How much have you made/lost in Investments since you started (Roughly)

Apodemus

realistically, very few of us can really say how we have done until the chips are all finally cashed in.

bigadaj

racing_blue wrote: »

Sure. But I'd be wary of extending this argument to suggest that returns of 5% for a private investor are "crap", or even average.

I'm only an armchair enthusiast, but the material I have read* suggest that private investors as a group return around -2% to 0% on average. So I think 5% is good. One of the reasons I'm interested in this thread!

*Edit: for example this for data and views on historic and expected market returns, and this for a list of reasons why individually we are likely to fare worse.

There is a problem with selective referencing though, vanguard have a product to sell as well as an opinion.

However the principle is fine in that private investors trading in general are likely to do far worse than professionals and also tho thafollow a buy and hold strategy.

SimonBlake

Check fund factsheets and Google Finance for specific shares. Or check Neil Woodford's equity income fund for some short-term return proof.

Alice_Holt

Moneycoach wrote: »

Wow, you have seen some good returns.
£3 pu to £33 pu in 20 years! The compound interest on that is amazing!

Equally, I have made some howlers.

Like the time I starting buying into the Tech sector (can't remember the name of the unit trust) in 95/6.
It had a spectacular rise - mid 1999 it was valued at many times my outlay (like a fool I failed to take any profits / topslice my holding) ; followed by a spectacular drop.
I eventually sold it in 2006 realising a small loss to set against other capital gains.

BLB53

Any learning or what you would do differently if to had to go through it again?

If I knew then what I know today, I would do things very differently.

Back in the 90s I did not have much of a clue what I was doing and took on far too much risk without really realising just how much my portfolio was exposed to a downturn.

Now I would start of with a plan which will minimise my emotional and behavioural errors - particularly overconfidence.

Choosing the right mix of assets - finding the balance between equities and bonds is the key to a good outcome.

Charlie Ellis ‘Winning the Loser’s Game’
“The hardest work in investing is not intellectual, its emotional. Being rational in an emotional environment is not easy. The hardest work is not figuring out the best investment policy; its sustaining a long term focus at market highs or market lows and remaining committed to a sound investment policy. Its hard especially when Mr Market always tries to trick you into making changes".

I would accept it is a mathematical certainty that the market will beat the average fund manager after costs. I would invest in a balanced, low cost, globally diversified index fund - the Vanguard Lifestrategy 60 is probably the best option and this is where most of my portfolio is currently invested. Over time I will move a step down to the VLS 40.

JohnRo

I'm indifferent to quite a lot of what he's quoted saying but the Warren Buffet quote that speaks to me is

'We don't have to be smarter than the rest, we have to be more disciplined'

masonic

racing_blue wrote: »

Sure. But I'd be wary of extending this argument to suggest that returns of 5% for a private investor are "crap", or even average.

I think it is absolutely reasonable to consider returns of 5% for a private investor over this most recent 10 year period to be towards the bottom end of what could be regarded as acceptable.

The absolute minimum investment return any investor should be willing to tolerate is the return that is delivered by an appropriate passive investment. This might be a FTSE All share index tracker, or a combination of trackers that include other markets and/or bonds. If you had your investment in (or spread between) US, European, UK markets in any combination together with some optional percentage in UK gilts, appropriate index trackers would have delivered in the region of 5% (the worst case scenario would be someone investing in just the expensive retail unit class of the popular HSBC FTSE All share index in 2006 and not switching into cheaper trackers when they came along a few years later - this would have only delivered 4.5% - but in reality, the switch to the cheaper Vanguard tracker would have been a no brainer).

I'm only an armchair enthusiast, but the material I have read* suggest that private investors as a group return around -2% to 0% on average. So I think 5% is good. One of the reasons I'm interested in this thread!

*Edit: for example this for data and views on historic and expected market returns, and this for a list of reasons why individually we are likely to fare worse.

This seems rather reminiscent of a discussion we had a few months ago here. Not wanting to repeat too much, the discussion could be summarised as: The average investor who does their own stockpicking absolutely does do much worst than the market return and that can be explained by a systematic transfer of wealth from private investors to institutional investors. That is no reason to set the bar so low, since there are known instruments that will deliver returns that are very close to the market return. Anyone whose own performance is tending towards the average private investor should really consider using those instruments instead.

talexuser

BLB53 wrote: »

Choosing the right mix of assets - finding the balance between equities and bonds is the key to a good outcome.

Good advice, when i started I had this mix and bonds went up slightly when equities fell generally so it was a balance for downturns. After a decade and a half I looked at the relative returns and decided I was losing out on bonds so sold up and moved into mostly equities (except where funds also had a minority bond exposure). By now capital gains due to compounding gave me the appetite for slightly more risk (but not high risk by general definitions) after riding the tech boom and credit crunch there was still a more than reasonable pot to ride out falls.
Long term is an easy phrase to roll out, but the truth is indisputable. Stick for the long term, don't chase short term booms, don't sell and buy at the slightest drop. don't gamble on timing the market. Consistency is the (Buffet) key.

racing_blue

Masonic, I recall that thread. It was the one where lawriejones1 wrote:

lawriejones1 wrote: »

I recently worked with a Cambridge research team for a large finance firm and the average return from a selection of the most popular UK funds has been at 5.1% over the past 15 years.

We then created an average portfolio with a spread of assets and funds, and modelled the behaviour choices of the average investor, and the average returns were around 3.0% as a result of high costs and attempts to time the market. Study was limited to UK investments, so those investing abroad (which makes perfect sense) may have seen much higher gains.

Basically 5% is pretty good.

I agree with every statement in your last post by the way. That is to say, a return of 5% might be both at the lower end of what private investors should have aspired to achieve (because they could have invested in index funds) and higher than most achieved (because they didn't).

My concern is that there may be significant information asymmetry here. Hargreaves Lansdown and the like will know exactly what the average UK investor returns, however I suspect it may not be in their interest to share this information with their customers. Instead we are subject to anecdotes of 10+% and 20+% returns, and stories about how the S&P500 has returned 8% or 10% per year since 1929. Which can lead to false expectations and perhaps excessively risky investing behaviour.

masonic

racing_blue wrote: »

My concern is that there may be significant information asymmetry here. Hargreaves Lansdown and the like will know exactly what the average UK investor returns, however I suspect it may not be in their interest to share this information with their customers. Instead we are subject to anecdotes of 10+% and 20+% returns, and stories about how the S&P500 has returned 8% or 10% per year since 1929. Which can lead to false expectations and perhaps excessively risky investing behaviour.

I agree that stories about high returns achieved from particular investments taken in isolation are quite misleading. For the most part, these have been cherry picked for marketing purposes and I'm sure that they do lead people to have unreasonable expectations.

It is interesting to compare the research lawriejones1 was involved in, which was over 15 years and included most/all of the Dotcom crash, with the 10 year horizon we were discussing above. It is interesting to note that over 10 years the S&P500 delivered about 9% per year, but if you look over 15 years, returns were about 4.5% per year, so while the long term average might be 8-10%, there are significant (15 year) periods where it would have performed no better than risk-free assets after fees were taken into account.

The trouble is, to give yourself the opportunity to make double digit returns, you need to have a concentrated portfolio with little diversification. That leads to high volatility and a much lower probability of success.

Even with a very well diversified buy and hold portfolio held over 20 years, you've still got about a 1 in 10 chance of failing to keep up with cash/inflation.