Can you actually lose in the long run with investing?
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If you pick a well established fund comprising of 50 or 100 of the world's major companies or a tracker fund, can you actually lose if you hold the investment for 25 or 30 years?
I just came across a mcdonalds menu from 1937 and then another one from 1975 and then you look at today's menu and the price changes are drastically different, as you might have guessed.
I'm still pretty young and remember freddo's being 10p, mars bars being 32p, packets of walkers being 30p and a 20 box of benson and hedges being £5.
It just seems that no matter what happens the world only ever gains money so if you do invest in a fund or multiple funds which consist of the biggest and most established companies, can you ever actually lose in the long run?
I just came across a mcdonalds menu from 1937 and then another one from 1975 and then you look at today's menu and the price changes are drastically different, as you might have guessed.
I'm still pretty young and remember freddo's being 10p, mars bars being 32p, packets of walkers being 30p and a 20 box of benson and hedges being £5.
It just seems that no matter what happens the world only ever gains money so if you do invest in a fund or multiple funds which consist of the biggest and most established companies, can you ever actually lose in the long run?
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How much money do you want to lose?
How greedy are you?
Put your money on a nag at Doncaster?0 -
If you pick a well established fund comprising of 50 or 100 of the world's major companies or a tracker fund, can you actually lose if you hold the investment for 25 or 30 years?
I just came across a mcdonalds menu from 1937 and then another one from 1975 and then you look at today's menu and the price changes are drastically different, as you might have guessed.
I'm still pretty young and remember freddo's being 10p, mars bars being 32p, packets of walkers being 30p and a 20 box of benson and hedges being £5.
It just seems that no matter what happens the world only ever gains money so if you do invest in a fund or multiple funds which consist of the biggest and most established companies, can you ever actually lose in the long run?
Probably not so long as you diversify. Some of the biggest companies will whither and die but most won't, some will get taken over, others will thrive.
Capitalism has won the competition as the system of choice, and we're used to a system that allows for,hopefully low levels of inflation, and consequent slightly higher levels of house price, wage and goods price increases. The world system is set up to maintain this, so it's the easiest bet to make, just look at the effort politicians and central bankers have made to maintain this since the gfc. Interest rates at 300 year lows, printing money, the only problem being a failure to inflate away the debts of the last boom and unwillingness to write off non performing loans giving the hangover were still suffering from nearly ten years later.0 -
I'm still pretty young and remember freddo's being 10p, mars bars being 32p, packets of walkers being 30p and a 20 box of benson and hedges being £5.
Don;t forget that you need to look at those prices in relation to earnings in order to get a true picture though
And 32p for a Mars bar - daylight robbery ! I can buy them now in a pack of 4 for £1 - although I swear they are smaller and less calorific than I remember when I was a kid.0 -
You are confusing growth with inflation. Just because McDonalds charge more for a burger does not mean they are more profitable than they were. Their costs have gone up too.It just seems that no matter what happens the world only ever gains money so if you do invest in a fund or multiple funds which consist of the biggest and most established companies, can you ever actually lose in the long run?
In real terms (i.e. what you can buy with your money) you will be worse off if the growth/interest you get on your money is less than inflation.
And better off if your money grows faster than inflation. A a rule of thumb in the long term well diversified investments tend to exceed inflation, whereas savings tend not to.0 -
Yes, you can. The figures on paper can look healthy, but with inflation and low returns it gets a lot of investors asking what was in it for them. The other side of the coin is that you can do very nicely thank you. But can you predict 25 or 30 weeks ahead?........can you actually lose if you hold the investment for 25 or 30 years..........
Comments about cash savings not matching inflation are just wrong. We used building societies and never fell behind inflation. Rates today are pesh poor, but still beat inflation.
Digger Mansions used equity investments, and cash. Now we are 85%+ in gold. A decision we wish we had taken all those years ago. You should research such a path.
This DM article shows how badly things can go wrong..._
http://www.dailymail.co.uk/money/pensions/article-3687096/Savers-pensions-slashed-87-Thousands-promised-annual-payments-30-000-set-receive-just-3-700.html0 -
its possible"enough is a feast"...old Buddist proverb0
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Its easy to fail if you portfolio isnt well diversified. But assuming that it is well balanced, history has shown that over a sufficiently long time period, a small number of decades at most rather than years or centuries, one always makes a real profit. To a large extent this comes about from dividends rather than greater than inflation capital growth, so dont ignore them.
Will this continue to be the case in the future? Who knows, but if it isnt the consequences may be a lot more serious than a reduction in your personal wealth as the whole world economy is based on there being underlying growth. In any case there is no other use of your money that can reasonably be expected do better.0 -
There seems to be a general assumption that the western economies will continue to exist, and grow!
Every time people have no jobs, have no where to live, and starve, they start a French Revolution, blame Jews, and read Karl Marx. Redistribution of wealth means YOUR investment disappears.
Welcome to being a capitalist pig. Oink oink.0 -
If you pick a well established fund comprising of 50 or 100 of the world's major companies or a tracker fund, can you actually lose if you hold the investment for 25 or 30 years?
The way you've phrased the question it's difficult to imagine a loss being made over that time period.
There are three ways to lose money by investing on the stock market: 1) panicking and turning paper losses into real ones 2) under-diversifying 3) borrowing to invest. You've largely ticked off both the first two and I have no reason to think you'd do the third.
Even people who stuck all their money in the Dow Jones just before the Great Depression hit would have been just about up on a price basis, and with 25 years of dividends (reinvested or otherwise) it's very unlikely they'd be down overall.
Only thing I would say is that if you literally put your money in the 50 biggest companies that would be a very US-centric portfolio. Mostly US multinationals, of course, but I would still want more geographic diversification than that.0 -
Blackbeard_of_Perranporth wrote: »How much money do you want to lose?
How greedy are you?
Put your money on a nag at Doncaster?
That's not exactly answering the question. Money on a horse isn't the same as investing for 25 years.
I think it's very unlikely that a balanced portfolio would lose money over 25+ years. If you really think that capitalism is going to disappear as the way economies are run then maybe it would lose money but that seems very unlikely.Remember the saying: if it looks too good to be true it almost certainly is.0
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