Is now a good time to buy? If so - what?

GeorgeHowell

If £10,000 is all you have, then the last things that you should be doing with it is buying shares, in any way, shape, or form. But if it's some spare cash that you can afford to, and want to, gamble with, then shove it in a FTSE tracker fund with one of the reputable fund management houses. Trackers tend to do as well, if not better, than most managed funds and generally cost less in fees.

dunstonh

Trackers tend to do as well, if not better, than most managed funds and generally cost less in fees.

Thats a myth I'm afraid. Trackers tend to outperform managed funds with the same aims and objectives. However, its only really the passive managed funds that have the same objective. For example, look at FTSE all share trackers and you will find them consistently mid table. That means approx half the funds are above them and half below.

Also, if someone does have only limited funds to invest then sticking it all in a single sector which is rated medium/high risk is probably not the best thing to do.

GeorgeHowell

dunstonh wrote: »

Thats a myth I'm afraid. Trackers tend to outperform managed funds with the same aims and objectives. However, its only really the passive managed funds that have the same objective. For example, look at FTSE all share trackers and you will find them consistently mid table. That means approx half the funds are above them and half below.

Also, if someone does have only limited funds to invest then sticking it all in a single sector which is rated medium/high risk is probably not the best thing to do.

I haven't done an analysis but have seen it quoted in the press a number of times that trackers are as good as the average managed fund for UK equity. I have also found this to be my own experience and have converted some managed fund investments into trackers, and will continue the process if the managed funds that I still have underperform the index. I figure that if people really knew how to outguess the stock market consistently then they would be living the life of Riley in the Bahamas rather then turning into an office every day (same goes for racing tipsters).

Regarding someone putting all their eggs in one basket, I totally agree. But my comments were prefaced with the assumption that this is £10,000 that the person is willing to gamble with. It's arguably not a big enough sum to try to spread around too much. If it's £10,000 that they might really need sometime then it should be in a bank.

Reaper

RoxieW wrote: »

Hi, complete novice here with about 10K to invest. Surely now must be a good time with the market low?? But what now? I have no clue about shares/bonds etc so what would be a reasonably save bet over the next 5 years?
Thanks

I don't think there is such a thing as a safe bet at the moment. Sometimes markets move slowly up and down, other times it is like a roller coaster.

Currently it is very volatile out there - you stand to make big profits or big losses. Unless you have nerves of steel and money you can afford to lose this might not be the best time to invest.

If you are set on it then how about feeding your money in gradually? Many investments accept monthly standing orders. That averages out the risk somewhat.

dunstonh

I haven't done an analysis but have seen it quoted in the press a number of times that trackers are as good as the average managed fund for UK equity.

That would be correct (average being middle). However, there are a few myths out there which are often mentioned here. Things like trackers being low risk (which they are not), outperform most managed funds etc. A lot of this comes from America where taxation on trackers is more favourable than managed funds. A position that is not the same here.

I figure that if people really knew how to outguess the stock market consistently then they would be living the life of Riley in the Bahamas rather then turning into an office every day (same goes for racing tipsters).

The problem with that is that you have to have the money in the first place.

The thing with investing is that there is no such thing really as a right or a wrong. Just an opinion. At different times the opinion could be right or could be wrong.

It's arguably not a big enough sum to try to spread around too much.

Agree. It takes about £25k to be able to start building a decent portfolio but it doesnt stop someone with £10k doing £1500 or so per fund in different areas. Especially if they are looking at the medium/high risk end of the scale.

If it's £10,000 that they might really need sometime then it should be in a bank.

agreed

baby_boomer

Dunstonh has stopped recommending 5 years minimum.

It's now 7 years minimum. These are tough times and an IFA has to cut his cloth accordingly.

Stay up to date, please .

sabretoothtigger

You wouldnt want a tracker over the last 6 months because it would have fallen quite badly but then so have lots of other funds no doubt.

If you are a complete novice, build up the investment risk gradually. Theres some nice interest rates available right now and you can take money from there into a regular investment into whatever share, fund or tracker you like which will balance out your buy in cost & risk for the long term.

If your a millionaire and this money is spare change then I guess now could be a good time to blow it all and gamble on the markets rising after a positive vote tonight.
I think theres still bad news left though, its the aftershocks of an earthquake that can kill just as much as the first strike

maypole

I would only invest money I could afford to lose if things went belly up. I wouldn't invest money I was relying on.

sabretoothtigger

Read up on these
http://en.wikipedia.org/wiki/Dollar_cost_averaging

http://en.wikipedia.org/wiki/Value_averaging

amcluesent

The secret to investment is the price you buy at, not the price you sell at.

IF I had detailed knowledge of a sector, and thought it had been oversold in the current general panic I'd be looking to make some small purchases now.