FTSE All Share Tracker?

thor

Linton wrote: »

What time frame are you looking at - when would you want to withdraw the money?

If the answer is say the six years you have til retirement then IMHO an allshare tracker or any other 100% investment in equity (shares) would be risky in that prices could well be lower than your purchase price when you wanted to sell. Look what has happened to share prices in the past 6 years. And the problem is that in these troubled and global times share prices around the world tend to move together responding to "events", at least in the short term.

If you dont need to touch the money for longer then the risk decreases.

I always hear this but why? How can anyone say that risk decreases? I rather think that you cannot predict anything at all especially after what we have seen in the financial sector over the last 4 years.

dunstonh

I always hear this but why? How can anyone say that risk decreases?

Risk is measured in a number of ways. Timescale is one of them. You also have shortfall risk, inflation risk, legislative risk and provider risk on top of the normal investment risk.

I rather think that you cannot predict anything at all especially after what we have seen in the financial sector over the last 4 years.

Exactly. just 4 years. A typical economic cycle is 8-10 years. If you pick just half of that period then you dont know if you will get the bad part of the cycle, the nothing part or the good part. The longer you invest, the more of the economic cycle will be seen.

Linton

dunstonh wrote: »

Risk is measured in a number of ways. Timescale is one of them. You also have shortfall risk, inflation risk, legislative risk and provider risk on top of the normal investment risk.



Exactly. just 4 years. A typical economic cycle is 8-10 years. If you pick just half of that period then you dont know if you will get the bad part of the cycle, the nothing part or the good part. The longer you invest, the more of the economic cycle will be seen.

Agreed - plus:

For investing to succeed there needs to be an underlying trend upwards. This will come from business expansion, from reinvestment of dividends and of course inflation. The trend is often small compared with the fluctuations. However over sufficient time its effect predominates.

So for example there was a very large crash in 2003 of nearly 50% in the FTSE100 which was of similar magnitude to the 2008 credit crunch crash, but at the minimum point the FTSE100 was only back to what it was in 1996, which was at the time a maximum. So taking dividends into account only people newly investing a lump sum in the FTSE100 after say 1998 would have lost money even if they sold at the worst point in 2003.

DietIrnBru

I've a FTSE tracker too - not been great preformance but the cost average has been working - interesting to see how my £10 buys more one month and less the next

Sceptic001

I note that the HSBC All-share tracker is UK-domiciled. Does this mean that there is stamp duty on purchases?

I have previously used the ishares FTSE 100 tracker, which is domiciled in Ireland and thus does not incur stamp duty.

Perelandra

thor wrote: »

I always hear this but why? How can anyone say that risk decreases? I rather think that you cannot predict anything at all especially after what we have seen in the financial sector over the last 4 years.

Two reasons- the effect of cycles, and flexibility on withdrawal.

The reasoning below assumes you believe in cycles in the assets world.


Example figures only!

If the average cycle is 10 years
And the average peak-to-peak growth rate is 5% (nominal or real doesn't matter in this example)
And the average peak-to-trough is 30%

If you invest at a peak, then in 5 years time your investment could be worth only 70% of what you originally put into it (peak to trough).

If you invest at a peak, and have to withdraw in 35 years time, then you can expect to be leaving in a trough (in this simpligeed example!), but will have gone through 3.5 cycles, so your return will be: 3 x 5%, - 30% = a loss of 15%. The risk is clearly lower if you're in for the long haul. Still bad, though, as you're restricted to when

If you invest at a peak, and have flexibility over when to withdraw, say 30 to 40 years time, then you will stand more chance of not having to "cash in" during the final trough. So in this example, you could either sell the investments after 30 years (3 peak-to-peaks) or after 40 (4 peak-to-peaks) if either of these look favourable at the time.

Linton

Sceptic001 wrote: »

I note that the HSBC All-share tracker is UK-domiciled. Does this mean that there is stamp duty on purchases?

I have previously used the ishares FTSE 100 tracker, which is domiciled in Ireland and thus does not incur stamp duty.

The HSBC tracker is a fund, not a share. There is no stamp duty on funds.

Eco_Miser

dunstonh wrote: »

Exactly. just 4 years. A typical economic cycle is 8-10 years. If you pick just half of that period then you dont know if you will get the bad part of the cycle, the nothing part or the good part.

But when you invest, you know how long it's been since the last crash, so the only question is how long the current cycle is actually going to be.

dunstonh wrote: »

The longer you invest, the more of the economic cycle will be seen.

So the longer you invest, the greater the chance of experiencing a crash. Doesn't seem a risk-reducing strategy to me.

dunstonh

So the longer you invest, the greater the chance of experiencing a crash. Doesn't seem a risk-reducing strategy to me.

When you invest you know there will be crashes. You just don't know when. So, if you go into investing hoping to avoid crashes then you are going about it the wrong way. Of course, you may get lucky with timing but trying to time things will see you get it wrong as often as you get it right and often having just stuck to investing through the crash and reinvesting distributions would have yielded better results.

black_taxi_2

when i watch tv--some expert comes on---says buy when index is low or feel is value

interviewer---is the index low or value now?

answer----depends on your time period

so he cant answer the question----more sh^t comes out there mouth than there ar*e