Any recommendations for income and slight growth?

bigfreddiel

dunstonh wrote: »

It's useful but not great. It measures the current underlying assets and not the potential underlying assets. So, a fund with a flexible objective fund could currently be defensive and have a 30 score but has the potential to go aggressive and at that time it could have a 150 score.

on typical risk scale of 1-10 (1 = cash and 10 = highest risk mainstream investing) then a FTSE100 tracker would be 9.

Giving cash a risk level of 1 means what exactly? Do you mean inflation? What other factors influence cash? Interest rates? Gilts?

Cheers fj

AlanP_2

I can see where you are coming from and can see the logic but taken out of context as it is presented here it seems like a "random choice" that has taken account of all the other options.

An investment tracking one index in one geographic market is inherently "higher risk" than a spread of investments which will, hopefully, balance each other out over an extended period.

Any index can drop by a significant amount, whether that "risk" concerns you is another matter. If you have plenty of cash and plenty of other investments it may not.

What you my wish to consider is:

1) What is this investment for and over what period will it be invested?

2) Define an ideal Asset Allocation for ALL your investments and for each separate "pot" as they are likely to have different end dates and "objectives" associated with them.

2) How does it "fit" with your other investments to see what the overall balance is?

3) What asset classes, geographies, sectors are you light on?

4) What can you invest in to "fill the gap"?


It's not for everyone and certainly has a reasonably high amount of risk but you might also want to consider P2P for some of your "spare cash". Do Your Own Research first obviously.

bigfreddiel

AlanP, I agree with all you say, you have to find a happy medium that suits your plan. Diversify to much and you may as well just buy a tracker, diversify to little and it gets more risky that you lose value.

I realise the risk factors are relative 1 being the lowest 10 being the highest, however how you categorise products and risk could be difficult.

Cheers fj

bigfreddiel

dunstonh wrote: »

What made you choose one of the worst performing index tracking areas for the last 20 years? (through multiple economic cycles it has been consistently amongst the worst performing)

You have bought something in the UK equity sector. What about all the other sectors? What do you hold in those?



Yield is not safe. The asset that produces the yield is the risk and that will be variable.

There is some element to that as high yielding shares do not "tend" to have as much growth in share price. Its a simplistic view in isolation of other information though. They can still do a BP, Tesco or Lloyds Bank or even a Polly Peck.



investment trusts can offer greater growth potential but can also carry greater risk on a like for like basis to a UT/OEIC. Again, yield is not an indication of stability. A 4% yielding fund can still drop 40% in 12 months.

The usual dissection, which looks good to me, but dunstonh could you perhaps follow up with how you actually mitigate these?

How are your finance, investments and pensions set. Actual information from an ifa would be a very welcome insight for us all.

Cheers fj

dunstonh

bigfreddiel wrote: »

The usual dissection, which looks good to me, but dunstonh could you perhaps follow up with how you actually mitigate these?

How are your finance, investments and pensions set. Actual information from an ifa would be a very welcome insight for us all.

Cheers fj

As an IFA, I can't post information in the same way unregulated people can. It has to be mostly generic. So, I can nudge and point out issues but I have to avoid solutions.

Luckily, many of the regulars here know how a conversation is going to go and will fill the gaps. I throw in the grenade and the rest do the tidying up

I can say that I invest using sector allocated portfolios using allocations provided by an actuary which are reviewed quarterly. I rebalance once a year. The allocations are risk rated and my pension is a notch higher on the scale than my ISAs. I only hold single sector funds (no multi-asset) and they are a mixture of trackers and managed. However, I would not use that method for smaller investors as there is no point. Multi-asset solutions are more viable for smaller amounts.

stringer_bell

I'm actually now considering buying a few investment trusts in each section and topping up regularly, focusing mainly on growth

Uk Smaller Companies
Us Smaller Companies

Of course there are only two there, but I will start with 2, topup then diversify, it does not make sense to have a load right at the bat

dunstonh

Giving cash a risk level of 1 means what exactly? Do you mean inflation? What other factors influence cash? Interest rates? Gilts?

Cash is no loss. It has poor growth potential but investment risk (not shortfall/inflation risk) focuses on loss.

Any reason why this is so risky? I would of thought investing in a single company, would be a risk 9-10, but a fund tracking a whole market, I thought would of been a safer option

50% loss potential in a 12 month period (twice in the last 15 years there have been losses in excess of 40%). That sort of loss is way above the average UK consumer risk profile.

Linton

stringer_bell wrote: »

I'm actually now considering buying a few investment trusts in each section and topping up regularly, focusing mainly on growth

Uk Smaller Companies
Us Smaller Companies

Of course there are only two there, but I will start with 2, topup then diversify, it does not make sense to have a load right at the bat

One could question whether these sort of focussed higher risk funds are appropriate for someone early in their investing career. However if you want to invest in global Small Companies...

Historically UK Smaller Companies have consistently beaten the wider indexes by a large margin. However US ones havent - the market seems very different. US small companies have pretty well matched the S&P500. Perhaps you could look at Europe rather than the US, the Europe market and SC performance seems similar to the UK.

Thrugelmir

stringer_bell wrote: »

Is 3.8 a safe yield?

On the basis that dividends from companies such as Shell, BP, Rio Tinto are unsustainable longer term and that further dividend cuts are enivitable this year (Standard Chartered). The perspective yield is nearer 3.2% at current price levels.

stringer_bell

Linton wrote: »

One could question whether these sort of focussed higher risk funds are appropriate for someone early in their investing career. However if you want to invest in global Small Companies...

Historically UK Smaller Companies have consistently beaten the wider indexes by a large margin. However US ones havent - the market seems very different. US small companies have pretty well matched the S&P500. Perhaps you could look at Europe rather than the US, the Europe market and SC performance seems similar to the UK.

Yeah, that was actually a typo. European smaller companies looks interesting, I was tempted by India, but the performance in my ISA the past year or so has put me off, the same with biotech and healthcare

edit : It seems like unit trusts/funds are better than investment trusts from my small research, anyone know why this is?