how to split money between cash savings and investments?

N1AK

Linton wrote: »

You are right to warn of investment price volatility but I fear your example of the FTSE100 would unnecessarily frighten off newbie investors.

And this includes two crashes of more than 40% in the meantime

It also assumes you're selling now, not in one of those two previous lows or in any future low. I accept all the figures you give, and have absolutely no desire to put anyone off investing, however I think real life examples of how funds can 'under-perform' for lengthy periods which makes them risky if you're not in for the long game.

I'm basically all equity and 27.5% of it is FTSE All Share (I'm surprised it beats the FTSE 100 that handily over the period mind!) so it would be odd for anyone to think I was warning them off it

user1168934

Linton wrote: »

You are right to warn of investment price volatility but I fear your example of the FTSE100 would unnecessarily frighten off newbie investors.

If you had made the mistake of investing solely in the FTSE100 in 1998 you would have received 3% approx dividends each year which should have been reinvested. Taking these into account your pot size would have more than doubled with an average annual return of about 4.5%. And this includes two crashes of more than 40% in the meantime.

The FTSE100 is a poor index for investment, The FTSE AllShare would have given you an extra 20-30% overall return.

yikes ! 100% FTSE100 here :eek: I should have started this discussion sooner. Keep it coming guys. Thanks.

N1AK

user1168934 wrote: »

Thanks mate, I think I have a lot to learn from you.
I have always been serious about money as far as I can remember but my journey was slightly different to yours. Out of university started saving for a deposit, had a decent deposit by 2009 (which I thought was safe) but lost the whole thing. Started the deposit pot again but after saving enough cash for "safety net" I invested all in stock and shares buying and selling as I saw fit. Luckily it paid off and I was able to buy a property in 2014 and here I am now not really knowing where to take it from here. Any advice for me?

Doesn't sound like you've got much to learn (especially from me) you clearly know how to manage your expenditure, put aside money etc which is pretty much it :T

Think long term, think conservatively, and be prepared for it to be very boring

For us that means deciding what our long term priorities are, which could be summed up as being in a position to retire (without assuming any state pension will be in place) comfortably by 60. To do that we're targeting a pot big enough to generate £40k+pa until 100 years of age. We assume our investments will grow by 2.5% more than inflation on average. Thus by 60 we need just over £1 million (all adjusted for inflation). To do that we need to add an additional ~£20k pa to the pot each year. We're going to stay completely stock focused until 40, then decide if/how to transition into lower risk assets.

We're actually fortunate enough to be running ahead of plan, so we're choosing to spend more on our love of travel now and getting ahead of schedule. There's no point living like a hobo now to have money you don't need or can't use at 60.

I'd suggest that once you have put together your long term plan you let it run for at least 6 months before even considering it again. It should be re-assessed carefully with major life events (if you suddenly decide to change careers, have children) but only to reconsider your goals and assumptions on returns etc; don't let current events make the decision for you (as much as it pains me to continue putting money into south america to watch it lose value).

Finally, read a lot, listen a lot, then think for yourself about what your strategy should be. I wouldn't suggest the above as a strategy for anyone else because it's based on so many factors that are personal

N1AK

user1168934 wrote: »

yikes ! 100% FTSE100 here :eek: I should have started this discussion sooner. Keep it coming guys. Thanks.

Exactly how I started, and I'm still trying to get my UK funds down to around 15-20% slowly but surely

You're doing it 90%+ right just by having investments at all, so you've got years to work on tweaking it that last little bit.

pejt

Agree with the above.


I tend to invest in structured products rather than funds. Avoids the annual management charges and the guess work. There are some 10 year ones appearing which look quite compelling paying anywhere from 8-10% with risks associated clearly.

atush

Sam_J12 wrote: »

Er, you say you disagree with my analysis and then go on to repeat exactly what I said.

And it is perfectly possible to build a diversified portfolio with individual stocks. People here often have the erroneous idea that because it is important to have diversification that more diversification is always a good thing. It is often harmful to results.

ER, NO.

I do not agree with you, as your told the OP you disagreed with the measured approach of diversification first.