A few questions on investing

JoeCrystal

Glen_Clark wrote: »

Alternatively just pick FTSE shares at random. By the law of averages, you will do better than the average professionally managed fund.

Or just invest in the companies that you rather like the idea. Basically gambling... in some hope that the overall return is better. In my case, at the moment, my simple return overall is +11% but companies are piles of returns from -37% to 78%. But only if you truly can afford to lose money.

Cheers

Joe

SnowMan

SailorSam wrote: »

There was a guy talking on Moneybox earlier about a free Ebook he had written with tips and the perils of share dealing. I've not read it yet but you can see and download it here ....
Monkey with a Pin | The investing book by Pete Comley

I listened to that moneybox item (available here on the iplayer, the item is at 8 min 24 secs) and have downloaded the book.

Be aware to download the book from the Monkey with a Pin website you have to register an email address with the site.

From a look at the first few chapters certainly looks worth a read but there are some glaring factual and analytical errors.

You can get the book from the Amazon Kindle store also here but it comes at a £1.53 charge.

jimjames

henrie wrote: »

bit risky investing money at the moment in shares, unless you are loaded!

Can you explain more?

Is it more risky to invest when shares have dropped or when shares are at a peak?

SnowMan

Monkeywithapin wrote: »

So far feedback from the 1000+ people who have downloaded it has been amazingly positive. Read some of the comments on the monkeywithapin website. See the blog post toady summarising them or the Comments page.

Sorry didn't intend to come across as negatively as it has come across.

I have only read some of the book so far and it is a good book and I would recommend people here download and read it. And of course we all like freebies here so that is a real bonus.

Many of us have discussed on this forum the inadequacies of the Barclays Equity Gilt Study so for you to come along and try and put some numbers on it to correct the biases in that report, to give a more balanced view of the cash vs equity argument is much needed. I don't under-estimate how difficult that task is given the absence of good historical information on best buy savings accounts.

I did read somewhere, I think it was when I registered that personal information could be passed to third parties, that was the reason for that comment. However on this page it says that information won't be passed to third parties. I did make it clear that I believed the book had been made available with the 'best of intentions'. As you have clarified things I will edit my earlier post accordingly to take out the references to privacy.

One of the inaccuracies I noticed was at the end of chapter 6 where you say that higher rate tax payers would hold accumulation units rather than income units to avoid paying additional dividend tax. This is incorrect as with accumulation units even though they don't get paid the dividend, it is merely reflected through teh unit price, a higher rate taxpayer would still need to pay additional tax on the distribution.

An analysis that I didn't agree with was in relation to survivorship bias in relation to the FTSE 100 index. It just didn't make sense to me. If you hold the 100 stocks in the index then they won't necessarily lag the index going forward as you seemed to suggest; they may do in some time periods but the opposite may happen in other time periods and they may outperform. Those growing companies coming into the 100 index won't necessarily do better in the future than those companies who have fallen to the bottom of the 100 index, if that were true then everyone would just buy the companies coming into the index and then subsequently 'outperform' the market. The market should price any such effects out. There is a separate argument sometimes put forward that the existence of trackers having to buy shares around the time they enter the index can distort prices but that is a separate argument.

I will feedback my comments via your website when I have read the full book.

For those interested the Daily Mail article is here and the BBC Radio 4 Moneybox item is available here on the iplayer, the item is at 8 min 24 secs).

I wish you good luck with the book. Thanks for writing it and making it available for free.

mr_fishbulb

Thanks Pete Monkey - just downloaded it.

SnowMan

Monkeywithapin wrote: »

Snowman,
You are not the first to tell me about my error on Acc units, but thanks anyway. It will be fixed in v2. I am slightly left wondering what is point of having Acc and Inc units therefore? You'd think the Unit Trust industry would have ensured they had a product which delivered just capital gains like the Investment trust industry has with is splits concept.

My understanding is that accumulation units are useful for investors as it makes it easier to value their holdings.

If they have bought 1000 units and the unit price is 0.500 then they just have to look up the price to know their holding is worth £500. With income units where dividends are automatically reinvested of course the number of units increases after a distribution and the unit price falls accordingly.

The slight difference with accumulation units taxwise is that the dividend for capital gains tax purposes is treated as an increase to the purchase price at the date of the original purchase of the units. I believe that with income units (used with automatic reinvestment of dividends) the reinvestment of the dividend is treated as a new purchase at the time the dividend is paid, I am also a private investor and don't work in the financial services industry so may be wrong there). The simplification was of more importance before the abolishing of taper relief.

So holding accumulation units makes it both easier to keep track of investments solely by looking up the unit price, and also to easily check that you are within the capital gains tax exemption.

Incidentally the fact that the dividends can be added to the purchase price for capital gains purposes reduces the possibility that the annual capital gains tax (with careful mangement) will be exceeeded given as you mention most of the non-inflationary return is through dividends.


I've set up a thread on the freebies board to mention the book so hopefully more people will see it there. You never know it might make it into one of Martin's weekly emails, you would certainly get plenty of dowloads if that happened.

Once again good luck with your excellent book :T

psychic_teabag

SnowMan wrote: »

Be aware to download the book from the Monkey with a Pin website you have to register an email address with the site.

There are various ways of generating transient email addresses. I tend to use http://www.mailinator.com

Credit-Crunched

henrie wrote: »

bit risky investing money at the moment in shares, unless you are loaded!

Its always risky investing in shares, if anything now is a potentially good time to purchase as thee unit cost is less.

They can only go up, or can they? As my old man used to say never try to catch a falling knife!

Radiantsoul

Monkeywithapin wrote: »

Snowman,

Hi

You are not the first to tell me about my error on Acc units, but thanks anyway. It will be fixed in v2. I am slightly left wondering what is point of having Acc and Inc units therefore? You'd think the Unit Trust industry would have ensured they had a product which delivered just capital gains like the Investment trust industry has with is splits concept.

It is probably a mixture of a lower hassle compared to having to manually go into an account and reinvest dividend cash and the avoidance of initial investment fees on those funds that charge them.

Linton

Monkeywithapin wrote: »

..........

I am slightly left wondering what is point of having Acc and Inc units therefore?

Acc units are less hassle and cheaper for people chasing long term capital gains.

Inc units are less hassle and cheaper for the people who want the steady income - eg pensioners.