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Is this too good to be true?
Comments
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Yes. I noticed that. I'm not sure how you pick what you want to buy though. I know next to nothing about most commodities, how would I know what to buy and what to sell.
Good to hear things have turned around and that you're also realistic, many don't seem to think so far ahead.
I only tend to buy and not to sell. You can make it as easy or as complex as you want.
At the very simple end you could buy a single fund that contains all the elements of a portfolio in the one fund. An example is from the fund manager Vanguard and is called their LifeStrategy fund, there are various different versions of it depending on the mix of bonds and shares in it but essentially it is a fully build portfolio in the one fund.
At the more complex end you could buy various different funds choosing different percentages in different markets such as 50% UK, 20% USA, 15% Europe, 15% bonds. How you choose those percentages is down to your risk appetite and how you see those prospects for the future. You can simplify by using index funds that just track a specific stock market index rather than using a manager to try to beat the market, again depends how complex to make things.
And then beyond that there is the option to buy individual shares. This is more risky because unlike a fund that invests in 100 different companies, a single company can go bust and lose all your money.
Overall you don't know what will go up and down, well at least I don't and nor do any managers consistently. The aim is that regardless of any short term volatility you build a portfolio that will grow long term.Remember the saying: if it looks too good to be true it almost certainly is.0 -
But how do you chose your funds? How do you know what is going to go up and what is going to go down?
You are asking the right kind of questions. Choosing your fund wisely is half the battle won - "Smarter Investing" and the monevator site were a lot of help to me when I realised I needed an answer to that question.
Depending on what you choose, you don't need to worry about the ups and downs because- they will happen whether you worry about them or not. Worrying makes not a blind bit of difference, so you might as well not worry
- if you have chosen wisely, the trend will be 'up' anyway (or we are all doomed, so it wouldn't matter anyway)
- if you opt for passive investing, you don't even have to re-balance your portfolio
Keep reading stuff :cool:0 -
I guess the best analogy for what you are saying to me is how to ride a bike. You cant tell me how to ride a bike, whether I will be successful or not, or even, what type of bike to buy. You can just tell me to get on a bike and try to ride it?
I like the idea of ready-made portfolios. How does one know that the design of these has the correct ratios to make them less risky? Do they come with risk assessments?
With regard to the ups and downs, I know what you mean. When I first invested in gold, I obsessively watched the graphs every day, but soon learned that it went up and went down on an hourly basis. I didnt need to watch the graph, just trust that the general trend would be up. It was, as it turned out. Gold is generally going up although there is a slump at the moment. Silver is starting to look attractive although there are not the same rapid rises as in Gold. Beyond that...I'm stuck. I'll get that book by Tim Hales and see if I can clarify some intelligent questions.Debt Free! Long road, but we did it
Meet my best friend : YNAB (you need a budget)
My other best friend is a filofax.
Do or do not, there is no try....Yoda.
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I saw this article on This is Money with 3 new investors trying to understand how/what to invest. It's a bit of a contrived article but raises a few good points.
http://www.dailymail.co.uk/money/diyinvesting/article-2616188/What-investment-virgins-1-000-Theyve-never-money-stock-market-theyre-terrified-losing-it.html
It's quite an eye opener and hard for someone who has been investing for nearly 20 years to step back from all the jargon to try to understand the basics from an absolute beginner's viewpoint.
It made me think I might try to get some notes together to explain some of the terms that were mentionedRemember the saying: if it looks too good to be true it almost certainly is.0 -
That's the bit I dont understand. The literature clearly says, no fees and return of 100% of your investment after 5 years with the possibility of an extremely tantilizing return.
So with the deal you're looking at, in effect they've got £1,655 to play with. If you get less that £11,655 back at the end of 5 years, you've lost out.0 -
Reading through the literature on the site, they say that you will get back 100% of your capital. This seems a bit anathema to trading, surely it is possible to lose money as well as make it.
That's not necessarily a red flag, as all sorts of legitimate investments are caipital protected. They work by (in effect) the company taking 90% of your investment and sticking it on deposit, spending 5% of it on options in the investment, and keeping maybe 5% for their profit.
At the end of the period, the 90% has grown by enough to return your original investment, irrespective of the underlying instrument's performance.How do you know what is going to go up and what is going to go down?
You don't. Anyone that tells you that they can predict the market's direction with absolute certainty is either a fool or a rogue.0 -
I read this about the Castle Trust Housa, it caught my attention a few weeks ago and so dug around for some more info.
http://moneyweek.com/why-the-housa-isnt-as-safe-as-houses/
It just gives another perspective on what they're actually offering.'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB0 -
JimmyTheWig wrote: »Ok, you can get 3.11% on a 5 year fixed interest savings account. If you put in £10,000 you'd be guaranteed to come out with £11,655.
So with the deal you're looking at, in effect they've got £1,655 to play with. If you get less that £11,655 back at the end of 5 years, you've lost out.
Actually, you can get 3, 4, 5 and 6% for this sum of money, and you don't even have to commit for 5 years. Granted, it is in variable rate accounts so there is a bit of added risk that you may or may not want to take.- 4,000 in 2 5% TSB Plus accounts
- 5,000 in 4% Club Lloyds
- 1,000 in 5% FlexDirect (only lasts one year)
- put your monthly interest from TSB and Lloyds into the FlexDirect in year 1
- In year 2-5, use a Monthly Savers for your interest. You can do up to 300/mth into 6% FD Regular Saver, up to 400/mth into Club Lloyds Monthly Saver
This could net you some £12,784 or thereabouts after BR tax in 5 years - clearly a lot more than just bunging the money into a 3.11% fixed account. Plus it allows you to jump onto better interest rates which we may well see in the next couple of years.
There is also a 3% 90-day notice ISA in the market at present, if the current account approach sounds like too much hassle / is seen too risky.
You do need to take tax off non-ISA accounts before comparing their return with ISA accounts - the return in your example would be £11,307 for a basic rate tax payer.0 -
I like the idea of ready-made portfolios. How does one know that the design of these has the correct ratios to make them less risky? Do they come with risk assessments?
Yes, there are numerical assessments of risk available. Consider two examples from Trustnet (available free online) that look at some of those ready made portfolios:
Vanguard LifeStrategy 60% Equity
Vanguard LifeStrategy 80% Equity
The 60% fund has a score of 51, the 80% fund has a score of 70. Roughly speaking, more equities/shares = greater chance of volatility, but potentially higher return.
The Tim Hale book and Monevator are great sources, well worth plodding through or dipping into0
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