Financial dilemma regarding large investment

stringer_bell

I'm 30, self employed.. however I suspect my income will dwindle soon enough. I have large cash savings, low six figures. I know this is somthing I should speak with regarding a financial advisor, but hey, I'm here now.. thoughts would be good

I have maxed out s&s isa, and its fairly high risk and is up 20 percent

My pension also maxed out, and up 20 percent.. picking usual suspects

I was thinking about investing in stock market outside of ISA.. maybe £25k every few months.. rather than lump sum it all. I wasn't thinking of putting it all in, maybe keeping some for emergencies

However, lets say I invested £100k in stock market, in high yield blue chips, would a gain of 10 percent a year be unrealistic? I start thinking more and more then, why not put the whole lot in and make more?

Of course its not that simple and my mind is playing tricks on me, I work so hard over past few years, would be nice to recieve a nice income and no stress

what would you do, or any thoughts?

TheTracker

I trust you made the money in a manner distinguishable from Stringer Bell.

S&S are only advisable if you have a time frame of 8+ years. Some would say 5, others 20. Common opinion would have it that a high risk strategy might gain you 8% over inflation per year over a 20+ year timeframe, to reset your expectations.

I'd be wary of IFAs. Someone has to pay for their car and mortgage. Do you want it to be you? That's liable for me to be shot down in flames.

bowlhead99

I'd agree with that - at least, it has been possible in the past. Of course, there are no guarantees and the markets are not particularly cheap at the moment. Though to get a figure like inflation plus 8 you would definitely be looking at the highest risk end of the spectrum (and over a 20+ year timeframe, the sectors that fit that profile may change).

Investing in the nice safe 'high yield blue chips', implying larger and less volatile companies, would be lucky to get you 10% pa compounded, more like inflation plus 4-5%.

And that would be average performance over time, so some years the capital value of those shares could easily be up 30%, or the 20% you have experienced, while in others it would be down 40%, regardless of whether you received a 2% dividend or a 4% dividend or no dividend that year. Which is why your timeframe needs to be long enough to ride out a full economic cycle or two.

If you 'expect your income will dwindle soon enough' then it doesn't seem like you should dump all your assets into such investments, unless your expenses will also be dwindling soon enough and you have no other need for the security and liquidity provided by cash.

stringer_bell

TheTracker wrote: »

I trust you made the money in a manner distinguishable from Stringer Bell.

S&S are only advisable if you have a time frame of 8+ years. Some would say 5, others 20. Common opinion would have it that a high risk strategy might gain you 8% over inflation per year over a 20+ year timeframe, to reset your expectations.

I'd be wary of IFAs. Someone has to pay for their car and mortgage. Do you want it to be you? That's liable for me to be shot down in flames.

I was actually thinking of sticking it in High yield bluechip shares.. BAE, Imperial, Vodafone, Glaxo etc and maybe a few punts like dixons carphone or man group.. the first £25k, maybe 10x2.5k.. see how that goes for a few months

stringer_bell

bowlhead99 wrote: »

I'd agree with that - at least, it has been possible in the past. Of course, there are no guarantees and the markets are not particularly cheap at the moment. Though to get a figure like inflation plus 8 you would definitely be looking at the highest risk end of the spectrum (and over a 20+ year timeframe, the sectors that fit that profile may change).

Investing in the nice safe 'high yield blue chips', implying larger and less volatile companies, would be lucky to get you 10% pa compounded, more like inflation plus 4-5%.

And that would be average performance over time, so some years the capital value of those shares could easily be up 30%, or the 20% you have experienced, while in others it would be down 40%, regardless of whether you received a 2% dividend or a 4% dividend or no dividend that year. Which is why your timeframe needs to be long enough to ride out a full economic cycle or two.

If you 'expect your income will dwindle soon enough' then it doesn't seem like you should dump all your assets into such investments, unless your expenses will also be dwindling soon enough and you have no other need for the security and liquidity provided by cash.

I agree, although in my sipp over past 2 years, I see companies like AVIVA, BAE, MAN GROUP all up over 30-40 percent.. maybe its clouding my judgement of the real market or maybe I got lucky with my pickings

TheTracker

Probably both

stringer_bell

TheTracker wrote: »

Probably both

My axa biotech fund is also up 180% in just over a year too!

TheTracker

stringer_bell wrote: »

My axa biotech fund is also up 180% in just over a year too!

Well done. By my calculations you could turn 100k into 35m in 10 years with that return. I wonder why everyone isn't doing it.

stringer_bell

TheTracker wrote: »

Well done. By my calculations you could turn 100k into 35m in 10 years with that return. I wonder why everyone isn't doing it.

crystal balls not widely available? not sure I have the stones to stick everything into one fund either!

stringer_bell

bumps for updates

obviously, an instant access savings account would be nice at 3-6 percent, but I dont think we will see them days for a long while

Im aware of santander 123 account etc

Broken_Biscuits

as an addition to stock and shares... Have you considered peer to peer? Ratesetter have been operating since 2009 and for me the thing that makes them stand out is that no one has ever lost capital with them due to the provision fund.


you can reinvest monthly repayment and capital (for max return) or pull out just the interest or take the interest and capital repayments.

if your income severely dropped, one of your 25k bundles would pay about £500 a month if you took interest and capital out each month. could be the solution you are looking for while the rest of your bundles are left to compound in stocks and shares.

do your own research. Just because no one has lost capital to date, doesn't mean that the first case couldn't happen tomorrow.

6.2% is currently achievable on 5 year loans.