Is having 0% of your savings as cash silly?

sambessey

These Chinese AIM companies trade on exceptionally low P/E ratios- hence the reason I buy them If the Chinese economy suddenly lost its insatiable appetite for growth and manufactring ground to a halt, then yes I would be in trouble- but they are not linked to the bubble exchanges over on China where a lot of companies trade at 30-40 P/Es.

I have actually recently started to take profits from these AIM stocks and put them into another sector I feel is grossly undervalued and did crash a couple of years ago, so I feel I am spreading my risk and it would take a market- wide crash (or extremely bad luck) to really hurt my portfolio, as I mix small growth companies, Chinese issues on AIM (which subdivide into manufacturing, oil and property), blue chips, prime market housing, oil, logistics, and leisure stocks into my portfolio.

I accept I will probably get stung at least once in AIM, but am happy to make hay whilst the sun shines as it were, and do hold a lot outside AIM too.

jamesd

sambessey, you're right about Japan but the question is when. So far it's mostly been losing people money during talk of opportunities there.

You might usefully look at European, South American and the rest of the Asia-Pacific region investing to spread your risk around further.

Primrose

I think if you had actually lived through a serious stock market crash you might think again about your investment strategy as cashing in some of your stocks if the market suddenly dives is not always possible. I think it was during the 1987 crash that prices dropped so suddenly that you couldn't even get in touch with a broker to sell and it took a very long time for those shares to recover. . So I'd recommend that you keep a minimum of three months living expenses in cash, either in a cash ISA or a high interest savings account, but preferably taking advantage of your cash ISA allowance as you're a taxpayer. You say you want to think outside the usual cash box but I think you also need to visit the "What if ?" worst case scenarios in your mind and ask yourself how you will cope financially if the stock market crashes and you also lose your job and find yourself unemployed for a long time.

sambessey

Yes thanks Primrose- I think you are right... Like I said, having never been old enough to care about any of the previous stock market crashes (and not really knowing what it is actually like to be caught up in one), I do need to have something in reserve that I can get at instantly, knowing exactly what it will be worth. I can't imagine what it would be like to be caught up in a crash and needing to sell but not being able to, but I wouldn't be feeling so clever then!

I will try and stop myself throwing everything into stocks and make sure I fill up my mini cash ISA before the end of the year - interest rates of 6% or more mean it's actually not a bad return at all I guess- certainly looks more attractive than it did a year ago. That way I easily have more than 3 months expenses in reserve.

Edit: As I can put in more than a thousand now, I think NS&I is still the top pick? After today it should pay something like 6.3% I believe?