How to fall in love with saving money

cathybird

115K wrote: »

Thanks for your helpful post, this forum has taught me so much.:)

This is what worries me about the idea of investing. I don't think I am confident enough to take risks at the moment. Maybe when my mortgage is at a more reasonable level (around £20k) and my ISA savings are up more I will consider making different choices with my money.

There are loads of good books around - a list on this forum mentions Smarter Investing, by Tim Hale, which I have bought and am reading. I'm not rushing into it either ... I need to take my time and do lots of thinking. Don't want to be rash.

cathybird

Eco Miser, thanks - that's a very useful and clear explanation. I hope you are keeping warm now that the weather has turned just that bit chillier than it was before.

cathybird

WantToBeSE wrote: »

Hehe, same here! I have gone from "I can't wait for payday, i want to buy (insert name of clothing here)" to "I can't wait for payday, i want to save more money"...what have you all done to me?? :rotfl:

It's all good though

Eco_Miser

cathybird wrote: »

I think the drip-feeding idea is a good one. Though I was reading some advice column in a financial publication yesterday and the advice from three financial experts went as follows: "don't buy individual stocks and shares, buy funds"; "don't buy funds, go the passive investing route"; "don't go the passive investment route, buy individual stocks and shares" :rotfl:

That happens on this board too.:) They could all be right, it depends on the aims and attitude of the individual investor. Haing all three types in your portfolio could be sensible.

I've got both passive (index tracker) and active funds, and fixed interest funds, but no individual stocks or shares yet. They seem too much of a gamble for someone who is not going to be watching what the companies are doing in the real world.

Eco_Miser

115K wrote: »

Eco_Miser wrote: »

In the worst case, a company could go bust and the shareholders lose all their investment.
There are no guarantees, and wild swings in value as sentiment changes.

This is what worries me about the idea of investing. I don't think I am confident enough to take risks at the moment.

This is why you should never put more than a tiny fraction of your total wealth into an individual company. Either buy lots of different shares (at least 20 is recommended), or, easier, invest in funds and let the fund manger spread your money, and that of all the other investors, over hundreds of companies. Of couse, if the fund manager is rubbish ...

115K wrote: »

Maybe when my mortgage is at a more reasonable level (around £20k) and my ISA savings are up more I will consider making different choices with my money.

You are quite right not to take risks until you are comfortable with them.

gallygirl

Eco_Miser wrote: »

Of couse, if the fund manager is rubbish ...
You are quite right not to take risks until you are comfortable with them.

Well, according to Tim Hale virtually none of them beat the market in the long run, after costs. A few do - but past performance no guarantee etc. so how are you going to choose them?

As Mr Eastwood once said 'You've got to ask yourself one question: "Do I feel lucky?" Well, do ya, punk'

cathybird

Haven't finished reading Tim Hale yet but he essentially says don't even bother with individual stocks and shares. I must confess I quite like the idea of having a slice of individual companies tho and find it hard to believe that Warren Buffett is the only person in the world smart enough to make this work (not saying I am btw). Obviously they have to be carefully diversified, which is tricky. But I quite like the idea of a combination of passive investing and a modest number of stocks with dividends reinvested. Anyway. I am getting ahead of myself. Have to learn to save first

cathybird

I do have enough in emergency funds in the bank (not via my own efforts saving but a lump sum I received) and a bit left over so do want to start drip-feeding into the stock market sooner rather than later. If I commit myself to an amount it can go straight out of my pay at payday and that way I'll have to economise on the rest of it.

Eco_Miser

[Fund Managers]

gallygirl wrote: »

Well, according to Tim Hale virtually none of them beat the market in the long run, after costs. A few do - but past performance no guarantee etc. so how are you going to choose them?

Even index trackers have managers.

Careful analysis shows (according to posts on here) that some managers are at the top of the performance league one year and the bottom the following year. So trying to pick a winner based on last year's performance may well result in a loss.
However some managers are consistently well down the league, avoiding these will improve your chances of picking a winner.
A few managers are consistently in the upper half of the table, picking these should be profitable, but you just might buy in just as their run of good luck ends, or they change their stock-picker.

cathybird

Eco_Miser wrote: »

[Fund Managers]

However some managers are consistently well down the league, avoiding these will improve your chances of picking a winner.

True, yet presumably investors still keep giving them their money