Making money from funds

djsunset_2

Taking the whole of this century, investing in shares as measured by the FTSE 100 would have resulted in a negative return (excluding dividends) - the market is lower today than it was on 31 Dec 1999.

Even with dividends re-invested, the return is only slightly positive in absolute terms (around 1.5%) and negative in real terms.

Taking a 15-year period, the best investment has been property, followed by cash, with stocks last.

If you had invested all your money in property in 1999 you would be a very wealthy person now.

However, looking at at a 6 1/2 year period (since Jan 2009) shares have more than doubled in that time, and including dividends have provided an annualised return of over 13%.

So even over longer periods of time, returns are impossible to predict with any accuracy.

The key is to have a portfolio which is diversified in terms of the following:

> Invests in different sectors
> Invests in assets in different parts of the world
> Invests in different asset classes (including real estate, bonds & gilts)

And also, pick funds which have no initial charge & a low annual management charge.

badger09

u0362565 wrote: »

Sorry me again, just wondering how people add money to their funds, on a monthly basis, at random, once a year? Because i'm with a platform that charges per transaction it makes sense for me to only make one transfer in once a year perhaps. I guess i should try and monitor the fund and wait until the price per unit drops and get the best price if i'm doing it annually? I could transfer the ISA to another provider but they'll probably charge an admin fee so you lose in a different way.
Thanks

But how will you know when it is 'the best price'?

Seriously, you'll never know when the units have reached their lowest price, and you're likely to be a nervous wreck if you try to time your investments in this way.

I use IWEB for my S&S ISA having transferred from Hargreaves Lansdown due to the introduction of their 0.45% annual charge on funds. I'm invested in only one fund and put in lump sums 4 or 5 times a year, so their £20 - £25 one off charges are much cheaper for me. This may not be right for you though.

There are many threads discussing the merits of regular monthly drip feeding, versus lump sum investing. Have a read, then when you've decided which you want to do, look for a provider which suits that method.

JohnRo

Any reason why four or five times and not just the once annually, if it's only the one fund?

I'd be looking to earn the interest and using that to pay one annual transaction fee personally.

Pincher

grey_gym_sock wrote: »

all in FTSE 100, or all in the far east, would be very poor investing - not enough diversification. a bit in every region is more sensible.

now, i'm not not objecting to weighting it a bit 1 way or another. so long as it's not too extreme.



more often than not, that will be bad advice. because what most ppl feel good about is usually what's being talked up as a great investment, which is whatever's done well recently. and nothing keeps on having the best returns forever. it always rotates, and something else does well. by picking the recent winners, you have a high chance of buying into them at exactly the wrong time, when they're about to hit a bad patch.



you say that as though it's a bad thing.

My grand father used to say marry a plain Jane, pretty girls are trouble. My mother always wanted me to get a civil service job or become an accountant. I have always wondered how long it takes for me to go Reginald Perrin, if I had listened.

grey_gym_sock

Pincher wrote: »

My grand father used to say marry a plain Jane, pretty girls are trouble. My mother always wanted me to get a civil service job or become an accountant. I have always wondered how long it takes for me to go Reginald Perrin, if I had listened.

errrrrrrrrr ...

well, if having an unbalanced investment portfolio is your idea of self-expression and doing it your own way, then go for it.

personally, i'd rather chuck my job in, and travel the world, while living off a more diversified portfolio. but it takes all sorts.

u0362565

Thanks all for the advice. I think one annual deal would be ok for me it's probably more difficult psychologically to hand over a lump than a bit each month in my head anyway but it's still a relatively small sum. I'm still toying with switching from lifestrategy 60/40 to 80/20 given that this is a long term investment.

TH1878

djsunset wrote: »

Taking the whole of this century, investing in shares as measured by the FTSE 100 would have resulted in a negative return (excluding dividends) - the market is lower today than it was on 31 Dec 1999.

Even with dividends re-invested, the return is only slightly positive in absolute terms (around 1.5%) and negative in real terms.

This didn't sound right to me so I checked the figures from 31/12/1999 up until today.

The FTSE 100, dividends reinvested, has returned 3.21% per annum over that period whilst RPI has been 2.84% per annum. So the FTSE 100 would have given you a (slim) positive rate of return in real terms.

Admittedly, it still hasn't been a great 15 years for equities!

masonic

TH1878 wrote: »

Admittedly, it still hasn't been a great 15 years for equities!

It hasn't been a great 15 years for the FTSE 100. YMMV with equities. Some have done rather better.

enthusiasticsaver

u0362565 wrote: »

Sorry me again, just wondering how people add money to their funds, on a monthly basis, at random, once a year? Because i'm with a platform that charges per transaction it makes sense for me to only make one transfer in once a year perhaps. I guess i should try and monitor the fund and wait until the price per unit drops and get the best price if i'm doing it annually? I could transfer the ISA to another provider but they'll probably charge an admin fee so you lose in a different way.
Thanks

I invest in the Vanguard Lifestrategy 60, I am looking at a 10-15 year cycle rather than 30 year so wanted to keep risk lower than you. I add to it monthly by £500 and have invested 3 separate lump sums so far ranging from £500 to £35000 (invested from a matured cash isa) but there is no monthly transaction charge. The platform I use, Cavendish charges an annual percentage fee and monthly trades are free.


Actually investing monthly or drip feeding is advised as you are buying at different prices so over the long run I understand cost averaging works in your favour or so I understand - I am by no means an expert. At the beginning of the year my monthly £500 was buying less units as the price was higher than it is now after a month or so of lower prices so my £500 is buying more units now than in January.

TH1878

masonic wrote: »

It hasn't been a great 15 years for the FTSE 100. YMMV with equities. Some have done rather better.

Alright mate, I originally wrote a sarcastic reply but I decided to lay down a challenge....

Which equity markets have done well over the last 15 yrs by historical standards?

The person who was gloating at a 6.7% annual return isn't keeping Warren Buffett awake at night.