Preparing for the year ahead - poor savings rates and an uncertain market

newfoundglory

Happy new year everyone! :j

13 is lucky for some, but I just wondered what savers out there are planning for the year ahead - with savings rates currently in free-fall and more rate drops likely to follow.

What are you planning to do?

Personally, I have started opening a couple of the current 'best rate' accounts now (even though they are not required) in anticipation that things are going to get worse before they get better.

Are you going to invest more into investment funds or high-dividend-yield shares?

Are you going to just cash in your savings and buy a property?

Or are you going to do nothing at all?

gadgetmind

Other than monthly drip-feeds into pensions, I'm not going to have fresh cash until April. I'm probably going to move this into equities but won't know exactly what until I do my annual rebalance and look around at what markets and sectors offer value.

atush

When markets are uncertain, it is quite often a time to buy certain equities esp ones with good dividend records. But many have been buying these for over a year now.

I will most likely (at these rates of interest for cash and the bubble in gilts and bonds) be a buyer of equities next year. I may readjust if and when interest rates rise, and if there are any new ILSCs coming out.

jimjames

atush wrote: »

When markets are uncertain, it is quite often a time to buy certain equities esp ones with good dividend records. But many have been buying these for over a year now.

Exactly. The time not to buy is when everything thinks it is perfect and that there is no risk or uncertainty!

I'm investing long term so daily fluctuations are irrelevant other than trying to add extra when the dips happen.

Not sure why anyone would cash in and buy a property if they are risk averse and unless they had substantial other investments.

gkerr4

equities, equities equities - i'm planning shifting more reserves into equities this year - bit time i hope. I currently have around 18% of assets in equities and i hope to raise this to over a third during the next few months. 'cliff' issues aside, the yanks are bullish (for the time being at least) and this will (i think) help add buoyancy to the wider markets.

I'm a short term trader investor who spends a lot of time researching and managed 32% return on my equities in 2012 - hoping to repeat in the new year.

best of luck folks!

atush

Cashing in all your investments to buy a single property (that you don't live in) is very high risk behavior. Certainly more high risk that a well balanced portfolio.

I certainly would not EVER consider this.

If I had a huge pile of cash, and a good quantity in Stocks, funds, trusts bonds in pensions and outside etc, then I would consider investing a % of my extra cash in a BTL property if I had no other property exposure apart from my home. But I would never make it more than a sideline of my main financial planning.

Diversification is always key.

N1AK

atush wrote: »

Cashing in all your investments to buy a single property (that you don't live in) is very high risk behavior. Certainly more high risk that a well balanced portfolio.

I certainly would not EVER consider this.

Definitely agree with atush on this. I'm considering property purely as a way to leverage our ability to lend and the current low rates. However I wouldn't want to lock up any-more cash in property than I can get away with.

My calculation is simply how confident I am that I can cover mortgage costs (inc repayment over 20 years) with rental payments based on a ~25% deposit. If the property value remains unchanged in real terms (and rental payments cover nothing but mortgage/running costs) than my initial investment has still increased by 300% over 20 years which is a decent return.

Mirno

300% increase over 20 years is a little over 7%, so if this takes into account reasonable void periods, and renovation costs periodically, then it's an excellent rate of return.

Even so, it exposes you to a specific set of risks, and in general the smart money tends to hedge it's bets.
If you're happy with this risk profile then the rewards you've calculated are reasonable.

Jegersmart

Hi

Personally I don't schedule my asset allocation on a calendar basis, it entirely depends on market activity.

As posted over the last couple of months I have been increasing my exposure to Japan and China (as well as APAC in general) which has done rather well, and to Natural Resources/Mining which is kind of breaking even right now but should do well.

Overall I am holding only around 25% fixed income and around 5% cash - the rest is in equities or equity derivatives.

In terms of geographical breakdown I currently have 52.22% Greater Asia, 25.12% Greater Europe and 22.66% Americas. These are overall, for all asset classes. My largest country holding is Japan at 22.4%, UK at 15.06% (more bonds than equities), US 11.26% and Australia 10.7% followed by Canada and China just behind those. China will increase somewhat shortly.

All imho.

J