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Funds & investments for when the tide turns

gil13
Posts: 297 Forumite

I thought it might make an interesting thread to list some thoughts and fund or investment ideas that people are considering in preperation of an turnaround in the economy.
It is often mentioned that the markets often price in and predict ahead of what the real economy is doing, which is probably true to a degree although perhaps this is not quite so obvious these days where everything is so sentiment driven, volatility is quite something these days.
So what are you plans, ideas, tips for positioning your investments/pensions and hard earned cash. For me, we have been concentrating on cash ISA's last year (got a one year fix at 6.3%), but now that money is going into offset against the mortagage. I have a small amount in a S&S isa tracking a pacific index which will jsut be left to run for a few years probably not big sums involved. The pension I am regularly reviewing and now quite diversified although it is still a bit of a job to know which funds are the ones where recovery will come first - I guess this is the point of diversification!. I have started to put some into USA and have some going into UK Government bonds etc to try and take out some of the volatility I have seen in some other areas.
It will be interesting to hear from others as to their investment ideas / strategy and perhaps particular funds they feel will do well over the next couple of years.
It is often mentioned that the markets often price in and predict ahead of what the real economy is doing, which is probably true to a degree although perhaps this is not quite so obvious these days where everything is so sentiment driven, volatility is quite something these days.
So what are you plans, ideas, tips for positioning your investments/pensions and hard earned cash. For me, we have been concentrating on cash ISA's last year (got a one year fix at 6.3%), but now that money is going into offset against the mortagage. I have a small amount in a S&S isa tracking a pacific index which will jsut be left to run for a few years probably not big sums involved. The pension I am regularly reviewing and now quite diversified although it is still a bit of a job to know which funds are the ones where recovery will come first - I guess this is the point of diversification!. I have started to put some into USA and have some going into UK Government bonds etc to try and take out some of the volatility I have seen in some other areas.
It will be interesting to hear from others as to their investment ideas / strategy and perhaps particular funds they feel will do well over the next couple of years.
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Comments
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Commodities and emerging markets are likely to do very well over the next 10 years. You cant depend on anything in particular doing well in a short ttime frame of say a few years but we may well get a big commodity spike (especially oil) coming out of the recession.0
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Banking stocks are very cheap and when the economy starts to pick up they will grow like a like the Chancellors Tax increases, as they extract more and more cash from our pockets, so why not invest in banks now, rather than wait for them to become too expensive.
Barclays has already gained £1.20 in the past fortnight, RBS around 15p and Lloyds 40p, these are big climes and in such a short time.0 -
If you would have invested £500 in Barclays shares at 50p per share a fortnight ago and sold them on monday when they were at £1.90 a share you would have made about £1343 - thats in a fortnight.
You wouldn't have made that if you kept your £500 in the bank for 10 years and it was paying 6%.0 -
The stock market wasn't the cause of this economic downturn0
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let me see if i understand what's going on here - the stock market tanks, like it does every now and then, people lose trillions of dollars in personal wealth, lose their homes, their belongings, their jobs and their dignity... and now you want to talk about getting back into it? are you crazy? WAKE UP PEOPLE. The stock market is a joke, a scam. Put your money in conservative instruments like CDs or money market accounts and live with peace of mind.
Yes and it will most likely go up again when we come out of recession. Ideally one should sell high and buy low not sell low and buy high.0 -
Yes and it will most likely go up again when we come out of recession. Ideally one should sell high and buy low not sell low and buy high.
Thats right - and banks have never been so low. Don't go and stick your life savings on some bank, invest about 20% to 30%, as the economy starts to gain momentum maybe buy some more or even diversify and buy into a different company.
To diversify will reduce the risks, but it can also reduce the potential for big profits.0 -
Looks like we have already missed out on the property shares'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0
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Put your money in conservative instruments like CDs or money market accounts and live with peace of mind.
Oooh, yay, money market accounts! You can get nearly half a percent of interest for locking up about a million for a year or so. Clearly a much better deal than investing well.
Sorry, but the stock market isn't a scam, it's just a more difficult place to invest well.I am a Chartered Financial Planner
Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.0 -
For me, we have been concentrating on cash ISA's last year (got a one year fix at 6.3%), but now that money is going into offset against the mortagage. I have a small amount in a S&S isa tracking a pacific index which will just be left to run for a few years probably not big sums involved. The pension I am regularly reviewing and now quite diversified although it is still a bit of a job to know which funds are the ones where recovery will come first - I guess this is the point of diversification!. I have started to put some into USA and have some going into UK Government bonds etc to try and take out some of the volatility I have seen in some other areas.
