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

Damage

I could drip-feed my money because it's only sitting in income bonds and premium bonds at the moment.

That's handy about the Vanguard LifeStrategy then. I don't think it's a good idea for me to get involved in active trading, although I really like the idea. In fact if it wasn't for reading Tim Hale's book I would probably have got much more involved believing that I could time the market. If professionals hardly ever manage to do it successfully then I don't stand a chance.

I could still perhaps set aside a very small amount (perhaps 1 or 2%) for hobby-style trading and see how I get on. I'm not confident that it will end well though!

Damage

steelbru wrote: »

Woodford Equity Income is not an investment trust, it's a fund ( or OEIC ). Woodford has though recently launched an investment trust, Woodford Patient Capital Trust, but has a completely different investment strategy to his income fund

Thanks, I didn't know that. I had seen it mentioned as an investment trust, so it ended up on my list of investment trusts. Further signs that I don't know nearly enough yet.

green_man

I could still perhaps set aside a very small amount (perhaps 1 or 2%) for hobby-style trading and see how I get on. I'm not confident that it will end well though!

This is the way to do it. Once you get some core holdings that you plan keeping for the long term (like Vanguard's funds) then using an amount as a 'play fund' can be useful, however if you double your money in your play fund over a year don't be tempted to suck all your core holdings in.

arbster

Damage wrote: »

Vanguard LifeStrategy (80 or 100) funds are the ones I am most interested in at this stage. I don't know if the diversification within those provide the (relative) safety, or if I need to create that myself by investing in funds that aren't specifically Vanguard LifeStrategy. If those funds function in the necessary way (in accordance with Tim Hale's advice) then I presume that they could constitute my whole investment (cash element excepted, of course). I need to read further into this though as I'm currently not very well informed.

Due to the limitations of my (three) DC pension schemes and current S&S ISA platform, LifeStrategy isn't available to me, so have gone for FL BlackRock Consensus and L&G Multi-Index 5 with the majority of my investments. Both of these are combined index-tracking funds. What this doesn't give me is enough exposure to Property, nor much control over the overall allocation. Therefore, I have added some Property funds (direct investments) and have a proportion of my funds invested in specific UK, US and European Equity index-tracking funds, enabling me to flex up and down in these areas during my annual investment review. I will also start to increase my bond exposure as I get nearer to 50.

Damage

green_man wrote: »

This is the way to do it. Once you get some core holdings that you plan keeping for the long term (like Vanguard's funds) then using an amount as a 'play fund' can be useful, however if you double your money in your play fund over a year don't be tempted to suck all your core holdings in.

I would definitely keep the hobby side of things separate (permanently!) from my core holdings.

I can't find it in my book now, but Tim Hale said (words to the effect of) all ideas and forecasts with regard to where a share price will go are priced into those shares very quickly - meaning (as I understand it), whatever you might think of as a clever idea has already been priced-in by others who have already thought of it. If that's the case then surely any gains made as a result of hobbyist traders' clever ideas are mostly (if not all) down to luck rather than judgement.

Another interesting part (2006 edition, pages 61-62) said that a study estimated that you need to call the up-markets and down-markets over 70% correctly just to make the same return as buying and holding equities. The chances of getting two consecutive decisions right is 25%, which reduces with each subsequent decision.

Another study (1981 to 2003) showed that to miss the ten best days of trading means that you miss out on 40% of the returns. To miss the best fifty days (less than 1% of the study period), would mean missing out on over 85% of the returns - and that's without accounting for costs and taxes.

mapk

Enjoying the discussion on this thread. I've recently opened up my first S&S ISA with VLS 60 as a core fund. I'm moving around £10,000 across from a cash ISA, hoping to improve on the woeful rates offered there. I can see the sense in drip-feeding, but figure I should get the money in to the fund and working asap. Planning to see how the VLS fund does over the next year and perhaps switch to the L&G MI5. Is there any sense in holding the two simultaneously? I think they're both offered on the AXA platform which I'm currently using - although I plan to move in 10 months, perhaps to Charles Stanley. So much to think about, and I seem to be spending hours on the MSE forums! A lot to learn, eh

Damage

arbster wrote: »

Due to the limitations of my (three) DC pension schemes and current S&S ISA platform, LifeStrategy isn't available to me, so have gone for FL BlackRock Consensus and L&G Multi-Index 5 with the majority of my investments. Both of these are combined index-tracking funds. What this doesn't give me is enough exposure to Property, nor much control over the overall allocation. Therefore, I have added some Property funds (direct investments) and have a proportion of my funds invested in specific UK, US and European Equity index-tracking funds, enabling me to flex up and down in these areas during my annual investment review. I will also start to increase my bond exposure as I get nearer to 50.

This kind of thing is something that I need to look into because I haven't got a pension at the moment. I will look into SIPP, but I don't know how having one of those will compare with straight investments. Obviously there is the tax advantage, but I presume that I am tied in more rigidly with an SIPP.

Damage

mapk wrote: »

Enjoying the discussion on this thread. I've recently opened up my first S&S ISA with VLS 60 as a core fund. I'm moving around £10,000 across from a cash ISA, hoping to improve on the woeful rates offered there. I can see the sense in drip-feeding, but figure I should get the money in to the fund and working asap. Planning to see how the VLS fund does over the next year and perhaps switch to the L&G MI5. Is there any sense in holding the two simultaneously? I think they're both offered on the AXA platform which I'm currently using - although I plan to move in 10 months, perhaps to Charles Stanley. So much to think about, and I seem to be spending hours on the MSE forums! A lot to learn, eh

Definitely a lot to learn! I'm also pretty anxious to get money into investments and working as soon as possible, but I think holding off at the moment whilst I'm learning might be a blessing in disguise.

arbster

Damage wrote: »

This kind of thing is something that I need to look into because I haven't got a pension at the moment. I will look into SIPP, but I don't know how having one of those will compare with straight investments. Obviously there is the tax advantage, but I presume that I am tied in more rigidly with an SIPP.

Assuming you're a taxpayer a SIPP appears to me to be a no-brainer - basically you're getting a free 25% (basic rate) or 66% (higher rate) top-up on your invested funds, which is a nice buffer if the markets go down, and a wonderful boost when they go up. SIPPs are pretty flexible too.

Damage

When you put it like that then it's clearly the way to go. I know absolutely nothing about how any of this works at the moment, so I will need to read up on it as well.