Interest rates so low - don't bother saving!

innovate

atush wrote: »

Those who remain invested don't lose out in the end

I am not disagreeing with you on the principle you are trying to get over, quite the contrary.

However, a blanket statement like this makes no allowance for people making bad investment decisions. There is a very real risk that people will lose out in the end (which they could reach very soon) if they pick the wrong investment vehicles/strategy.

Look no further than the "What to do with £1m" thread for people who'd blindly invest their entire capital into property, without demonstrating much of an appreciation of the subject. For those sorts of folks, it would rarely be a case of "sitting it out", unless they are stupidly lucky.

jimjames

atush wrote: »

No. Those who don't learn lessons from history are destined to make the same mistakes as those in the past.

For instance, any of you cash-only investors out there who are afriad of investment risk because you 'lost' money in the markets Forced yourself to lose. Because, if you looked at history (say the crash of 87) you saw that those who lose out, are the ones who sell in a panic. .

Even in the crash of 1987 the level of the FTSE at the end of the year was still higher than at the start of 1987 so you would only have lost money if you sold AND if you had only invested your money during that year. The FTSE was also then back at pre crash levels within 2 years so it did bounce back fairly quickly.

Thrugelmir

jimjames wrote: »

The FTSE was also then back at pre crash levels within 2 years so it did bounce back fairly quickly.

Not good for those retiring , or requiring the money during the interim period.

Every portfolio will have winners and losers. So the broader the remit of the portfolio. The more chance that the there'll be an overall gain.

gadgetmind

atush wrote: »

Those who remain invested don't lose out in the end as the investments tend to rise after those who panic have sold.

And those who rebalance do even better. During 2011, I was reducing my cash and bond exposure and buying some ridiculously cheap equities.

I've recently added to cash simply because I was below target allocation, many equities were starting to look toppy, and I got a chance to stick a few bob away for a year at 3.6%.

I've often wondered if those who panic sell equities do the same if the value of their house drops? Do they perhaps tell the agent to immediately put their new house back on the market and sell immediately if they get an offer 25% below what they've just paid?

gadgetmind

Thrugelmir wrote: »

Not good for those retiring , or requiring the money during the interim period.

How many who need the money out within two years will have a high equity exposure? Only the stupid ones ...

doughnutmachine

gadgetmind wrote: »

I've often wondered if those who panic sell equities do the same if the value of their house drops? Do they perhaps tell the agent to immediately put their new house back on the market and sell immediately if they get an offer 25% below what they've just paid?

i read somewhere that you should buy shares like you do your groceries, ie stock up when the stockmarket has a BOGOF* offer..

*buy one get one free

gadgetmind

doughnutmachine wrote: »

i read somewhere that you should buy shares like you do your groceries, ie stock up when the stockmarket has a BOGOF* offer..

You should have seen what a piggy I was in early 2009 and then late 2011. Imagine Homer Simpson on half price doughnut day!

High equities prices are *not* what investors actually want.

grey_gym_sock

gadgetmind wrote: »

I've often wondered if those who panic sell equities do the same if the value of their house drops? Do they perhaps tell the agent to immediately put their new house back on the market and sell immediately if they get an offer 25% below what they've just paid?

of course not. a house is worth what you paid for it, or what it's been valued at, or what your gardener's mother-in-law once implied it might be worth - whichever is the highest figure. that's why you can't lose money with bricks and mortar.

innovate

grey_gym_sock wrote: »

of course not. a house is worth what you paid for it, or what it's been valued at, or what your gardener's mother-in-law once implied it might be worth - whichever is the highest figure. that's why you can't lose money with bricks and mortar.

tell that to those who had their house repossessed due to negative equity

(may be I missed the humour)

jimjames

innovate wrote: »

tell that to those who had their house repossessed due to negative equity

(may be I missed the humour)

I think you did. Based on the post that the best safe place for cash is to buy houses.

As someone who bought a house for £60k and then sold 10 years later for £40k I know all about negative equity. Houses might be useful to live in but prices are not guaranteed.