£5000 lump sum to invest and then add to

jimjames

Aegis wrote: »

"Past performance is no guarantee of future performance, and the value of investments can fall as well as rise"

It's very dangerous to try to play the commodity game as a beginner.

Agreed. I could post a graph that showed a 5 fold rise in a particular share over the last 6 months. That doesn't mean that it would be a good idea to invest in it and I think it is irresponsible for someone to post suggestions like that.

maxmycardagain

Gold is a finite resource, it is the measure of a country's wealth and stability, it cannot be manufactured or, like cash, printed

there is only approx 130,000 tonnes of gold in the world

what would you prefer to trust, imaginary cash to be lost by bankers worldwide or something that has risen 10 fold in ten years?...

maxmycardagain

jimjames, what suggestion did i post exactly? i posted a graph

if someone wanted to buy "X" amount of gold per month now (lets say a gold sovereign or rand) and in 30 years time wanted to sell one per week do you think they would lose?

the BOE base rate has never been lower but it isnt reflected in low lending rates to the public, who is making the extra?

Aegis

maxmycardagain wrote: »

Gold is a finite resource, it is the measure of a country's wealth and stability, it cannot be manufactured or, like cash, printed

Many commodities are a finite resource. It's no guarantee that those commodities are a good investment.

there is only approx 130,000 tonnes of gold in the world

See above.

what would you prefer to trust, imaginary cash to be lost by bankers worldwide or something that has risen 10 fold in ten years?...

First point: it's not a dichotomy between cash and gold. Almost everyone here is aware that keeping long term cash deposits is going to result in a loss in real value due to inflation. That's why investments exist: to try to maintain value and to either generate income or to acquire more value. However, the majority of mainstream investments have the potential for an underlying income stream to be generated and either rolled up into the investment or paid out. Commodity investments don't have this income stream, so it's entirely down to the fundamentals, which generally haven't changed much over the last 10 years.

Secondly, as I already mentioned, past performance is no guarantee of future performance. Even if it were, the chart for gold is now oddly reminiscent of the late 70s and early 80s, where gold spiked up and increased its value by many times over a several-year period, then crashed back down again afterwards. Buying towards the top of that bubble would still have resulted in a loss in real terms after 30 years, so there are lessons to learn from the past about buying just because prices have risen.

jimjames, what suggestion did i post exactly? i posted a graph

You posted a chart of gold price in a thread with someone asking how they should invest and you added the word "gold" immediately after. Were people not supposed to view this as a suggestion to buy? If so, you should make it clear that you were posting a warning about gold rather than a suggestion to buy.

if someone wanted to buy "X" amount of gold per month now (lets say a gold sovereign or rand) and in 30 years time wanted to sell one per week do you think they would lose?

That depends on the price of gold. If it's fallen in real terms (like it has in the last 30 years or so) then it could be a loss in real terms, which would be terrible for a 30 year investment.

the BOE base rate has never been lower but it isnt reflected in low lending rates to the public, who is making the extra?

You can currently get mortgage deals at 2% or lower with some lenders. You can get lifetime tracker rates at not much above that. Extremely low lending rates are available to the public under some conditions. Savings rates over 3% are also available.

What does the base rate have to do with this...?

jimjames

Aegis has summed it up perfectly.

FTSE level 1984 (earliest date available)
1,108.10
FTSE level 2011
5718

Increase - 5x

Gold 1980
$850
Gold 2011
$1418
Increase 1.7x

So gold has 4 years more to grow but hasn't kept up with inflation. If you invested £5000 in 1980 in gold it would now be worth £8500 or £25000 in shares. Which is the better investment?

MikeInOman

Guys,

Sincerely, thank you all for this advice and for very obviously taking some time to help me; i am grateful and humbled by your generosity in terms of your time.

Aegis, the Golden rules are great and like all great truisms make immediately sense. If you have more of them then i would be delighted to read them.

Some feedback (or check of understanding) from me:

There is probably a lot more that my wife can do with ISA's through HL; i didn't realise that the investment levels were so high.
Savings in cash, while immediately available, do not seem to keep up with inflation.
Commodities can grow (and factually gold has factorially grown) but long term investments in the market would appear to be a stronger option.

So in addition to ISA's for my wife…is there anything that you believe that i, as a non- UK tax payer should be thinking about. If it helps i am 45 and expect to work for another 20 year insha' Allah (God willing) as they say out here every couple of seconds.

This is so helpful guys thanks

Mike

maxmycardagain

The "institutions" hate the thought of joe public holding gold as an investment, mainly because they would prefer you gave THEM your cash so THEY can invest it and cream it off for themselves

Indeed some countries restrict the amount of gold an indvidual may hold, for fear the holder can yield too much power

Lets put it this way, Icebank only lost cash... nuff said

maxmycardagain

jimjames wrote: »

Aegis has summed it up perfectly.

FTSE level 1984 (earliest date available)
1,108.10
FTSE level 2011
5718

Increase - 5x

Gold 1980
$850
Gold 2011
$1418
Increase 1.7x

So gold has 4 years more to grow but hasn't kept up with inflation. If you invested £5000 in 1980 in gold it would now be worth £8500 or £25000 in shares. Which is the better investment?

how many pension funds are paying zilch (or a lot less than forecast?)

goverments/banks/insurance company/pensions funds NEED cash, but arent keen on parting with it, who do you think pays bankers bonuses? not the banks!

maxmycardagain

and ask someone with shares in a company thats gone tits up which they would prefer...

Aegis

maxmycardagain wrote: »

The "institutions" hate the thought of joe public holding gold as an investment, mainly because they would prefer you gave THEM your cash so THEY can invest it and cream it off for themselves

Actually "the institutions" don't care what you hold, "they" get their dealing costs regardless of what you hold. Buy gold and there are going to be transactional fees for doing so. Buy shares and there are going to be transactional fees for doing so. Etc. That's just the way the world works, you don't get something for nothing.

If you want managed portfolios, you pay for them. If you want to buy something yourself, you pay the fees and leave it at that. Not a great argument in favour of gold right here, as you can buy all sorts of other investments with minimal charges if you so desire.

Indeed some countries restrict the amount of gold an indvidual may hold, for fear the holder can yield too much power

Do you have any quotes confirming that claim? I would imagine the restriction is more because governments generally want to keep wealth moving around rather than leaving it static, hence wanting to see a quote from a reputable source.

Lets put it this way, Icebank only lost cash... nuff said

Icesave lost cash, savers with Icesave have been repaid out of compensation arrangements. Not sure what point you were trying to make other than that...

maxmycardagain wrote: »

how many pension funds are paying zilch (or a lot less than forecast?)

Nothing to do with the worth of gold as an investment.

goverments/banks/insurance company/pensions funds NEED cash, but arent keen on parting with it, who do you think pays bankers bonuses? not the banks!

Actually it IS the banks. They pay bonuses out of their annual profits. There are a few banks which received a bailout that still pay bonuses, however as the government took partial ownership of those companies whilst providing funds, you can be safe in the knowledge that it was an investment, not a series of charitable donations.

maxmycardagain wrote: »

and ask someone with shares in a company thats gone tits up which they would prefer...

Also a poor strategy if that was their only investment. Diversification is the key. My own portfolio started out not much bigger than the OP, and probably had exposure to 3-400 companies. It's possible that a few of them have since gone bust. I haven't noticed.