Is a Crash Likely (2015-ish)? Should a New Investor Wait a While to See?

Damage

As a newcomer to investing I have been reading articles concerning the likelihood of a stock market crash in 2015, and am wondering whether it would be wise to wait to see what happens during the rest of the year.

My thoughts are that I could use the rest of the year to continue my reading and learning (which ought to put me in a better position to avoid future mistakes) instead of diving into the market right now. If the market falls sometime soon then I'll be in a better position when I finally make my investments. If the market doesn't fall, then I've simply missed the opportunity to gain for x-months, rather than actually lost anything. I'd be happier with that outcome than the crash option.

I appreciate that crashes are probably being predicted continually, and it's always doom and gloom etc, but this article has me slightly concerned: http://www.telegraph.co.uk/finance/economics/11322623/Ten-warning-signs-of-a-market-crash-in-2015.html.

They said (amongst other things) back in January:

'The UK stock market is in its 70th month of a bull market, which began in March 2009. There are only two other occasions in history when the market has risen for longer. One is the period leading up to the great crash in 1929 and the other before the bursting of the dotcom bubble in the early 2000s.'

So, to the experienced investors in here, considering the above, if you currently had little or no money invested at the moment, would you hold on for a little while to see if a crash happens this year?

My intended investment period is on the upper end of medium-term, and I understand what one might expect in the way of percentage falls and possible crashes per decade, so perhaps a crash wouldn't matter that much. I also appreciate that attempting to time the market is rarely successful, but in my case I'm not gambling with a potential loss, rather a missed gain at the worst.

Thanks in advance for any advice or opinion.

mvarrier

How much of a lump sum is buring a hole in your pocket? How old are you?

If you feel you need more time to choose your strategy and asset allocation then take it. If you know what you want to do then start the drip feed.

Damage

I'm in my mid-forties and I've got £110,000 put aside at the moment (£15,240 of that is in a week-old stocks and shares ISA). I'm probably a little way off being able to devise my strategy with any real confidence, so I'm currently leaning towards waiting for a while.

CLAPTON

my investing record is at best patchy but I have sold nearly all my S&S over the last few weeks.
I will not buy again until there has been significant falls and expect to wait at least a year or more.

sorry no crystal ball though

mvarrier

What about pension?

Damage

Having read a lot more over the last few days, I am a bit concerned about my new stocks and shares ISA. I don't know if there's a way out of that, or if I really need a way out of it, but it won't kill me to keep it, considering my intended investment period.

Mvarrier, I haven't got a pension, apart from putting about £450 into a pension in the late-1980s (before giving up shortly afterwards), like everyone my age seemed to do after their friend called round in a shiny grey suit with a Filofax and got them to do something to do with pensions. It's currently with Windsor Life and last time I looked (a few years ago), it was worth about £1,100.

mvarrier

If your investment aim is to try and accumulate enough money to improve your lifestyle in retirement and you are not looking to use it before then, you can do much of your investing inside a DIY SIPP. If you are a higher rate tax payer you will get 120% of whatever you put in at the start and be able to claim another 20% back in tax.
With this kind of lump sum it may be worth talking to an IFA (although you should get sensible pointers on this forum)

Damage

Yes, that's my main aim: to invest the money and end up with appreciably more than I started with. Obviously the higher the final amount the better.

I will look into SIPPs (I'm not a higher rate tax payer), which I will get to after I've finished reading Tim Hale's book.

puk999

mvarrier wrote: »

If your investment aim is to try and accumulate enough money to improve your lifestyle in retirement and you are not looking to use it before then, you can do much of your investing inside a DIY SIPP. If you are a higher rate tax payer you will get 120% of whatever you put in at the start and be able to claim another 20% back in tax.
With this kind of lump sum it may be worth talking to an IFA (although you should get sensible pointers on this forum)

You get 125% of whatever you put in. An £80 net contribution gets you £100 gross, and £80 * 1.25 = £100.

Freecall

Damage wrote: »

Mvarrier, I haven't got a pension, apart from putting about £450 into a pension in the late-1980s (before giving up shortly afterwards), like everyone my age seemed to do after their friend called round in a shiny grey suit with a Filofax and got them to do something to do with pensions. It's currently with Windsor Life and last time I looked (a few years ago), it was worth about £1,100.

£450 invested for 23 years (say 1988 for 'late 1980's' and 2011 for a 'few' years ago) would need to achieve 4.3% pa compound after any charges to be worth £1,100.

This is not particularly terrible but nor is it as good as it perhaps could have been. It rather depends on how much risk was taken along the way to get you there.

Interestingly, over that time period there have been two significant downturns (or 'crashes' to use the terminology in your original question) so even building these in does not spell disaster.

Why not consider pulling it together with other investments to save into an on-going pension scheme? With your relatively small starting point you need to look at costs carefully but you will find plenty on here about pension charges, some of which can be very low indeed.

jimjames

Damage wrote: »

Having read a lot more over the last few days, I am a bit concerned about my new stocks and shares ISA. I don't know if there's a way out of that, or if I really need a way out of it, but it won't kill me to keep it, considering my intended investment period.

I certainly wouldn't lose any sleep over your ISA when you are not much more than 10% invested.

If you are investing in ISAs each year then you'll have cash for some time and will buy new units at a lower price if there is a crash.

Undoubtedly there will be another crash. No-one knows when that will be, whether this year, next year or 5 years. Considering the scale of the global financial crisis you can't really draw much from history to extrapolate time periods.