Is now a good or bad time to invest?

jamesd

rlfan82 wrote: »

Whats opinions on this: good time as market is low and set to rise at some point, or, low and getting lower?

The Hartford fund has a large component of UK government bonds in its gilt sub-fund. It's a poor time to be buying gilts because lots of people have piled into them for safety, so the price to buy is unusually high. That also means that as people become more confident, the prices are likely to fall when people switch to other things to try to get better returns.

To me it looks like a good time to be buying high yield corporate bonds, those more risky also than the ones from the AAA companies. The reason is similar, many who want better interest yield than gilts offer at the moment try corporate bonds but are reluctant to take any risk beyond the very lowest risk companies. So the price for the high quality corporate bonds is also poor. For the high yield ones, there's a lot of default risk factored in so as the economies around the world recover and the fear of bond issuers going bust decreases the price should rise, giving a nice capital profit as well as the income.

For equities, it's too uncertain so it looks to me as though for someone with your low risk desire it's better to say target 50% into equity funds but to do that with say 10% now and then even amounts of the rest over the next two years. That way you may miss some of the gains if now turns out to be the lowest time but you'll lose some of the drop risk and buy cheaper if there are further lows during this time period. While investing this I'd be inclined to use cash and corporate bonds to hold the uninvested money.

I agree with the guidance that you've been given that after five years it's unlikely that there would be much potential for loss. If you want the death benefit that dunstonh has mentioned you might consider using insurance to get it.

Do note that I'm not a professional and these are merely my personal opinions about what currently looks to me to be a reasonable mixture of sense and simplicity for someone with what I believe your general risk acceptance level is. An IFA should be able to come up with a more refined plan (more parts, more finely tuned to your risk desires combination) and detailed reasoning for including a range of specific funds in the mixture. If the IFA can't do that, then you'd need another IFA.

Stavros_3

dunstonh wrote: »

How do you intend to structure this investment? What sort of diversification will it have? How much cash, fixed interest, property, equities will it have? With the equities and fixed interest, how will it be spread?

Here is my spread on medium risk

Equities
UK - 23%
Overseas -10%
Private equity - 2%
Structured products - 8%

Fixed Income - 25%

Alternative investments
Hedge Funds - 20%
Property - 10%
Commodities - 2%

sabretoothtigger

we cant really afford to lose this money

if we hold out for 5 years,

Sounds like you would really worry about losses before those 5 years, though I reckon you'd be ok gradually investing especially like stavros there

Anyway your post made me think of this bond, its not rewarding especially but in theory you cant lose money (except through inflation!)
http://new.egg.com/visitor/0,,3_101404--View_2140,00.html

Like I said you'd be better off accepting some risk. That bond would be covered against loss upto 50k per person afaik