Time in the market

Newbie2saving

Evening,

Would like your opinion on the following....

My IFA has advised it isn't a great time to invest in the market, this has been ongoing for about 8months, he says we could be heading for unprecidented times in the short to medium term. This is all well and good, but I feel I am missing out on 'time in the market'. With cash rates I was averaging 3.5% until late, now with bonuses dropping off (the largest one dropping in June) I am averaging around 2.5% which is obviously loosing money against inflation. I have a lump sum already invested through my IFA and I run a smaller portfolio myself. As a 'newish' investor I don't want to take my pot much further in terms of capital input, I want my IFA to do that for me. Surely there are areas / suggestions which could be made for current investment for a further lump sum? I would obviously love this investment to make a large profit, but in reality as long as it hit 5% after charges I would be happy. This is money I won't need for 15yrs+, he is aware I am a medium risk investor.

Any thoughts or comments appreciated....

lesstoinvest

Well you are paying your IFA for his advice.

I'm not sure what the size of your pot is, but unless it is very large, it may not be realistic for him to pick out a number of individual 'undervalued assets'.

There isn't really such a thing as time in the market, you can win or lose each day, and it's quite possible that if you waited you could end up with 20% more in your pot at the end.

Equally, maybe not.

Nobody knows.

But if you don't like your IFA's advice, you don't have to take it.

Newbie2saving

Appreciate your response, good to get an opinion from someone else.

Not sure if I like or dislike the IFA's thoughts, highlights my niavity in this area! One of the reasons I like being able to come and ask MSE'rs their thoughts, thanks.

bigfreddiel

just out of interest how much did you pay your ifa for that advice?

cheers

fj

Ark_Welder

You don't list your current funds so there might be an overlap with any suggestions made.

For instance, you could look at funds that seek to protect capital (so funds from Troy, Ruffer, Newton - multi-asset funds, but preferably not fund of funds), or a fund where the fund manager also believes that it isn't a great time to invest (such as Alistair Mundy of Investec - there are others). As long as you can accept that these funds might underperform an index when markets are rising.

sabretoothtigger

The IFA might well be right but cash isnt safe either. Can you not pay down a mortgage instead, that might be good advice as alternative to investing elsewhere

Shaolin_Monkey

Ask for evidence of the reliability of your IFA's crystal ball and then decide whether you want to take his predictions

I know of an IFA who was keeping a client I know (and I assume a whole bunch of clients) in very cautious funds for a period of time (late '09 to mid 2011) on the basis that the markets looked overvalued and were due a correction. The clients missed most equity growth during that period. In mid 2011 he appeared to have a change of heart and, deciding there would be no correction, switched the client I know's portfolio (and probably others) into 100% high risk specialist equity funds. Of course the market subsequently corrected within weeks, and the client lost a packet (20%+ in a short space of time). Unhappy with this, the client decided the IFA had invested above his risk profile and sold out soon after the 2011 correction had "bottomed out" and ended his relationship with the IFA, deciding to go DIY to try to recover his losses. True story...

I guess what I'm trying to say is beware of any IFA who claims to have inside knowledge of what the markets are going to do next or claims to be able to successfully trade in and out of funds according to market conditions. It's likely to be b******s

sabretoothtigger

Thats the whipsaw effect, 2011 was the debt crisis. Great time to be buying on a few things even if it did fall at first

lost a packet (20%+ in a short space of time

short space of time is the dangerous thinking, not sure I'd blame the IFA except it best not to enter all or nothing

http://www.investopedia.com/terms/w/whipsaw.asp
expect more of that

kidmugsy

It's not time in the market that matters of itself, it's whether you buy assets that are cheap or are expensive. If you get 'em cheap and then stay in the market for a decent time, that's when you can make money. The best two ways of judging the general expensiveness of an equity market is its "q" value, or Shiller's CAPE calculation; happily the two broadly agree. The man to read on this is Andrew Smithers.

After that, I suspect that the next important move is to diversify across investments that are uncorrelated; but it's their future correlation that interests you, not their past - so it's crystal balls again.

Remember that the advice that you're bound to do well by buying equities and holding them for ages is based almost entirely on the history of only two equity markets, the US and the UK. If the future equity market of the UK turns out to be more like the historical markets of Italy or Austria or Belgium or most other places, the usual advice might prove very poor indeed.

IronWolf

Get a new IFA. Noone can predict whether the market is going up or down and anyone that claims they can pre-empt the market should be dropped.

Im curious to know at what point he thinks the future wont be 'unprecedented'

brandydog

you could have been drip feeding the market