are regular savers worth it?

2010

The fact remains when you "invest/gamble" with stocks and shares there`s no gaurantee.
They can just as easliy, even over time, go down as well as up.
It`s a gamble.
You pay your money and take your chance.

bowlhead99

2010 wrote: »

The fact remains when you "invest/gamble" with stocks and shares there`s no gaurantee.
They can just as easliy, even over time, go down as well as up.
It`s a gamble.
You pay your money and take your chance.

The fact remains when you "cross the road / gamble with your life" to participate in activities on the other side of the road, there's no guarantee. You can just as easily, even looking both ways, die or not die. It's a gamble.

You can do what normal people do and cross the road carefully to participate in the benefits of being involved in society, or you can opt out to avoid death.



It's a decent analogy because even if you don't cross the road, you'll die of something anyway. Similarly if you don't choose to invest - and stay in cash instead - you'll lose the value of your money to inflation. So IMHO you might as well do what most normal people do and invest over multiple decades to fund long term objectives like retirement, despite the risk that "even over time" your investments might lose value.

stringer_bell wrote: »

I have a large sipp also that needs a rebalanced. I have a diversified portfolio there but a ton of individual ftse 250 shares that are all in profit.. man group.. Ted Baker etc

I'm thinking about slowly selling them all off and putting the whole amount in a vanguard lifesyrategy 80. I'm 31 and won't need it for another 24 years. Value now is £78k. Thoughts?

Couple of things. You mention your shares are all in profit. Really that's irrelevant because whether they are suitable to hold going forward is not related to what you paid for them.

Mr Baker and Mr Man don't know what you paid and don't have a corporate objective of delivering you a particular personal target return. The market says what they are worth and is presumably valuing them fairly today for their prospects today against all other opportunities in the market. So whether today's price happens to be more or less than you paid for them doesn't tell you whether they have a place in your portfolio. Generally, most investments bought in the last 7 years are more valuable than they were worth when they were bought, as we have been in a bull market since 2009. Tells you nothing about their prospects.

The FTSE 250 makes up about a percent (or two at the most, i haven't really counted) of world stock markets by market capitalisation. So if that large chunk of your SIPP was all drawn from that pool of opportunities, you'd be missing out on the other 99%. The companies you have might be diversified by industry sector, but they share things in common, like local political, economic and currency risks and being valued between £0.5 billion and £4-5 bn. And all the holdings are presumably equity not debt or other asset classes.

By contrast the VLS80 has its fingers in rather more pies, with UK-skewed global equity and a few types of bonds.

However, the VLS, while meeting the criteria of being properly globally diversified and multi-asset, is still a bit biased. As its holdings within different regions are allocated on market capitalisation, a very large proportion are in the largecap and mega cap companies. A relatively small amount is in mid-caps (eg FTSE250 is only 17% of FTSE UK all share) and there's hardly any small cap exposure.

While there's no real doubt that a globally diversified portfolio of largecap stocks and bonds is going to be a very sensible thing to hold from now to your retirement years which are three to six decades away - you might feel that actually you like the potential of holding slightly more mid-and small-cap holdings for long term growth. So some would "break" the off-the-shelf, straight-out-of-the-box VLS allocation by having another fund in the SIPP alongside it which increases the allocation to companies which are less of a monster size.

However, playing with the default allocation is something that can then get you back into endlessly tweaking and ending up buying lots of specialist funds and maybe even individual stocks that appear to have long term potential, so is perhaps best not encouraged if you want an easy life with minimal periodic rebalancing to do.

2010

Bowlhead99,

I like and appreciate your posts.
The point I`m making about the SE (gambling den)is if you put £100k into a savings account, at the end of the year you still have £100k plus any interest.
If you put £100k into the SE by whatever vehicle and taking into account charges management fee etc after the first year what exact figure do you have.

As you well know, you can`t tell me and I can`t tell you and in fact nobody can.
They can only speculate, which is ironically what they are doing when they invest/gamble in the SE.

I also wonder if some of the posters on here ever do get out to "cross the raod", maybe that is too risky for them.

eskbanker

2010 wrote: »

The point I`m making about the SE (gambling den)is if you put £100k into a savings account, at the end of the year you still have £100k plus any interest.
If you put £100k into the SE by whatever vehicle and taking into account charges management fee etc after the first year what exact figure do you have.

The point everyone else is making is that yes, you can elect to keep all your money in cash deposit form and this is indeed the only way of knowing an exact figure that you'll have at the end of a year. However, that's a very narrow and unrepresentative set of circumstances and for those who have accumulated a substantial pile of cash (the context of this thread), then it's likely to be worth looking at other options unless there are reasonably specific short-term objectives, not least from the perspective that keeping all your money in cash deposit form isn't the risk-free option many seem to see it as.

