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  • FIRST POST
    • capital0ne
    • By capital0ne 14th Nov 17, 3:23 PM
    • 97Posts
    • 56Thanks
    capital0ne
    Why don't people invest?
    • #1
    • 14th Nov 17, 3:23 PM
    Why don't people invest? 14th Nov 17 at 3:23 PM
    I work with highly skilled and trained engineers, but none of them will consider investing in equities, either through shares, funds, ITs or ETFs and I often wonder why.

    They even talk of their ISAs but I know they mean cash ISAs and they think it's investing!

    They also don't even know you can earn £1k interest tax free!

    Some friends I know are sitting on a pile of money just left in their current account(s) losing 3% a year.

    I've tried to educate a few of them by letting them know how my portfolio is doing, and it's doing well, but I think they get a bit frightened by the 'noise' when I asy I'm down £10k this week or I'm up £12k the week before.
    To me it's no-brainer, it's so easy as well with the wealtho of info on-line, soy why is it people don't invest?
Page 2
    • chrisgg
    • By chrisgg 14th Nov 17, 8:25 PM
    • 20 Posts
    • 8 Thanks
    chrisgg
    Media, the general person etc don't make a lot of noise when equity markets are ticking along at 8% a year. As soon as there's a crash, everyone is screaming about losing money, it's all over the news, the papers...

    When I talk to friends and family with loads sitting in cash, the vast majority think markets are still down since the peaks of '07.

    I recently advised my partner (she's in her 20s) to move her work pension from the 'Balanced' option to the 'Adventurous' one (approx. 65% and 95% equities respectively). When she told other colleagues of similar ages they thought she was being reckless! Unfortunately, the vast majority with no interest or professional involvement (direct or indirect) in financial markets is simply uneducated when it comes to investing,
    • Puddylove
    • By Puddylove 14th Nov 17, 8:30 PM
    • 440 Posts
    • 716 Thanks
    Puddylove
    Perhaps they leave it to their husbands/partners with the realisation that if it all goes wrong - they have someone to blame
    Originally posted by ManofLeisure
    I suppose in a world where my half of a council tax rebate was given to my then boyfriend only because he had a penis, your views may point to a wider issue.
    • redux
    • By redux 14th Nov 17, 8:43 PM
    • 17,506 Posts
    • 22,358 Thanks
    redux
    I suppose in a world where my half of a council tax rebate was given to my then boyfriend only because he had a penis, your views may point to a wider issue.
    Originally posted by Puddylove
    Did he have to produce it in order to validate the claim?
    • veryintrigued
    • By veryintrigued 14th Nov 17, 8:54 PM
    • 2,091 Posts
    • 1,362 Thanks
    veryintrigued
    Take a step back and first ask why the majority of people don't/can't save let alone invest.
    • Audaxer
    • By Audaxer 14th Nov 17, 9:13 PM
    • 571 Posts
    • 248 Thanks
    Audaxer
    If you are near retirement you need to reduce you risk profile substantially lest any sustain fall in the market is not reversed before you run out of money.
    Originally posted by Uxb
    I think in retirement you can still have a fairly balanced portfolio of say 60/40 equities to bonds as long as you keep a decent cash buffer as well to draw income from in the event of equity crashes.
    • jimjames
    • By jimjames 14th Nov 17, 9:18 PM
    • 12,185 Posts
    • 10,702 Thanks
    jimjames
    Maybe they remember the experience of Japan.
    Their index peaked at around 38900 in 1989. A figure it never reached again.
    Some 20 years later in 2009 it was at 7054!
    It is now at 22300.
    Originally posted by Uxb
    I very much doubt many people would use the example of Japan as a reason to not invest. If they did then they should realise that it shows the reason for a balanced worldwide portfolio not that you shouldn't invest at all.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Thrugelmir
    • By Thrugelmir 14th Nov 17, 10:13 PM
    • 55,870 Posts
    • 49,241 Thanks
    Thrugelmir
    it's so easy as well with the wealtho of info on-line
    Originally posted by capital0ne
    Can I ask when you first started investing and whether you've traded shares in more voltile times. As there's been a bull market for 9 years. Complancy being an investors worst enemy.
    "Wide diversification is only required when investors do not understand what they are doing." - Warren Buffett
    • elephantrosie
    • By elephantrosie 14th Nov 17, 10:22 PM
    • 372 Posts
    • 102 Thanks
    elephantrosie
    the engineers i know of are all into investments. hmm.... i really need to get to know more engineers!

