How can I make 12% pa on my S&S ISA

Ark_Welder

Ilya_Ilyich wrote: »

Well according to the table from the barclays equity/gilt study in 2007 as displayed on this page.

...or a version from 2010. Check out the annualised real return (i.e. after inflation) for cash over the last one hundred and ten years...

http://www.stockbrokers.barclays.co.uk/content/Cotter/Cotter_BEGS.htm

Ilya_Ilyich

Thanks I knew there was a more recent one. Real returns of 2-3% (I'd argue results over last ~50 years are more applicable to today than results over last ~100) are quite respectable for cash compared to the net return from equity investing! Especially considering the much lower volatility.

Ark_Welder

Ilya_Ilyich wrote: »

Thanks I knew there was a more recent one. Real returns of 2-3% (I'd argue results over last ~50 years are more applicable to today than results over last ~100) are quite respectable for cash compared to the net return from equity investing! Especially considering the much lower volatility.

True. My interest, as it were, in the century figures is that it is a timescale over which a certain breed of inflationists and devaluationists like to quote. This (i.e. the Barclays study) had been in the back of my mind for a while but it just hadn't clicked properly into place. In all, it suggests having balanced portfolios and accepting that some assets do better than others some of the time, and then things change.

oldvicar

Ilya_Ilyich wrote: »

Thanks I knew there was a more recent one. Real returns of 2-3% (I'd argue results over last ~50 years are more applicable to today than results over last ~100) are quite respectable for cash compared to the net return from equity investing! Especially considering the much lower volatility.

I agree. If I look at the Barclays study figures it tells me that over the past 10, 20, or 50 years I would have been better off in cash rather than in a mainstream average UK equity pooled investment (unit trust / OEIC) after deducting typical Total Expenses (a TER of 3.3% over 50 years makes cash better - Equities 5.2% return vs cash 1.9%, after inflation). But there would have been more excitement (volatility) in equities along the way

It helps me understand why I feel some disappointment with expertly managed pooled investments

Out of curiosity, does anybody know what the average or industry wide TER on say OEICs is? And what further or 'hidden' reductions apply, again on average, beyond quoted TERs?

jamesd

This is the full Barclays Capital Equity Gilt Study 2011. Page 46 contains anticipated returns for various stock markets in the ROE column.

Page 93 has the table that is of greatest value for long term investment planning, the returns on investment for all of the ten year periods in the study so you can see the range of possible values and what is expected on average. Substantially better than cash but with more variation.

jamesjenkinsyates

bigfreddiel wrote: »

As title suggests - how can I make 12% (+/- 5% )pa on my S&S ISA and what risk profile would that be (1 - low, 10 - high)

Cheers

fj

I am personally creating a High Yielding Portfolio with good growth prospects. If you look at Aviva its future dividend yield is over 9%. If it grows by 3% in a year you reach your 12% but I wouldn't reccomend investing in just one share, that is merely an example.

ctdctd

jamesjenkinsyates wrote: »

I am personally creating a High Yielding Portfolio with good growth prospects. If you look at Aviva its future dividend yield is over 9%. If it grows by 3% in a year you reach your 12% but I wouldn't reccomend investing in just one share, that is merely an example.

And just for balance, I invested in Aviva for just this reason on August 8th.

Now down by 29% :mad: :mad:

So it could be a great buy now - or have another 29% down to go. Who knows?

JohnRo

ctdctd wrote: »

And just for balance, I invested in Aviva for just this reason on August 8th.

Now down by 29% :mad: :mad:

So it could be a great buy now - or have another 29% down to go. Who knows?

If you're investing in a HYP you don't worry about (very) short term price movements.

Private equities look set to make a very strong recovery once world leaders can get their act together and sort out the ridiculous banking situation that's dragging everyone else down with it.

jamesd

If you're investing in a high yield (share) portfolio you should at least watch short term price movements because the best time to put in more money is after a drop, when prices are lower and yields higher.

While the pure HYP approach is optimised for the US tax regime there's little reason in the UK not to do some selling and buying if you think you know when prices are good or bad compared to historical trends. Be wary of acting as US HYP advocates do just because they have a higher short term CGT rate than long term.