Or to put it in your preferred emotive terminology, as used by some rich guy from many years ago, staying in cash is also gambling!

jimjames

2010 wrote: »

Bowlhead99,

I like and appreciate your posts.
The point I`m making about the SE (gambling den)is if you put £100k into a savings account, at the end of the year you still have £100k plus any interest.
If you put £100k into the SE by whatever vehicle and taking into account charges management fee etc after the first year what exact figure do you have.

As you well know, you can`t tell me and I can`t tell you and in fact nobody can.
They can only speculate, which is ironically what they are doing when they invest/gamble in the SE.

I also wonder if some of the posters on here ever do get out to "cross the raod", maybe that is too risky for them.

Equally you can't tell me how much your £100k will be worth in 12 months time as you don't know how inflation will go. Yes it may still be nominal value of £100k but purchasing power will have dropped.

Worth thinking what the stock market actually is, the value of companies listed. Under capitalism and profit generating activities then the value of companies will grow over time. If you really think that companies will be worth less in 20 years time then the whole basis of economic activity will be an issue. To repeat again, investing properly is not gambling. House prices can also vary, why are you not saying that's gambling too?

2010

jimjames wrote: »

Equally you can't tell me how much your £100k will be worth in 12 months time as you don't know how inflation will go. Yes it may still be nominal value of £100k but purchasing power will have dropped.

Will your investment funds after all the charges and fees still have a nominal value of £100k.
Nobody knows but the minute you invest you`ve lost money with fees and charges and if the SE dives after the first year you could be looking at anything up to a 30% loss maybe more which you will never recover fully.

You cannot lose capital with a savings account but you can big time with an investment.

2010

eskbanker wrote: »

The point everyone else is making is that yes, you can elect to keep all your money in cash deposit form and this is indeed the only way of knowing an exact figure that you'll have at the end of a year.

---

and everything else is a gamble, thank you!
No further discussion needed.

eskbanker

2010 wrote: »

---

and everything else is a gamble, thank you!
No further discussion needed.

It seems your approach to finances mirrors that of your posting style, i.e. being very selective when choosing only something that suits your preconceptions rather than considering the big picture!

bigadaj

2010 wrote: »

Bowlhead99,

I like and appreciate your posts.
The point I`m making about the SE (gambling den)is if you put £100k into a savings account, at the end of the year you still have £100k plus any interest.
If you put £100k into the SE by whatever vehicle and taking into account charges management fee etc after the first year what exact figure do you have.

As you well know, you can`t tell me and I can`t tell you and in fact nobody can.
They can only speculate, which is ironically what they are doing when they invest/gamble in the SE.

I also wonder if some of the posters on here ever do get out to "cross the raod", maybe that is too risky for them.

Everyone is different and we should all make decision with which we are comfortable.

You don't appear to have a high appreciation of risk and in that case it may well be best if you avoid the stock market, as volatility and potential extended period of poor or negative returns will be something you won't be comfortable with.

All we can do is work from previous experience and records, and over the last 130 years or so for which we have good records the indication is that the stock market provides better returns than debt, in the form of bonds, or deposits of cash in bank accounts. This may all change in future, indeed we have three hundreds years of experience that interest rates at near zero are not very probable, but they have been the case for most of the last decade.

The success of stock markets are in part a reflection of humanity, controlled by a combination of greed and fear, but capitalism is the least worst system we've found to be successful so it's all we have currently. For similar reasons holding large sums could be considered to be particularly risky in the current environment, the debt hangover from the last decade still exists and much if this debt is government held. The easiest way of reducing this is to inflate it away, by quantitative easing if necessary, and this is probably going to have a worse impact on cash than other asset classes, which will perversely be inflated by this approach.

jimjames

2010 wrote: »

Will your investment funds after all the charges and fees still have a nominal value of £100k.
Nobody knows but the minute you invest you`ve lost money with fees and charges and if the SE dives after the first year you could be looking at anything up to a 30% loss maybe more which you will never recover fully.

You cannot lose capital with a savings account but you can big time with an investment.

That's the risk element, there is no guarantee on value. However in my experience it's not true to say you'll never recover from a drop. My portfolio dropped 50% in 2008/9. It's now recovered and is 50% up on original value. No guarantee but long term history shows markets rise. Investing is obviously not for you but that doesn't mean you can post incorrect info that others may believe