    Although, i have noticed that most females do not invest.
    Another night of thankfulness.
    • Cactus_Jack
    • By Cactus_Jack 15th Nov 17, 12:14 AM
    • 552 Posts
    • 74 Thanks
    Cactus_Jack
    I think people just associate it with a risk of losing everything - the shares going to zero. I always wanted to get involved but knew nothing. It took me many hours of research to understand things to some degree. I was quite lucky as a podcast I listen to dedicated an episode to index investing. I didn't even know it existed. And they also broke down how the markets have as a whole gone up over the last 100 years or so (US).

    It should be taught in schools.
    • darkidoe
    • By darkidoe 15th Nov 17, 1:38 AM
    • 886 Posts
    • 1,008 Thanks
    darkidoe
    I think it's very much education about the stock market, financial systems and then building the suitable mentality and attitudes towards risk management. And then having a sense of adventure to be optimistic and bet on the future!

    Save 12K in 2017 # 9 £11,119.65/15 000 (74%)
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    • BananaRepublic
    • By BananaRepublic 15th Nov 17, 7:40 AM
    • 871 Posts
    • 623 Thanks
    BananaRepublic
    Most people have the view that equities are inherently risky, and that investing in them is akin to betting on horses or buying a lottery ticket. They don't take the time to educate themselves. Many start investing when everyone is saying to invest because you can't lose. That's usually when the markets are nearing the end of a bull run, so when it crashes, the newcomers pull out and crystallise their losses. So they never again invest in equities, because it is of course a way to lose money. Once bitten, twice shy.

    Most of these people will be investing via their pensions schemes - they just may not realise it.
    Originally posted by p00hsticks
    Yes. What we need - and this may already exist - is lessons at school in financial management so that children learn the basics. Thus they would learn about compound interest, bonds and guilts, equities, stock markets, private and public companies, bull runs and bear markets and so on. But it would be from a practical viewpoint, not academic. So there would be mention of Warren Buffett, of the great crash of 2008, and the Great Depression etc.
    • bertpalmer
    • By bertpalmer 15th Nov 17, 7:55 AM
    • 88 Posts
    • 40 Thanks
    bertpalmer
    As someone said above - I think the problem is ignorance and fear.

    Many of my friends consider it ‘gambling.’
    • Glen Clark
    • By Glen Clark 15th Nov 17, 8:41 AM
    • 3,892 Posts
    • 2,894 Thanks
    Glen Clark
    Right now equities are close to record highs so the forums are full of threads like this saying how good investing is.
    But some of us remember what a crash is like.
    “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” --Upton Sinclair
    • chucknorris
    • By chucknorris 15th Nov 17, 8:45 AM
    • 9,314 Posts
    • 13,969 Thanks
    chucknorris
    I've had investments in the past that have lost money at the time needed to withdraw so maybe it also depends on what people are planning to do with the money and when they need it by.
    Originally posted by Fireflyaway
    If you need to withdraw money, it shouldn't be invested, investing is for the medium to long term, not the short term, you were speculating, not investing.
    Chuck Norris can kill two stones with one bird
    The only time Chuck Norris was wrong was when he thought he had made a mistake
    Chuck Norris puts the "laughter" in "manslaughter".
    After running injuries I now also hike, cycle and swim, less impact on my joints.

    For the avoidance of doubt Chuck Norris is an actor and an ex martial artist (not me)
    • demonloop
    • By demonloop 15th Nov 17, 8:51 AM
    • 27 Posts
    • 11 Thanks
    demonloop
    Investing in the current climate is tricky and I would be very reluctant to offer the closest of friends any advice.

