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

Biggles

It's no more likely than at any other time. First rule of investing is that it's time in the market that counts, not timing the market.

Having said that, don't rush in if you're still not sure of your strategy. But when you are, don't hang around.

atush

I agree that I would A- start a pension forthwith. Who do you work for? What is their pension scheme? How much do they pay in?

B- Not to be afraid of you s&S isa- why are you? what is it invested in?

Basically if you are investing over a period of decades, and not years, it is time IN the market, not Market timing you need to think of. In some ways, one of the best things for you t o do would be to Drip feed into the market each month (in both the ISA and pension) as a crash in the early years wont be a bad thing, it could be a good thing. AS each months money buys more units/shares and therefore you will get a big bump later when the market recovers. Add in compounded returns (have a look at the article in Moneyator) and you are flying.

So get in there and get investing. At first start with lifestyle funds (which are a mix of equities and bonds/cash ) and a Global tracker (as then you are exposed to all markets not just one) while you continue your research/education (never a bad thing).

dunstonh

am wondering whether it would be wise to wait to see what happens during the rest of the year.

You never know when a crash is going to happen. You just know that one will happen and another and another and another. Trying to time the market is futile and usually results in lower returns over the long term.

My intended investment period is on the upper end of medium-term

So, you are looking at 10-15 years then. In which case, you will probably see two crashes and several more corrections. Are you going to be worried about those?

Linton

If the majority of people thought there was going to be a crash soon they would have sold causing prices to drop and the crash to happen now. Any crash has be a surprise to the majority of investors (except with the benefit of hindsight).

If you are planning to drip feed for the next decade or two start drip feeding now. Of course there will be a crash some time and you will be happy because you will get more investment for your money. There will also be a boom sometime. No-one knows which will happen first.

If you dont start now how will you know when to start? Say prices drop by 20% do you start then or wait fearing prices will drop further? If you put it off and then prices then rise a bit do you start investing or put it off again fearing a dead cat bounce? What happens if your fears arent realised and prices keep on rising? The chances are you will lose more by not knowing when to start than by starting early.

If you are drip feeding what happens in the early years doesnt matter much as you have little invested. And over the long term things average out.

saintalan

...one man's drip is another man's waterfall...:)

Damage

Thank you for all of your replies.

Freecall, your guess is spot-on! From memory, it was 1988, and the paperwork I am referring to dates to 2011. I have just dug out the paperwork again and it is split between four funds:

Managed (Type 1) Pension Capital Series 02 (Managed): 112.8958 units.
Managed (F) Pension Capital Series 01 (Managed): 96.6138 units.
Managed (Type 1) Pension Capital Series 01 (Managed): 94.6282 units.
Multi Select Pension Capital Series 01 (Managed): 85.9832 units.

I just tried to look up their current value on the Windsor Life website, but it's unclear what refers to what as the names of some of the above funds are very similar, plus the fund names on their website haven't got any precisely-matching names in order for me to be sure that I'm looking up the right ones (and the prices seem to vary for ones with the same name).

I don't know if I can transfer these to anything else, but if I can then that would be handy as I could incorporate them into what I'm planning now. The paperwork says that the transfer value is £680 though, so I don't want to lose over half their value if I do anything like that.

JimJames, I have my money in Premium Bonds (£50,000), Income Bonds (£45,000) and that ISA (£15,240) at the moment. Probably not ideal, but I needed to put it somewhere whilst I read up on investing. I do plan on investing in ISAs as and when each financial year comes round - so I must allow for that with whatever other investing I do.

Biggles, all noted, thank you!

Atush, I don't work for anyone, only myself, so income can be erratic. My capital for investment here is a bit of a one-off, so it could well be that I don't add to that - or I may do - I just can't predict if or when. I have read about drip-feeding, so that seems like a good idea. I like the look of the Vanguard LifeStrategy funds (80 or 100) so I'll look into those shortly.

DunstonH, yes, spot-on, 10 - 15 years, but perhaps longer. I can't envisage needing this money at all, so it may as well be 20 years. I don't want it to run much past that though in case I happen to be dead at the time. I'm not actually worried about crashes along the way, and I fully understand how the market can behave. Actually I don't know why I'm worried about an impending crash as it probably won't make much of a difference. I think I'd just like to get off to a good start, so if I can avoid a crash towards the beginning then that's one crash less than the eventual total within my period of investment.

Linton, good points, and all noted. If prices drop 20% then I'd already be ahead of where I would have been if I dived in straight away, so I would see that as a comparative advantage. I don't think I'd lose any sleep over whether I ought to hang on for an even bigger drop. I'd probably go with it at that point and congratulate myself for having waited until that point of the drop.

Thanks again for your replies everyone.

Eco_Miser

Damage wrote: »

DunstonH, yes, spot-on, 10 - 15 years, but perhaps longer. I can't envisage needing this money at all, so it may as well be 20 years. I don't want it to run much past that though in case I happen to be dead at the time.

If you're dead, you're not going to worry about it. If you're not dead you can just switch to taking the dividends instead of re-investing them, and you've got an income steam without divesting (or you can sell just enough for a year's spending). Either way, the bulk of your investment stays invested and earning.

Damage

I'm seriously considering excluding premature death from my investment strategy!

C_Mababejive

The only new money i am currently putting in is DRIPs.

I have also sold some stuff and holding cash.

frugal90

We have about £2500 - £3000 to invest at the moment each month- we have £1000 buying two investment trust £500 to scottish mortgage and £500 to finsbury income and growth. We put £500 rpm cash. The remainderbetween £1000 - £1500 we either invest or put to cash depending on how high the ftse 100 is. If it is at peak the all the spare goes to cash. If it is more than 10% below peak we put 100% to woodford equity Inc or similar . Below 10% off peak and the spare is split proportionately say 6% below peak then 60% goes to equity Inc and 40% to cash. In the event of a crash then we have cash to add to the market. Hope this makes some sense. We have also dipped our toe in when opportunities arise like woodford patient capital etc. Was thinking of starting to use vanguard lifestyle but this system seems to be working for us so far.