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  • FIRST POST
    • Ridethewave
    • By Ridethewave 4th Dec 17, 7:20 AM
    • 8Posts
    • 0Thanks
    Ridethewave
    Newish to investing.
    • #1
    • 4th Dec 17, 7:20 AM
    Newish to investing. 4th Dec 17 at 7:20 AM
    Though not adverse to risk...having been burnt a little spreadbetting a year ago.... I decided less risk was definately advised
    I noticed that my old mutual self select pension funds had been doing well...10% peryear since 1998 and 14%py over last 5 years and about20% over last year.

    So I decided to open a stocks and shares isa on Charles Stanley platform ...10K

    funds...
    axa framlington glob tech
    axa fram uk small cos
    henderson glob tech
    invesco hong kong and china
    invesco small cos equity
    henderson china opportunities
    Marlborough uk micro cap growth
    old mutual uk small cos
    liontrust uk small cos

    Ive kept away from japan at the moment because of north korea fears
    my funds are all accumulation funds roughly equal in size.
    started 13th september 17
    since then it dropped 2% then went to plus 4.5 and last week dropped back to 2%(tech stocks and china fallng back)

    Im sure I have lots to learn and am new here... so HI!

    I probably have lots of questions but for now....
    comments please.
Page 1
    • AnotherJoe
    • By AnotherJoe 4th Dec 17, 8:45 AM
    • 7,671 Posts
    • 8,280 Thanks
    AnotherJoe
    • #2
    • 4th Dec 17, 8:45 AM
    • #2
    • 4th Dec 17, 8:45 AM
    IMO, Too many funds for £10k.

    To balance that, half of them are covering the same grounds, you’ve gone very risky with half your equity in small companies (and 80% of that in one economy), and then half the remainder in two sectors, tech and China region.

    You might therefore just as well have bought one UK smaller cos, one China, one global tech, and your performance will reflect that, I’d expect it to be quite volatile especially with 40% being in smaller cos in the U.K. which could be significantly impacted by Brexit.
    • Ridethewave
    • By Ridethewave 4th Dec 17, 8:51 AM
    • 8 Posts
    • 0 Thanks
    Ridethewave
    • #3
    • 4th Dec 17, 8:51 AM
    • #3
    • 4th Dec 17, 8:51 AM
    Do I lose or gain anything by taking out 10 funds instead of 3?.
    • ColdIron
    • By ColdIron 4th Dec 17, 9:29 AM
    • 3,657 Posts
    • 4,400 Thanks
    ColdIron
    • #4
    • 4th Dec 17, 9:29 AM
    • #4
    • 4th Dec 17, 9:29 AM
    Would you lose or gain anything by taking out 100 funds instead of 10?

    Apart from unnecessary complication, one area where you lose out is fund charges. Instead of following the strategy of one fund or fund manager you are creating a blend or strange mish mash of them all with no dominant objective or strategy. What you end up with is tracker like performance whilst paying active fund manager charges to achieve it
    Last edited by ColdIron; 04-12-2017 at 10:07 AM.
    • Linton
    • By Linton 4th Dec 17, 9:37 AM
    • 8,614 Posts
    • 8,577 Thanks
    Linton
    • #5
    • 4th Dec 17, 9:37 AM
    • #5
    • 4th Dec 17, 9:37 AM
    Do I lose or gain anything by taking out 10 funds instead of 3?.
    Originally posted by Ridethewave
    You dont gain much by having multiple similar funds, just some protection against a very foolish fund manager. You lose because....
    1) Possibly extra dealing charges - fund purchases/sales are often fixed price.
    2) Extra work deciding which to buy/sell and rebalancing.
    3) Lack of immediate clarity in where you are investing
    4) You may have a mistaken belief that you are increasing diversification.

    If you only have a £10K portfolio any benefit of £1K in fund A and £1K in fund B rather than £2K in fund A is probably small change in £ terms and not worth the time thinking about.
    • AnotherJoe
    • By AnotherJoe 4th Dec 17, 9:56 AM
    • 7,671 Posts
    • 8,280 Thanks
    AnotherJoe
    • #6
    • 4th Dec 17, 9:56 AM
    • #6
    • 4th Dec 17, 9:56 AM
    Do I lose or gain anything by taking out 10 funds instead of 3?.
    Originally posted by Ridethewave
    The more funds you have in the same sector, the more their overall performance approximates a tracker fund, which means you are paying unnecessarily high management fees for a tracker. When you set out to get better performance by paying more for better management, so that’s wasted.