    Up until the beginning of this year I had all my eggs in the managed funds basket, but I'm convinced there is a stock market correction on the horizon.

    I sold the lot in February and invested it in BTL. The returns are similar, but tax is higher. Whilst the investments aren't as liquid as funds, I feel more comfortable with the BTLs right now.
    • demonloop
    • By demonloop 15th Nov 17, 8:52 AM
    • 27 Posts
    • 11 Thanks
    demonloop
    As someone said above - I think the problem is ignorance and fear.

    Many of my friends consider it ‘gambling.’
    Originally posted by bertpalmer
    Which it sort of is, unless you can predict the future.
    • Malthusian
    • By Malthusian 15th Nov 17, 9:22 AM
    • 3,294 Posts
    • 5,004 Thanks
    Malthusian
    I sold the lot in February and invested it in BTL. The returns are similar, but tax is higher. Whilst the investments aren't as liquid as funds, I feel more comfortable with the BTLs right now.
    Originally posted by demonloop
    The last time there was a market correction there was a significant correction in the property market as well.

    But of course you don't see the value of your BTLs plotted on a graph every day.

    Of course there's a stock market correction on the horizon. There is always a stockmarket correction on the horizon.

    Which it sort of is [gambling], unless you can predict the future.
    Not correct. Gambling has a negative expectation of return. For every £1 you put on a roulette wheel you expect to get 97p back; if you keep placing bets then in the long run you will lose all your money. Investment has a positive expectation of return.
    Last edited by Malthusian; 15-11-2017 at 9:24 AM.
    • BananaRepublic
    • By BananaRepublic 15th Nov 17, 10:09 AM
    • 871 Posts
    • 623 Thanks
    BananaRepublic
    Investing in the current climate is tricky and I would be very reluctant to offer the closest of friends any advice.

    Up until the beginning of this year I had all my eggs in the managed funds basket, but I'm convinced there is a stock market correction on the horizon.

    I sold the lot in February and invested it in BTL. The returns are similar, but tax is higher. Whilst the investments aren't as liquid as funds, I feel more comfortable with the BTLs right now.
    Originally posted by demonloop
    Studies have shown that you cannot predict the markets, and withdrawing money usually means you lose out on gains before the next crash. I recall that for many years prior to the last great crash, people were saying the markets were overvalued and about to crash. Had I listened to them, I would have missed out on some good returns. If you do not need the money for 5 or more years, then the best approach is simply to leave it invested in equities.

    But if you feel more comfortable with BTL, then stick with BTL. On a related matter, I recall that the last crash in 2008 corresponded to a huge fall in property prices. I was trying to buy then, and there was a scarcity of decent homes on the market. That though might have been exceptional in that the crash was associated with a loss in confidence in the banking system, and banks were unwilling to lend, which would have contributed to house price falls.
    • trailingspouse
    • By trailingspouse 15th Nov 17, 10:55 AM
    • 2,370 Posts
    • 3,374 Thanks
    trailingspouse
    I can't say why 'people' don't invest, but I can tell you why I don't (not including pensions and suchlike).

    It's complicated, it's time consuming, and if you get it wrong there's a lot at stake.

    I think saying 'ignorance and fear', as if people only have to know more and be braver, is very simplistic. I know enough to know that it's not for me, at this point in my life. And I don't scare easy.
    • chockydavid1983
    • By chockydavid1983 15th Nov 17, 11:15 AM
    • 472 Posts
    • 283 Thanks
    chockydavid1983
    My feeling is that most people don't invest because they don't have or don't want to make (by cutting back) spare cash to put aside for the future.
    It's a lot simpler than it appears at first and doesn't have to be time consuming, especially the more passive you go.
    There is of course risk but if you're putting aside spare cash and you're in it for the long run, the bigger risks come from not investing but people don't see investment risk and inflation risk as part of the same scale.
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