What will happen when interest rates rise?

chucknorris

mystic_trev wrote: »

Not if you're stuck with a large CGT bill. It's different if you're doing it with your Pension, which is what we're doing.

This is one of the reasons why I regret not paying into my pension earlier, and also in the earlier years just sticking to cash ISA's and not investing in a SS ISA. I've got about £300k in ISA's and pension (excluding my final salary pension), but I could have had much more in these tax free wrappers if I had been thinking clearer. The problem was that I didn't really value pensions until about 5 years ago, when one day the penny dropped, that they are an excellent way of allowing you to spend more capital because they are a hedge against living longer. Of course now that they have been made much more flexible, they are an even better investment, but too late for me, as I plan to retire next year, so I will only be able to add a paltry £3,600 to my SIPP annually. Unless we can create some 'employment earnings' (which may be possible).

MFW_ASAP

chucknorris wrote: »

I don't think that there will be a large correction, I said I wish I was out, because I think the current price is a very good price to invest at, and if I was out, it would have been because I had previously sold at a higher price.

You could have sold yesterday at a higher price than today and a much higher price than next week. The rout has started but you have time to get out. Just because you missed sellign at the very top, doesn't mean you now have to hold until the very bottom....

With Japan, China and Brazil dropping away, Europe still in turmoil, the UK bumping along the bottom and the US determined to raise rates no matter what, you have to wonder what is going to reverse or indeed even just halt the slide.

Expect a downward sawtooth pattern in the indexes from now until this time next year, perhaps well beyond depending on how the central banks handle the rate rises....

MFW_ASAP

mystic_trev wrote: »

Not if you're stuck with a large CGT bill. It's different if you're doing it with your Pension, which is what we're doing.

Better to pay some tax on the gains made over the last few years than to see those gains wiped out over the next few years. I guess it would solve the capital gains problem though - no gains, no tax.

chucknorris

MFW_ASAP wrote: »

You could have sold yesterday at a higher price than today

I'd be more impressed if you told me what was going to win the 3.05 at York today (before the race starts), rather than what yesterday's prices were.

You are fully entitled to your opinion about what the market will do, but I am not going to speculate on it. I have made my money now, it is looking increasingly impossible that I can spend it all before I die, so I really don't need to be speculating on market moves. I just want to invest for the long term, to preserve what I already have, rather than to create more wealth.

The market might well dip, but nobody knows for sure whether it will or not. I'm not getting dragged into speculating on it, because if I did sell, and the market did drop, then I make money that I probably won't live long enough to spend, but if it rises, I lose. So rather than win/win, it is lose/draw, so no real upside for me.

So the upshot is that I only want to invest for the long term in not too risky passive tracker funds.

wotsthat

I'm not selling. I've made some nice sums from the odd good trade and lost similar sums on poor trades. The absolute best returns I've made are by buying and holding. I've actually made an effort to diversify to make it more expensive to make bets based on nothing more than share price movements.

I don't think anyone has the inside track.

Thrugelmir

midnight_child wrote: »

Third rule of investing: You only lose money when you sell (at a loss).

That's not a rule it's a mistake. Investors on the whole find it difficult to sell at a loss opposed cashing in a profit. Hanging on in quiet desperation is the English way. Unless you know something the market doesn't, shares rarely bounce back in a short space of time. Big sell offs happen for a reason.

mystic_trev

MFW_ASAP wrote: »

Better to pay some tax on the gains made over the last few years than to see those gains wiped out over the next few years. I guess it would solve the capital gains problem though - no gains, no tax.

Bearing in mind I've used all this years allowances, I'd need the market to drop in excess of 30% to make it worth my while, and as I'm sitting on over half a million cash in my Pension, I don't want to release further Investments into cash.

chucknorris wrote: »

I have made my money now, it is looking increasingly impossible that I can spend it all before I die

The same applies to me. I retired nearly 20 years ago aged 42, and am worth far more now than I did then. In the meantime I've also spent a large wad of cash, and enjoyed every moment!:D

chucknorris

mystic_trev wrote: »

The same applies to me. I retired nearly 20 years ago aged 42, and am worth far more now than I did then. In the meantime I've also spent a large wad of cash, and enjoyed every moment!:D

I also retired at 42 Trev (from my day job), but I was still running 2 businesses, so I suppose technically I wasn't really retired, although it never seemed like working to me. But a couple of years after selling one of the businesses I started lecturing at a university aged 52. I think I am more prepared for retirement now, last time around I just suddenly stopped working because my portfolio value happened to reach a number, and it seemed crazy to carry on working. This time around though, I am really looking forward to the forthcoming freedom with my time.

lippy1923

I'm feeling rather poor reading some of your posts :rotfl:

MFW_ASAP

More drops today...