Pro or anti-S&S, funds etc?

jamiednm

Are you pro or anti investing in stocks & shares, indices, funds etc?

Do you see it as a strong long-term investment strategy and think the potential advantages outweigh the risks?

Do you see this type of investing as preferable to alternative ways to investing large sums of money?

If you have such a portfolio, how do you feel about having likely zero influence on the institutions that your money is invested in?

eskbanker

Are you pro or anti investing in stocks & shares, indices, funds etc?
Horses for courses, it works for some and not others, depending on objectives, timescales, size of pot, overall financial status, attitude to risk, etc, etc.

Do you see it as a strong long-term investment strategy and think the potential advantages outweigh the risks?
In general, yes, it fits (some of) my needs

Do you see this type of investing as preferable to alternative ways to investing large sums of money?
I don't see it as either/or, and would adopt the usual steer here about diversification, i.e. having some assets in cash deposit form, some in property, pension provision, etc. Actual mix will obviously vary from one person to another as per the criteria above and others

If you have such a portfolio, how do you feel about having likely zero influence on the institutions that your money is invested in?
I have zero concern about that! If a company was small enough for me (or any other small stockholder) to be a significant influence then that in itself would be a massive risk in investment terms.

jimjames

jamiednm wrote: »

Are you pro or anti investing in stocks & shares, indices, funds etc?

Can you explain why you're asking the question? To me it seems a bit like asking if you're pro or anti eating food. Presumably you have some reason to ask?

I've been investing for 20 years and wouldn't be doing so if I didn't think it was a good idea. If you're a communist I can understand why you wouldn't invest but if you accept the principle of capitalism and business then surely investment is part of that.

bowlhead99

jamiednm wrote: »

Are you pro or anti investing in stocks & shares, indices, funds etc?

Pro

Do you see it as a strong long-term investment strategy and think the potential advantages outweigh the risks?

Yes. It is the way most people have had their retirement funded over the last half century. Either by investing directly into such investments themselves, or having money invested in a personal or company pension.

Those who have been fortunate enough to retire on a defined benefit pension may not realise that the way their pension scheme was able to generate enough money to pay out the retirees was by investing in "stocks & shares, indices, funds etc"

Do you see this type of investing as preferable to alternative ways to investing large sums of money?

Investing in companies - which on the whole, exist to make profits for their owners and grow with the local and global economy over time - has proven itself to be a very reliable way of investing large sums of money.

Perhaps a more lucrative one is starting and building your own business, but not everyone has the capability to do that and it is fraught with risk. If you have a large sum of money it should be spread among opportunities. You don't get a good spread if it's all in one business or one or two investment properties. Investing in a portfolio of funds can be lower risk as well as much more liquid and flexible. They can also sit inside useful tax-protected wrappers.

This is not to say that S&S funds are the only thing that someone should invest in but it is ludicrous to ignore them if you are truly looking for long term inflation-beating wealth generation.

If your large sum of money is not truly available for the long term because you need it for something in the shorter term, then obviously the risks of investing it in the markets may make it a poor choice - as would be investment in other stuff like property or commodities such as gold or barrels of oil. You would need to stick to cash products or short maturity loans to the government.

If you have such a portfolio, how do you feel about having likely zero influence on the institutions that your money is invested in?

I do not invest in a portfolio of tens, hundreds or thousands of global businesses to try to "influence" them. I am not an egotistical megalomaniac. I invest in them because debt and equity ownership gives me interest payments and a slice of their assets and profits, which will grow my wealth over time.

I will always have zero influence whether my £100k is invested in a £30 million company or a £30 billion company or is spread over £30 trillion-worth of companies in a global index. That is fine with me.

By contrast, if I instead invested in my own £100k consulting or property development business or went into business in partnership with someone else who had £100k to invest alongside me, I would of course have much more influence. I would also be taking a lot more risk because instead of trusting wealth generation to the boards of directors and senior management of the 4000 multi- million/ billion dollar companies around the world that make up the global stock market, it would all be on me.

Though I am an awesome and intelligent guy, I generally believe that those tens of thousands of senior business managers have more combined experience than I do, and even if and when some of them make inevitably calamitous mistakes, they will do less damage to my overall assets than I could do if I chose the wrong business strategy or business partner or let my investment property out to the wrong tenants having forgotten to renew the insurance. Or foolishly let my cash sit in a bank deposit account or premium bonds so it didn't grow faster than inflation, which I need it to, in order to retire.

racing_blue

1. Pro
2. Yes
3. Complimentary
4. At ease

JohnRo

1. Pro
2. Yes
3. Yes, over the long term.
4. Indifferent

ChesterDog

This is feeling spammy to me. Like the poster that met and influenced numerous CEOs every day.

I will just say that I would frankly be terrified if my small shareholdings could influence the companies concerned, mainly because such companies would then be like ships where thousands of people were all able to tug at the wheel in the storm: hello, rocks...

jamiednm

Spammy?!

The questions I asked are completely genuine, because I want an insight in to the mindset of people who invest in this type of vehicle.

