewer investors will choose equites, so their recovery is by no means guaranteed.
Thanks for the replies gents. A few things to consider and look into.
As far as risk goes, I'm prepared to 'invest' 40% of my capital and save the rest. That will increase year on year, but around that for the time being.
Who knows what Putin is going to do next, or Quasimodo for that matter. I guess investing is as good a time as ever seeing as we're in a dip. I just don't really know what sector tbh. Hence a percentage punt on NSI.
As far as risk goes, I'm prepared to 'invest' 40% of my capital and save the rest. That will increase year on year, but around that for the time being.
Who knows what Putin is going to do next, or Quasimodo for that matter. I guess investing is as good a time as ever seeing as we're in a dip. I just don't really know what sector tbh. Hence a percentage punt on NSI.
caduceus said:
Thanks for the replies gents. A few things to consider and look into.
As far as risk goes, I'm prepared to 'invest' 40% of my capital and save the rest. That will increase year on year, but around that for the time being.
Who knows what Putin is going to do next, or Quasimodo for that matter. I guess investing is as good a time as ever seeing as we're in a dip. I just don't really know what sector tbh. Hence a percentage punt on NSI.
So what I would consider next is of that 40% you're prepared to invest (put at risk in order to hopefully increase its value over the long term) what is your appetite for risk?As far as risk goes, I'm prepared to 'invest' 40% of my capital and save the rest. That will increase year on year, but around that for the time being.
Who knows what Putin is going to do next, or Quasimodo for that matter. I guess investing is as good a time as ever seeing as we're in a dip. I just don't really know what sector tbh. Hence a percentage punt on NSI.
Imagine you invested £10000 today and you take a look at its value in six months time.
Would you be happy seeing it only worth £8000 or would it cause you to panic and sell it or might you think there's 20% off so you'd want to buy more?
If you think you'd be OK with seeing it worth £8000 what about £6000 and so on?
If you want an easy life it could be as simple as putting the £10000 into a global tracker which means you're investing in a little bit of almost all of the global economy rather than trying to decide which "sector" you think is best to invest in.
With Vanguard I'd look at FTSE Global All Cap or their LifeStrategy range.
FTSE Global All Cap is a global tracker and is just stocks.
LifeStrategy is stocks and bonds in different ratios and historically bonds help dampen down volatility so the more bonds you have the less volatile your investment BUT this year has been one of the worst in history for bonds and probably a very good example of how "safe" bonds can feel very unsafe and lose you money in the short term.
Remember you can start out by investing as little as a few hundred pounds so it's easy to do something and see how you feel watching the value go up and down with a small amount rather than feeling you have to do something with thousands of pounds right away.
The points I'm making above are because you do see people rush in with larger amounts and then panic when their investment falls in value so they sell it and lock in a loss and they're also deterred from investing because they feel they've lost money.
The more you think about your appetite for volatility upfront and do sensible things and keep your costs really low (I think Vanguard have good options for all of those points) the better chance you have of staying the course
Basically don't be the guy on here who decides to take a punt on a tin mine in Angola or some random gamble.
bhstewie said:
hstewie said: ... so the more bonds you have the less volatile your investment, BUT this year has been one of the worst in history for bonds and probably a very good example of how "safe" bonds can feel very unsafe and lose you money in the short term.
The longer the dated bond, the more the value moves inversely to interest rates.
Therefore a bonds crash was obviously going to happen (with interest rates being for such a long time at historic 300 year lows).
What was completely unknown of course, was when would interest rates start to increase.
A very predictable event, but timing impossible to forecast.
A rapid increase in interest rates was always a possibility. That does seems to be happening, which makes the bond crisis worse.
As for being just a short-term loss, depends whether we ever see 0.10% base rates again (19 Mar 2020 to 16 Dec 2021).
Jon39 said:
The longer the dated bond, the more the value moves inversely to interest rates.
Therefore a bonds crash was obviously going to happen (with interest rates being for such a long time at historic 300 year lows).
What was completely unknown of course, was when would interest rates start to increase.
A very predictable event, but timing impossible to forecast.
A rapid increase in interest rates was always a possibility. That does seems to be happening, which makes the bond crisis worse.
As for being just a short-term loss, depends whether we ever see 0.10% base rates again (19 Mar 2020 to 16 Dec 2021).
To the question of market timing. The stock answer is you can't do it (sorry about the pun). Get a graph, ftse S & P, anything really, get a pin and find a low spot and think what would be your situation if you had entered the market then. Now do the same picking a recent high.
I use to have problems with my wife "should we sell, everything is down" In an effort to explain value to her I used a dress she liked. The dress was reduced to $200 do you want to buy it now, or shall we wait to see if it goes back up to 400?. While it is difficult to gauge value on a dress, it is possible with stocks. The stock market can be considered over or under valued at any time by looking at P/Es .
Earnings are what drives the market. Some Counties and some sectors within thos countries will have decent earnings. We all have to eat and apparently the US Gov has to have an ongoing war somewhere. Money is always being spent somewhere.
Recessions and subsequent recoveries have become shorter over time. Look 08 and 09, it happened so quickly many were left on the sidelines.
In essence you can't really time the market and hit "the low", but you can mis time it and go in at a high. Going in at a lowish point will absolutely get the job done over time, and possibly faster than you think.
Bare in mind this is a forum, I could be a twelve year old kid (wish I was) Read some articles on predicted earnings, UK could get some surprises with the Pound in the toilet. Foreign earnings converted to Sterling look good on the bal sheet.
Vanguard, excellent if you like indexing.
jeff m said:
While it is difficult to gauge value on a dress, it is possible with stocks. The stock market can be considered over or under valued at any time by looking at P/Es
I wonder how things would be if everything was linked directly to P/Es? ie no speculation about what might happen. Would the world be better or worse off?Simpo Two said:
jeff m said:
While it is difficult to gauge value on a dress, it is possible with stocks. The stock market can be considered over or under valued at any time by looking at P/Es
I wonder how things would be if everything was linked directly to P/Es? ie no speculation about what might happen. Would the world be better or worse off?
But I think the markets need "happenings" to keep it in check, if it were not for the occasional disaster, it would "index itself'" into unrealistic levels by people just buying on a whim. (UK dot com)
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