NS&I index linked certs

bowlhead99

It depends what you mean by 'the market'. Some funds had pushed to all-time highs supported by low interest rates and have already retraced a bit this year (e.g. smaller companies funds). Others had been falling and were pretty damn cheap earlier this year and have since put on a nice chunk in the last quarter or two (e.g. emerging markets funds).

Overall, the 'market' is more expensive than it was a few years back but there are many sectors making up the world's investible market. As an example from the low point of 2011, the UK FTSE 100 is probably up 45% (say 36% price and 9% dividends), while from the high point of 2011 it's only half that (maybe 13% price and 9% dividends). But UK FTSE 100 is only one of many markets and some of them (like the smallcaps) have stormed up while others have been flatter.

If you look at a daily chart you see 'retracing' every month - you don't get 20 business days in a row without some days being lower than the previous day. But this is always the case. I think yes, the 'common view' is that the market (generalising globally) is more likely to have a retrace than it was a few years back because it is more fully valued now, if you look at what the share prices are compared to reported profits. But that doesn't mean it will retrace significantly this quarter or next quarter or in two years time. Just, probably, eventually.

If the markets went up in a straight line you would always be buying at the peak of a market and it would never be the wrong thing to do. But we are in a world where people can and do lose money from time to time. So, only invest in the market if you can stand the risk of being in the market. But also realise that moving to a 'safe haven' now or in 2011 and having the market go on without you, is also a risk of sorts because the ILSC keeps up with how much a loaf of bread costs but not how many loaves of bread the Joneses next door can afford when they've been investing in smallcaps and getting 20%+ a year instead of 3%.

Consider which bit of the market seems less overdue for a retrace and how much you are already invested into it. Consider how much your life would be impacted if the money that you moved from your ILSCs (which you weren't touching) was moved into fluctuating market based investments (which you weren't touching) and their value changed temporarily. If you don't need the money for the long term and you aren't touching it from day to day, then whether it 'retraces' from day to day doesn't make a damn bit of difference.

All that is of concern is whether it is worth more when you want to access it in X years than what you would have had available to you via the other method in X years. If you might need the cash in less than X years or you expect there is more money to be made by buying in in less than X years when 'markets' are cheap, then consider those options instead of piling back into the markets

Rollinghome

oneilly wrote: »

It seems the common view is the market has peaked and will retrace, what's your predictions??

All that can be predicted with certainty is that the markets will at some point stop going up and start going down instead. They always do. Rather trickier is predicting when that will happen, especially as it depends so heavily on whatever decisions are made by the central banks.

We now also know that anyone who wasn't invested over recent years has lost out, that investment assets are very much more expensive, and that recent levels of return are unlikely to be repeated for a long time.

If it's any comfort, no one knew back then that the returns would be so good: doomsters like Moneyweek were telling us the falls we'd seen in 2008 were just the start of the decent into the pit and anyone would be mad to invest.

So the big profits are the reward for taking risk, which is what investment is about. You on the other hand avoided the risk and have still been rewarded with a return above inflation. It could have gone the other way if the journos at Moneyweek had been right and the more prudent would have been here on MSE telling the rest of us not to be so rash next time.

The easiest way to avoid regrets is to hedge your bets knowing that while you may not call it 100% right, you won't be totally wrong either.

oneilly

All very interesting points of view, thanks for taking the time!