Shall I invest in funds now or wait for a bit longer

Jonbvn

Cleaver wrote: »

My advice, for what it's worth...

You said in a thread yesterday:

If this is the case then why are you getting back in to this? You could quite easily see a £400 +/- swing on any volatile week. I think I have a strong stomach for these things but there was a 12 day period in late April / early May this year when my portfolio dropped by nearly 15%. If you feel like crying when losing £430 in a week, how would you feel about 'losing' £3,750 in less than two weeks on the same amount you invested?

I have experienced something quite similar recently. I bought a stock about two weeks ago, which I incorrectly thought had bottomed out. It proceeded to drop 40%+:eek:

However, on Friday it rose 50%+ on talks of a possible takeover.

Whatever happens, this investment is money that I can afford to lose. It will be interesting to see how things progress over the next week. Much more fun than a roller-coaster!

opinions4u

jonj123 - you stated in a previuos post that you hade made a significant sum from running your own business.

Would you not be able to re-invest in that business at a greater return?

I suspect you understand how you've made your money much, much better than equity markets.

Cleaver

jonj123 wrote: »

Yes I didn't really pay too much attention to diversification and the reason those funds appealed to me most was because they had performed significantly better than other funds in the past. So I willl re-ook into this and try to diversify my choice based on sector and region. I mainly look at the HL top 150 list and morningstar to do my research - What other websites do people on this forum find useful for research?

I understand that past performance is not an indication of future performance but how else would I be able to research whether a fund is good to invest in without considering the past performance? What other factors should I be looking at?

P.S. I will take your advice on board cleaver and invest 5-6K initially and if I decide I want to risk more of my money I'll add more in future.

To be honest, my advice would change now that I know your timeframe! 3 years is a very short timescale, especially if you require the money then for a propety purchase. I would be looking to put the majority of my money in fixed savings and maybe have a bit of fun with funds with a very small amount of your money.

Rather than look at funds first, take a step back and put your money in to pots. Let's say you have £100,000, it's all the money you have in the world, and you're deciding what to do with it. You might allocate in the following way:

Emergency cash fund: 15%
Cash savings: 35%
Investments: 50%

So you've decided to invest £50,000. You would then decide how to invest it, which would usually depend on your risk / age / preferences. So, just as an example, you might break up that through the following:

Index-linked Gilts: 30%
Bonds: 30%
Equities / Other Assets: 40%

You can then look at your catagories in even more detail:

Index Linked Gilts: 30%
Grade A / Quality Bonds: 25%
'Riskier' High Income Bonds: 5%
UK Equities: 10%
US Equities: 10%
European Equities: 6%
Emerging Markets: 4%
Asian Markets: 4%
Property: 3%
Specialist: 3%

You can then allocate your prefered funds within these catagories. My personal opinion is that you can look at all the information available to you, but there's no golden rule as to which I pick for each catagory, different stuff might appeal to me. To be honest, all my UK, US and European funds are trackers - low fees and I'm happy to just track the market.

I'm not saying the example above is 'correct' or what you should do, it's just an illustration of one way of doing it. You'll see from the figures above that if you applied it to your £55,000, you'd end up with about £1100 invested in Asian equities. Which is a bit different to about the 65% you plan to do now.

StevieJ

Linton wrote: »

Three years is NOT long term, it's short/medium. Personally I would only put a small percentage of my wealth in any equity funds if that really is the timescale. You would probably be better off with most of your money in some sort of higher interest savings even if the rates are low.

Something of an Oxymoron there

jem16

jonj123 wrote: »

I have about 55K out of which I can put away 35K for a long term investment of about 3 years which is when I'll finish university. My ultimate goal is to be able to buy a small flat outright by the time I finish uni

3 years is much too short a timeframe for investing. You could well end up with a significant drop just before you want to buy that flat.

Stick to savings for the majority of it.

jonj123

opinions4u wrote: »

jonj123 - you stated in a previuos post that you hade made a significant sum from running your own business.

Would you not be able to re-invest in that business at a greater return?

I suspect you understand how you've made your money much, much better than equity markets.

There are two reasons. One is the fact that it is very time consuming -specially for a student and secondly my business is on a small scale and I do not need to reinvest this much money into it so the 35K will remain untouched. I appreciate why many think I should just stick to a saving account but even the best saving accounts wouldn't give me the return that I need to reach my goal. This is the reason why I wish to purchase funds. I will try to come up with another selection of funds and post them on here again to received further feedback.
Many thanks for the feedback so far.

Cleaver

jonj123 wrote: »

I appreciate why many think I should just stick to a saving account but even the best saving accounts wouldn't give me the return that I need to reach my goal. This is the reason why I wish to purchase funds.

What is your goal for the end of the three year timeframe?

sabretoothtigger

All these posts need 'I think' in front of them, nobody knows exactly

You might be better off focusing on asia but in terms of risk management its a bit one sided.

I think even over 3 years funds will be better then savings, normally it would be best not to start with a short time frame but normally the government doesn't set interest rates so far below inflation.
Savings right now would mean more like losings

This is being done deliberately to support investments, housing, etc Anyone with cash in their pocket is being taxed indirectly by those who issue money
It does pay to stay liquid though


As well as gold commoditys will matter. Gold doesnt serve any purpose except as a store of value, most commoditys are useful to working nations but do not always store value as well

I prefer india to china. Its more chaotic though but china is too popular, I prefer the countries which supply china.
USA, UK and the west generally import from china but any sector which supplies china might be good
Europe has been very unpopular but Germany is a gigantic exporter even to china I bet

Japan exports to china, that market has been going down 20 years but I bet everyone here owns some Japanese product

As well as bric there is MENA which is middle east and north africa. Canada is a valid place to invest because they have so many commodities, Australia also and thats included in the pacific

Gilts means high quality western debt. Or to me that means over valued and low yield. Im considering emerging market bonds, investec do a fund with a good track record

Bric is just four countries but Schroder and probably others do a global emerging fund that covers a few more, some of these would be in an pacific asia fund

HL shows a graphic for it and I think they would show one for your proposed funds also if you enter them. Or try morningstar, enter them there

jonj123

Cleaver wrote: »

What is your goal for the end of the three year timeframe?

To have achieved around 10-15% growth.

dunstonh

Anyway thanks for your reply. I have chosen the following funds based on their past performance:

Aberdeen Asia Pacific A Accumulation
BlackRock Gold & General Accumulation Units
Fidelity South East Asia Accumulation Units
First State Greater China Growth Class A Accumulation
Lazard Emerging Markets Retail Income Units
Melchior Asian Opportunities A GBP Accumulation.

Wow. That selection is akin to someone who hasnt gone swimming before deciding to swim the channel next week.

You are close to as high risk as you can get in the unit trust universe. For a really short timescale and the high level of risk you are not really investing but speculating.

One of the biggest mistakes new investors make is to invest too high up the risk scale, to fashion invest and pick on the basis of past performance.

You though £430 loss in one week was bad. This selection could lose you half your value in a week.