It will be interesting to hear from others as to their investment ideas / strategy and perhaps particular funds they feel will do well over the next couple of years.
Reflecting on your original question:
1) Pension - We're 44 and presently this not relevant to our "active" planning as we luckily both have final salary schemes but who knows if they'll close? So, whilst we don't want SIPP etc, our investments include some consideration of having funds to help in retirement. When this will be is a little unclear, love to be at 60 but likely like many we'll have to work to 65 or more. Also, we have to consider our daughter's requirements in 7yrs time when she will be 18 and leaving school, so cash will be needed then too.
2) Debt clearance - in our case the only debt is the mortgage running since 1994, and we've always overpaid into it (well before many people realised you could). Since 2006 it's been offset but with OP. Our hope is to clear it 10yrs early in October as we overpay by 172% per month now. That will then free up quite a bit of extra cash for saving and investing thereafter.
3) Investments - Since 2006, we've pound-cost averaged in S&S Funds ISAs (to an extent our savings etc would allow and recognising the risk). Our first steps into investing so we went UK initially then added Latin America plus Russia; as we were looking for growth... took loses in 2008 which hit about 50% and learnt some lessons. However we continued monthly investments to Dec 08 (my decision point set in August) and I then modified to get a better spread, thus:
Growth with risk:
Neptune Russia & Greater Russia (no new money to this, leaving to recover)
Investec UK Smaller Co
Threadneedle Latin American
First State Asia Pacific Leaders
Neptune US Opportunities
Lower growth but less risk:
BlackRock UK Absolute Alpha
M&G International Sovereign Bond
We can only put £300 per month against the above at the moment (into 2 ISAs).
From October we'll need to pump up our savings initially as a sizeable amount will go with clearing the mortgage. Then we'll be able to hit maximum Cash ISA and S&S ISA each plus additional savings from Jan 2010, this is where I need to learn during this year to give a better balance overall (and where I hope to get help on this forum just as I have from the MFW board) because we'll be in the position of saving+investing about 45%-50% of our net income per year.
So, thoughts on what to do next, well I anticipate getting into some EU funds and those in the property sector as I don't have any presently. I would also consider renewable energy but only as a small stake and expectation it will take 10yrs to generate any real return. Ethical may be another to look at. Diversification I think is going to be the key.
With at least 15yrs to retirement, I'm assuming in the first 5yrs aim for growth and then to realise some of this and start to move into long term safer asset classes steadily. However, as we have final salary pensions, in theory we should be able to retain reasonable sums in equities to generate extra income plus some growth I think.
The present markets I think favour purchases made over this year and 2010 to provide the majority of the increase in the fund values over the period to say, 2015.
Comments?
Beyond the ISAs then we'll need to think and plan carefully. I feel that I don't have time for individual equities so am uncertain I should in that case go for AIM, although these would be held for the qualifying period to be tax efficient. However, fixed term savings (care taken with timing as I think interest rates may potentially start to rise Q2 or Q3 2010 if inflation kicks in then) plus Corporate Bonds and Gilts would seem sensible.
Comments?
Finally, based on the above would you recommend I head to an IFA urgently to avoid major failings?0 -
it's not? do you want to tell that to the people who lost everything and are living in tent cities? or maybe the people who are in their 50s and now cannot retire because 60% of their nest egg is gone? i took my $ out of the narket in 2000. yes, the interest rates on CDs and such are low, but slow and steady is better than up and down. you win in the long term. i think you guys are nuts for placing your faith in a system that let's you down every 5 years - but it is your money/life. invest at your own risk.
People in their 50s typically have 5-10 years or more for their funds to recover before they need to retire. As such, they have plenty of time to wait for their money to recover before they need it. If they put their money into high risk single equities and lost everything, then they needed to diversify more. That would then be the fault of their investment strategy, and certainly does not make the market a scam. If they've lost 60% of their investment, then they were in extremely high risk investments and should have expected to see large drops every now and then. A 60% drop would typically be considered high risk under standard risk profiles. My own investment strategy is high risk, and only the riskiest of my funds suffered a loss of 60%. I can only imagine the sorts of things people must have been invested in to generate an overall loss of 60% or more.
As for cash accounts, you may not suffer with the volatility, but you lose in the long run due to inflation. In cash, you always lose in the long run in terms of absolute value. By picking a sensible investment strategy and investing while the markets are falling as well as rising, you will tend to do much better than cash in the long run.I am a Chartered Financial Planner
Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.0
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