I also think one or two people have misunderstood what I meant by 'zero influence'. I'm not suggesting that you having a small stakeholding in a company should give you a seat at the table, it is simply a matter of trust and control - you're investing money in to people that you don't know from Adam, whereas if you invested the same money in to a rental property for example, you have a much more direct control over it.

jamiednm

jimjames wrote: »

Can you explain why you're asking the question? To me it seems a bit like asking if you're pro or anti eating food. Presumably you have some reason to ask?

I've been investing for 20 years and wouldn't be doing so if I didn't think it was a good idea. If you're a communist I can understand why you wouldn't invest but if you accept the principle of capitalism and business then surely investment is part of that.

This is an interesting and constructive answer. Comparing S&S investment to eating food shows suggests you are that positive about it that's it's a no brainer.

I'm certainly not communist, and I actively invest in property and business. I have always had an active personal interest in all of my investments, so it's natural to want an insight in to S&S investors before I consider entrusting a fund manager.

nb73

whether you'd consider entrusting a fund manager could be question number 5

Yes- I would consider. And having considered, yes I would entrust. Although for me it is not an issue of trust but of value, which is why I don't.

bowlhead99

jamiednm wrote: »

it is simply a matter of trust and control - you're investing money in to people that you don't know from Adam, whereas if you invested the same money in to a rental property for example, you have a much more direct control over it.

You do have more direct control over a rental property than over an investment fund that you own a millionth of or an investee company that you own a hundred-millionth of.

And you'd certainly have more influence. But there are a great deal of factors outside of your control.

Example, the value of your property at a point in time is set by the market, not by you. National and international macroeconomics controls interest rates, affordability and supply and demand which all hit rental prices and sale prices, and outside influences affect availability of schooling, transport infrastructure, local services, green spaces, level of crime etc. The boards of the big companies that you might invest in as alternatives, also have to deal with such external factors beyond their control and figure out how to react by implementing a strategic plan and on average, they will cope averagely well to the challenges.

So what do you do in the face of challenges to your business model, when the business model is just renting out a property or two? Government changes rules on mortgage interest deductability? Sit there and take it. Stamp duty increase for second properties? Sit there and take it. Yobs move into the area and 'lower the tone'? Sit there and take it. Professional landlord with large portfolio of properties, more efficient operations and lower cost base buys up a few properties on your street and charges lower rent to ensure full occupation? Sit there and take it. Tenant defecates in every room of your house for several months and eventually stops paying, but can't be evicted until you find out about it and get a court order? Take it.

All you can really do to 'influence' the success of your single-sector single asset property rental business is do is what you can to keep the property in a rentable or saleable condition by spending money on maintenance, shopping around for suppliers to keep costs down and for estate agents to re-rent as quick as possible at highest price when your customer moves on. And try to negotiate an efficient finance package with your bank to maintain your ownership position or extend/expand in due course.

Meanwhile, my global conglomerate with operations in energy, telecoms, technology, manufacturing, healthcare, utilities, financial services, consumer products, and, oh yes, real estate... is managed by a bunch of experienced senior managers and directors. I and my co-owners pay the CEOs a few million a year so that they continue to make us a few billion a year instead of losing us a few billion a year... and if/when they appear to be underperforming or not be as good as the next guy, they get changed. My influence is limited or non existent. But my risk is no worse than dumping my £100k into a small terraced house that I hope to rent out.

jamiednm wrote: »

I'm certainly not communist, and I actively invest in property and business. I have always had an active personal interest in all of my investments, so it's natural to want an insight in to S&S investors before I consider entrusting a fund manager.

Spammy?!

The questions I asked are completely genuine, because I want an insight in to the mindset of people who invest in this type of vehicle.

Before your posts this week about tentatively putting a couple of thousand pounds into a fund or a US listed company (and maybe £200pm thereafter), about which you were going to see a professional financial adviser - which, by the way, sounds like massive overkill because the fees to get the advice will kill the returns on a £2000 (or £2400/year) investment - you had not indicated much in the way of business interests or investment experience.

So when you have limited posting history and show up to ask a question such as 'are you pro or anti investing' on a "savings and investment" board with thousands of users, you can see why some people would have the reaction, "ah, is this going to lead into some spam again...." or "is this guy for real or is he a lazy undergraduate looking to write a homework essay whose teacher told him to consider potential attitudes to these 4 questions"

In your last financial post on this site, you were considering aggressively paying down the rest of your residential mortgage over five years so you could potentially buy another property as an investment. Now after eighteen months you are telling us you actively invest in property and business. I guess the paydown plan went well or you found some other capital or income?

Personally, I have a (mortgaged) residential property and the rest of my investments are in company shares or funds / investment trusts. Maybe at some point I will get an investment property but for most people it wouldn't be suitable as a first investment because of it being expensive and 'eggs in one basket' together with being time consuming and illiquid. Of course, many people by choice or circumstance have made being a landlord work, although the historic returns as average house prices went from 2x average salary to 8x average salary may no longer be available, unless house prices are going to go up to 30x average salary.