Stocks and shares - a good time to dabble?

osully

I have some money to invest (have paid off the mortgage and have no other debts, yee hoo) and wonder if now might be a good time to get into stocks and shares, perhaps via a stocks & shares ISA so not too much is invested. Or do I wait to see if the markets get even more dire and then jump in and play? Any views would be welcomed.

dunstonh

Or do I wait to see if the markets get even more dire and then jump in and play?

Only time will tell and it will be too late then.

There are two scenarios here. Things will get worse than expected. Things will get better than expected. Today, things appear to be getting better than expected (interest rates likely to fall, inflationary pressures likely to fall, credit crunch easing). Tomorrow it could be the reverse.

The only thing you can say is that a few weeks ago was the best time to purchase in the last 3 years. Whether its the best time we will let you know.

one option is to phase your investing. That way you hedge your bets a little by buying some each month and averaging out the ups and downs.

Do remember though that investing is long term. Typically looking at 10 years plus with 5 years an absolute minimum (unless high risk).

Paul_Herring

Your post sounds like "I want to take a gamble on the stock markets" - but I'm not sure from the tone you should be doing that quite yet...

How much do you have in cash savings first of all. Let me expand...

E.g. how many months' worth of salary in savings do you have easily accessible if, e.g., you were to lose your job? Minimum recommended is around 3, some suggest 6.

On top of that, how much in very easily accessible savings/short term credit do you have for, e.g., emergencies? Boiler blows? Car trashed?

On top of that, how much do you have in savings to pay in total for things like future holidays, hobbies, christmas etc.

Finally, of any extra money after that, how long are you prepared to put it away for (except for perhaps extreme emergencies)? 5 years? 10 years? Are you willing to see it lose 30%+ of it's value in a few days/weeks/months and still be able to keep it in there if it does?

In short, you must be prepared to 'lose' any money you put away into S&S, and if you don't have substantial savings, I'm not sure that *any* gambling on equities would be a good idea.

--

One further thought - do you have a pension?

osully

Cheers Paul - very useful food for thought. I'd be limiting my investment probably to the max £3600 for this year, and have other savings/income so making this investment over 10 years, say, would not be an issue. I do have a pension, which is frozen (I took voluntary redundancy earlier in the year). It's a final salary pension and I'd done 25 years with a decent finishing salary so I don't have a concern there either.

a7man

Its hard to predict what the markets will do. The fact is certain areas in the markets are more resilient than others. If you are looking for a punt, I do mean a proper high risk investment then look at the emerging markets, for example Latin America (I Love them):

Invesco Perpetual Latin America **
Threadneedle Latin America **
Scottish Widows Latin America **
These are really at the high end of the scale for risk and you will be in for a bumpy ride, but the rewards can be huge. Certain funds will be more able to handle the economic gloom than others.

Also look at gold etc: Blackrock gold & general - good for riding out the tough times.

As Dunston says a phased investment will also help to minimise the ups and downs. Also diversification is key.