are regular savers worth it?

2010

bigadaj wrote: »

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.

Thanks for that, but I`ve got the T shirt regarding risk,reward and volatility from the SE and overall have done rather well.
As you say it`s all down to what you`re comfortable with.

Some posters come on here, probably with a vested interest,and make it sound all one way traffic, it isn`t.
They never seem to mention, as you have, poor or negative returns.
They never mention all the fees and charges etc.
They never mention certain periods when you would have lost your shirt,only certain good periods.
They bleat why have you got so much in cash, you`re losing out if you`re not fully invested.

Read my last sentence in post # 14

bowlhead99

2010 wrote: »

Some posters come on here, probably with a vested interest,and make it sound all one way traffic, it isn`t.

I haven't seen much of that. With the exception of our resident gold bug DiggerUK, there isn't really much in the way of OTT "put all your money into this, you can't lose".

However, those who recognise that investing is pretty much essential for the long term are numerous. People aim to retire on personal or company pensions after a lifetime of putting money into a system that generates stock-and-bond market returns and hands them back during retirement. A process that generates real terms growth, unlike cash deposits, is the only practical way you can put some small fraction of your income away for 40 years of your working life and then draw out a larger fraction of your income for the next 40 years of non-working life.

They never seem to mention, as you have, poor or negative returns.

Negative returns are quite normal and are mentioned all the time, because sometimes you will have an up year or a down year or a nothing year and you don't know what's next. "the value of your investments may go down as well as up" is burned into everyone's brains just like "your home is at risk of you do not keep up repayments" and other stock phrases that everyone knows by heart.

They never mention all the fees and charges etc.

Fees and charges make a difference to your returns but are not the be all and end all. Being satisfied with the net return over a long period of time is the goal.

Consider a bank account. You put in £3000. The bank lends £1000 out to a credit card borrower at 21%, £1000 on an unsecured personal loan at 8% and £1000 on a high loan to value mortgage at 4%. Overall his gross investment returns are £330 on the £3000 which is 11%. He pays you £30 which is 1%.

The £300 kept by the bank represents a fee on your assets which goes towards paying for his global banking infrastructure and 150000 employee salaries, billions of pounds of office premises, 30% tax on his profits and leaves a residual profit for the owners of the banking business.

You can see that £300 as a fee of 10% on your £3000 of assets, or you can see it as a 91% fee on the £330 of profits which had been made with your money that year.

The fees on savings accounts are not very transparent, are they. But we don't mind. Because what is important is whether the net amount back is satisfactory. I might be happy paying my 1% fee to get a 10% net gain on an equity fund, just like I might be happy paying a 10% fee to get a 1% gain on a savings account which is insured and guaranteed. I pays my money and I takes my choice.

Read my last sentence in post # 14

Yes in that sentence, you say that "diversification is key" which is a statement that no investor would disagree with. But that comes after the middle part of your post where you said,

"cash is king (it probably always is) and you don`t want to risk it once you`ve got it"

and then went on to describe how the best thing to do was to buy a house to live in, but not stop when you had an adequate house to live in and instead keep on buying bigger and bigger houses and hope to sell the last one at the end to release cash from downsizing.

Going through your life concentrating all your funds in one asset plus fiat cash, is the exact opposite of doing what you admit is the "key" thing which is diversifying.

colsten

2010 wrote: »

Thanks for that, but I`ve got the T shirt regarding risk,reward and volatility from the SE

Are you equating investing with buying shares?

veryintrigued

A very dear friend of mine argues that the markets are a huge pyramid scheme reliant on those already holding shares on making them glamorous to others such that their own holdings increase in value.

jimjames

veryintrigued wrote: »

A very dear friend of mine argues that the markets are a huge pyramid scheme reliant on those already holding shares on making them glamorous to others such that their own holdings increase in value.

Obviously someone with no idea about investment then.

bowlhead99 wrote: »

I haven't seen much of that. With the exception of our resident gold bug DiggerUK, there isn't really much in the way of OTT "put all your money into this, you can't lose".

However, those who recognise that investing is pretty much essential for the long term are numerous.

Well said Bowlhead, couldn't have put it better. I suspect I may have been the person referred to as "they" despite pointing out that investments can rise and fall in value. Investment isn't for everyone but far more people should consider it as part of balanced portfolio rather than purely sticking to savings accounts over the long term but some people seem to have a closed mind to any reasoned discussion.

LXdaddy

bowlhead99 wrote: »

I haven't seen much of that. With the exception of our resident gold bug DiggerUK, there isn't really much in the way of OTT "put all your money into this, you can't lose".

However, those who recognise that investing is pretty much essential for the long term are numerous. People aim to retire on personal or company pensions after a lifetime of putting money into a system that generates stock-and-bond market returns and hands them back during retirement. A process that generates real terms growth, unlike cash deposits, is the only practical way you can put some small fraction of your income away for 40 years of your working life and then draw out a larger fraction of your income for the next 40 years of non-working life.


Negative returns are quite normal and are mentioned all the time, because sometimes you will have an up year or a down year or a nothing year and you don't know what's next. "the value of your investments may go down as well as up" is burned into everyone's brains just like "your home is at risk of you do not keep up repayments" and other stock phrases that everyone knows by heart.


Fees and charges make a difference to your returns but are not the be all and end all. Being satisfied with the net return over a long period of time is the goal.

Consider a bank account. You put in £3000. The bank lends £1000 out to a credit card borrower at 21%, £1000 on an unsecured personal loan at 8% and £1000 on a high loan to value mortgage at 4%. Overall his gross investment returns are £330 on the £3000 which is 11%. He pays you £30 which is 1%.

The £300 kept by the bank represents a fee on your assets which goes towards paying for his global banking infrastructure and 150000 employee salaries, billions of pounds of office premises, 30% tax on his profits and leaves a residual profit for the owners of the banking business.

You can see that £300 as a fee of 10% on your £3000 of assets, or you can see it as a 91% fee on the £330 of profits which had been made with your money that year.

The fees on savings accounts are not very transparent, are they. But we don't mind. Because what is important is whether the net amount back is satisfactory. I might be happy paying my 1% fee to get a 10% net gain on an equity fund, just like I might be happy paying a 10% fee to get a 1% gain on a savings account which is insured and guaranteed. I pays my money and I takes my choice.



Yes in that sentence, you say that "diversification is key" which is a statement that no investor would disagree with. But that comes after the middle part of your post where you said,
and then went on to describe how the best thing to do was to buy a house to live in, but not stop when you had an adequate house to live in and instead keep on buying bigger and bigger houses and hope to sell the last one at the end to release cash from downsizing.

Going through your life concentrating all your funds in one asset plus fiat cash, is the exact opposite of doing what you admit is the "key" thing which is diversifying.

+1


As always, an impressive, cogent and well presented post by bowlhead.

bigadaj

veryintrigued wrote: »

A very dear friend of mine argues that the markets are a huge pyramid scheme reliant on those already holding shares on making them glamorous to others such that their own holdings increase in value.

Well that's an argument that could be considered to have some basis, but it's the only pyramid scheme that enough people believe in to make it sustainable.