    At the extreme, with 100 funds (to answer the Q from Coldiron), that’s an absolute given, so in that case you are probably losing at least 0.5% every year which might not seem like a lot but if long term performance is 5% you are reducing overall performance by 10%
    Last edited by AnotherJoe; 04-12-2017 at 9:58 AM.
    • Filo25
    • By Filo25 4th Dec 17, 10:02 AM
    • 1,194 Posts
    • 1,827 Thanks
    Filo25
    • #7
    • 4th Dec 17, 10:02 AM
    • #7
    • 4th Dec 17, 10:02 AM
    Do I lose or gain anything by taking out 10 funds instead of 3?.
    Originally posted by Ridethewave
    It depends on how charges are applied to your account I suppose, if it is a flat fee on funds held then not directly from a financial perspective.

    Otherwise it probably just means you need to keep a closer eye on where you might be over/underexposed.
    • Ridethewave
    • By Ridethewave 4th Dec 17, 10:12 AM
    • 8 Posts
    • 0 Thanks
    Ridethewave
    • #8
    • 4th Dec 17, 10:12 AM
    • #8
    • 4th Dec 17, 10:12 AM
    fund dealing is free on CharlesStanley.
    It seems that reducing funds now and reinvesting in the one remaining fund would lose more money than keeping the others which all pretty much have the same management charge..approx 0.75%.
    Correct me if I'm wrong.

    any other comments welcome

    John
    • jimjames
    • By jimjames 4th Dec 17, 12:35 PM
    • 12,238 Posts
    • 10,765 Thanks
    jimjames
    • #9
    • 4th Dec 17, 12:35 PM
    • #9
    • 4th Dec 17, 12:35 PM

    Ive kept away from japan at the moment because of north korea fears
    Originally posted by Ridethewave
    Curious about this bit when you've got 2 funds invested in China which borders North Korea. Is there a reason you think the impact will not be felt across Asia?
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Ridethewave
    • By Ridethewave 4th Dec 17, 4:32 PM
    • 8 Posts
    • 0 Thanks
    Ridethewave
    although china does of course border north korea, as far as I know north korea is not pointing its weapons in that direction. Wheras Japan and south korea are far more seen as allies of USA.
    • dunstonh
    • By dunstonh 4th Dec 17, 5:16 PM
    • 89,853 Posts
    • 56,512 Thanks
    dunstonh
    So I decided to open a stocks and shares isa on Charles Stanley platform ...10K

    funds...
    axa framlington glob tech
    axa fram uk small cos
    henderson glob tech
    invesco hong kong and china
    invesco small cos equity
    henderson china opportunities
    Marlborough uk micro cap growth
    old mutual uk small cos
    liontrust uk small cos
    Way to go. Classic fashion investing and talk about going right in at the deep end. That is going to be a rollercoaster of a ride. Less Ridethewave and more ridetherollercoaster

    You should be a sticky thread in this section on what to avoid.

    since then it dropped 2% then went to plus 4.5 and last week dropped back to 2%(tech stocks and china fallng back)
    Who cares about 2-4% swings when that spread is capable of 70% losses. And that is not a joke. Seriously, that is the sort of swing that spread is capable of.

    Trying to build a bespoke portfolio on just £10k is pointless. Building a bad bespoke portfolio on any amount is not a good idea but picking the highest risk niche funds and putting random amounts into each is not the way to invest sensibly.

    It seems that reducing funds now and reinvesting in the one remaining fund would lose more money than keeping the others which all pretty much have the same
    How would it lose money by putting it right? Getting it wrong is likely to cost you far more.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Ridethewave
    • By Ridethewave 4th Dec 17, 8:35 PM
    • 8 Posts
    • 0 Thanks
    Ridethewave
    so how about making an example of me to highlight the dangers making it a sticky thread and lets see where it goes. I have an open mind but lack experience. I have a thick skin can also play devils advocate..... have nothing to prove but 10k to lose, so please convince me. Once convinced I will see the light and change my portfolio.

    Thanks John
    • Ridethewave
    • By Ridethewave 5th Dec 17, 9:16 AM
    • 8 Posts
    • 0 Thanks
    Ridethewave
    Ive sold my tech and china stocks which represented about 60% of my total. these have been the stocks that have been dropping recently.

