Surplus income - rethinking investing and considering term deposit instead?

Ifts

Credit-Crunched wrote: »

Regarding my experience, I do not proclaim to be a market reader, however I do have a significant expertise in civil engineering / geophysics and rock structure. As such in a good position to review posts from speculative oil companies drilling.

This was from an article I was reading on TIM website, it reminded me of your post:

John_Cotter,_Barclays_Stockbrokers wrote:

It makes sense to focus at least initially on sectors of the market that you are familiar with, work in, or at least interest you. Warren Buffett calls it ‘the investors circle of competence,’ Peter Lynch refers to it ‘investing in what you know’. I would call it common sense.

Read more: http://www.thisismoney.co.uk/money/investing/article-2113984/INVESTING-TIPS-How-successful-investor-tell-money-making-secrets.html#ixzz1pFVwod7z

atush

tony2toes wrote: »

Most financial advisors, brokers or sales reps, banks are reluctant to recommend Investment Trusts (ITs) because these do not pay a nice fat commission to the broker/financial advisor/sales rep. ITs have a better % annual performance track record than their ISA funds (unit trusts with tax free wrappers) and ultra low annual management charges e.g. 0.75% etc and no initial charges. Consider doing your due diligence in ITs and the sectors they invest in. Quite a lot of ITs now come with their own ISA tax-free wrappers - verify before investing.

Instead they choose to pump and overhype all the ISA funds (unit trusts with tax free wrappers) and plain unit trusts because these pay a fixed commission.

Preaching to the choir Tony, I am very fond of ITs ;-)

gadgetmind

atush wrote: »

Preaching to the choir Tony, I am very fond of ITs ;-)

Me too. I've used them for many years for money preservation (RIT, RICA, PNL) and have upped this over the last 18 months. I'm also now using them for growth investing in niche areas.

I currently only hold two funds in my SIPP and only First State Global Listed Infrastructure in any great quantity. If there is an IT equivalent of this fund, please let me know. I looked at the various trackers but wanted less developed world exposure than they offered, and I couldn't be bothered putting something together myself with the likes of BRXX.

gadgetmind

tony2toes wrote: »

Most financial advisors, brokers or sales reps, banks are reluctant to recommend Investment Trusts (ITs) because these do not pay a nice fat commission to the broker/financial advisor/sales rep.

That's one factor, but some ITs do need to work on their governance, and many allow discounts and premiums to get out of hand.

Neverland

gadgetmind wrote: »

That's one factor, but some ITs do need to work on their governance, and many allow discounts and premiums to get out of hand.

Some of the easiest money I ever made was buying ITs at high discounts to the underlying assets (c. 25%)when they were unfashionable and watching the discounts narrow as the NAV went up when the underlying investments went back into fashion

As an example when I started investing in the 90s I was buying RIT shares at about £3.50 at a 20%+ discount to NAV and they are now over £12 I think because it was viewed as the Rothschild family's toy not a proper investment trust. It hasn't changed at all, just the perception of its performance has changed :money:

Other types of trust's I made good money with was emerging market trusts and private equity trusts at the start of economic recoveries

The more esoteric the underlying investment the higher the potential for this

Obviously this is all kind of high risk

Totton

gadgetmind wrote: »

many allow discounts and premiums to get out of hand.

Not too sure I agree with that part, the discount/premium is just a reflection of market popularity. A basic part of IT's being that they are not forced to issue or cancel units as with OEICS, hence the manager has better control over the underlying asset allocation rather than having to keep a side pot of units for trading.

Of course some of those discounts are huge, e.g. Private Equity currently in the -30's but savvy investors can use that to take on additional portfolio risk if they wish which makes things much more interesting if you can stand the fun :-)

On the other hand an IT trading at say +8% with a 5% difference between buy & sell may be one to steer clear off but is also something that reflects market demand, for example Capital Gearing.

Anyway, not arguing with you but simply disagreeing, I see no point in making IT's as if they were OEICS.

Regards,
Mickey

gadgetmind

Totton wrote: »

Not too sure I agree with that part, the discount/premium is just a reflection of market popularity.

So what's an IFA to do? Say, "Yes, you should invest in this IT, but not yet. Maybe give it until next year or the year after."

I'm happy to keep watching an IT (or equity) looking for an "in", but I'm not sure it's for everyone.