    Dunston how did you come up with the 70% figure? and over what time frame?
    • fun4everyone
    • By fun4everyone 5th Dec 17, 9:35 AM
    • 850 Posts
    • 1,385 Thanks
    fun4everyone
    Once convinced I will see the light and change my portfolio.
    Originally posted by Ridethewave
    First off I think you have come to the right place to start with. That's because £10,000 is not an amount that a good IFA would be wanting to take charge of. You also seem willing and able to read and learn.

    You need to learn about risk, the 70% figure you were quoted is correct. Before you start putting five figures into investment funds you need to understand whats going on. Look at the graphs from the dotcom crash January 2000-March 2003 and the GFC June 07-March 09. See what would have happened to your current spread then. Stuff like that will happen again, that much is guaranteed. You will not be able to predict when. Even without huge events like that your spread will very regularly suffer 10-20% drops. You will not be able to predict when or when it is about to turn around.

    For the amount you have I would just pick 1 or 2 funds and be done with it. If it was me I would take a global developed world passive fund and possibly an active emerging markets fund on the side. That's just me though. Picking 10+ active manged funds to cover various areas is for £100k+ imo. You are creating stress and complexity without any need for it.

    Ive sold my tech and china stocks which represented about 60% of my total. these have been the stocks that have been dropping recently.
    Originally posted by Ridethewave
    That just shows you have picked funds above your personal risk tolerance. You should stay invested through thick and thin once you have made your choices. Selling because a high risk investment lost a little bit is lunacy - you shouldn't have been in it in the first place.
    Last edited by fun4everyone; 05-12-2017 at 9:51 AM. Reason: My advice : Read a lot more and ask questions here.
    • Linton
    • By Linton 5th Dec 17, 10:24 AM
    • 8,614 Posts
    • 8,577 Thanks
    Linton
    Ive sold my tech and china stocks which represented about 60% of my total. these have been the stocks that have been dropping recently.

    ....
    Originally posted by Ridethewave
    This is the one big mistake that all new investors seem to make. It's called "buying high and selling low". Think about it - wouldnt it be more sensible to do things the other way around?

    If you want your investments to be 60% tech/china a fall is the time to buy some more. You only sell when tech/china grows significantly higher than 60%. This is a process known as "rebalancing".

    However 60% in tech/china is very risky - you should plan to invest more broadly. If you want to put a slightly higher % somewhere, that's fine, just dont go overboard.
    • Ridethewave
    • By Ridethewave 5th Dec 17, 1:41 PM
    • 8 Posts
    • 0 Thanks
    Ridethewave
    This is the one big mistake that all new investors seem to make. It's called "buying high and selling low". Think about it - wouldnt it be more sensible to do things the other way around?

    If you want your investments to be 60% tech/china a fall is the time to buy some more. You only sell when tech/china grows significantly higher than 60%. This is a process known as "rebalancing".

    However 60% in tech/china is very risky - you should plan to invest more broadly. If you want to put a slightly higher % somewhere, that's fine, just dont go overboard.
    Originally posted by Linton
    Thanks for that. Although a newbie here I'm not totally new to markets. I do understand that it's better to sell high and buy low.

    I have sold those units and made profit on each one. I am still 2% up over the last 3 months...
    I had got to the point of being happy with my choices having studied past graphs including the previous crashes etc.... however having joined here and read the above posts... and seeing those units dropping quickly... and getting the feeling from articles online that another crash is due..and what with trump/korea/brexit likely increasing volatility .I thought it better safe than sorry to reduce my exposure somewhat and spend more time studying and asking questions etc.

    John
    • fun4everyone
    • By fun4everyone 5th Dec 17, 1:47 PM
    • 850 Posts
    • 1,385 Thanks
    fun4everyone
    and getting the feeling from articles online that another crash is due
    Originally posted by Ridethewave
    You think the people writing those articles can predict the short term future direction of the markets?

    Perhaps there is another reason they write such click bait.

    You have to understand when you are being fed a load of nonsense about anything financial. It happens all the time, ranging from newspapers or websites simply wanting clicks/reads to someones ill informed opinions being dressed up as fact.

    If you predict a crash in everything and anything constantly you will be right some of the time.
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