Santander dropping interest to 2%

eskbanker

xylophone wrote: »

The stock market is supposedly the raisin d'etre

Low hanging fruit?:)

And there was me thinking this thread was about a currant account....

bigadaj

fun4everyone wrote: »

Do you have a link to this post (or posts). I would be interested to read them.

If you do a forum search for Jamesd and p2p then a few examples should pop up.

moneyfoolish

bigadaj wrote: »

It depends on the sums involved really. If you are talking more than the one tens of thousands then non cash investments are probably advisable for a percentage of your money.

Linkers are looking more favourable since the Brexit vote, but investing in equities would give you some return, 3-5% is achievable with capital at risk, with expectation that capital might increase over the longer term rather than reduce. Similarly p2p is an option for a percentage, again capital is at risk but spreading between platforms and loans reduces the impact of any potential default, and 10-14% is possible secured on property or assets; so any default is unlikely to mean loss of 100% of capital just a percentage and a delay whilst assets are liquidated.

I'm talking about £230,000 with the worst rate I'm currently getting of 1.56% (although I haven't a clue what I'll be getting with the new NS&I Index Linked of RPI + 0.05%!). However, my wife and I want to be able to spend whatever money we fancy on holidays, etc. and the remainder together with the proceeds of a currently valued £450,000 property will be split between our 4 children and I have no intention of that sum being reduced by 10 or 20% at the time we depart this world!

chucknorris

bigadaj wrote: »

You can't talk about equivalent for dividend income, there was a notional tax credit until,this tax year but it never was a real thing and the yield is what you get, so around 3.5%. Dividend cover has suffered for many firms and there's a serious risk of cuts in the largest payers.

It's a big jump in risk profile to go from an fscs protected bank account to a stockmarket investment, you may have used the ftse 100 as a generic example hut it has been a terrible performer now for many years.

In terms of income and capital protection my priority is always total return.

We'll never see eye to eye on investment strategy, you seem far more cautious than me, and that is even after I have become much more cautious, because there isn't any reason for me to take on significant risk any more. I'm not saying that is wrong, just that you are totally different. You might see the ftse 100 as having been a bad performer, but I have made quite a decent return from it in the last 15 years or so, and I know that it was previously higher, but I piled in when it fell to about 4,000.

Thrugelmir

fun4everyone wrote: »

Do you have a link to this post (or posts). I would be interested to read them.

Chasing yield has been the case the case for some years now. Yields fall but the risk remains the same.

bigadaj

chucknorris wrote: »

We'll never see eye to eye on investment strategy, you seem far more cautious than me, and that is even after I have become much more cautious, because there isn't any reason for me to take on significant risk any more. I'm not saying that is wrong, just that you are totally different. You might see the ftse 100 as having been a bad performer, but I have made quite a decent return from it in the last 15 years or so, and I know that it was previously higher, but I piled in when it fell to about 4,000.

Fair enough, but you've seemingly made most of your money from property I understand.

I believe your earlier quote was that you didn't believe in timing the market, which is a little different to the quote above.

I'm fairly objective in terms of risk, markets are overvalued in historic terms if you look at price to earnings ratios, though whether that means constrained gains or earnings going forward given the potential for negative interest rates is another question.

There is no debate about the ftse 100 being a poor performer, just look at historic returns over the last few decades and this is immediately apparent. It's a poor index, lacks diversification being concentrated on mining, oil and banks, missing tech, manufacturing and other sectors with potential for higher returns and lower volatility.

Value is determined by a combination of returns, risk and volatility, but also in comparison with other asset classes, and it's only the latter determination that currently indicates values in equities.

You may well have a higher risk tolerance than I have but that certainly isn't indicated by our relative exposure to equities. I currently have over 50% of net wealth in shares or rather funds, well over 70% if you exclude primary residency, which doesn't mean that I don't have concerns about stock market valuations. Your risk tolerance is higher because despite having a lower percentage of your wealth in equities you have a large proportion within a presumably small number of properties, and the latter is a higher concentration of risk than any amounts in diversified equity funds.

I don't mean to get into an argument as we are different people with different views, attitudes and risk tolerances, but it's important to understand the reasoning behind different approaches, and indicate where assumptions may not necessarily be correct.

chucknorris

bigadaj wrote: »

Fair enough, but you've seemingly made most of your money from property I understand.

I believe your earlier quote was that you didn't believe in timing the market, which is a little different to the quote above.

I'm fairly objective in terms of risk, markets are overvalued in historic terms if you look at price to earnings ratios, though whether that means constrained gains or earnings going forward given the potential for negative interest rates is another question.

There is no debate about the ftse 100 being a poor performer, just look at historic returns over the last few decades and this is immediately apparent. It's a poor index, lacks diversification being concentrated on mining, oil and banks, missing tech, manufacturing and other sectors with potential for higher returns and lower volatility.

Value is determined by a combination of returns, risk and volatility, but also in comparison with other asset classes, and it's only the latter determination that currently indicates values in equities.

You may well have a higher risk tolerance than I have but that certainly isn't indicated by our relative exposure to equities. I currently have over 50% of net wealth in shares or rather funds, well over 70% if you exclude primary residency, which doesn't mean that I don't have concerns about stock market valuations. Your risk tolerance is higher because despite having a lower percentage of your wealth in equities you have a large proportion within a presumably small number of properties, and the latter is a higher concentration of risk than any amounts in diversified equity funds.

I don't mean to get into an argument as we are different people with different views, attitudes and risk tolerances, but it's important to understand the reasoning behind different approaches, and indicate where assumptions may not necessarily be correct.

Like I said we will never agree. What I have learned is that when you don't have that much (like I originally had) and if you want to get somewhere, then be open to take on risk, which I did. But when you have made it, take your foot off the accelerator.

bigadaj

moneyfoolish wrote: »

I'm talking about £230,000 with the worst rate I'm currently getting of 1.56% (although I haven't a clue what I'll be getting with the new NS&I Index Linked of RPI + 0.05%!). However, my wife and I want to be able to spend whatever money we fancy on holidays, etc. and the remainder together with the proceeds of a currently valued £450,000 property will be split between our 4 children and I have no intention of that sum being reduced by 10 or 20% at the time we depart this world!

Thanks for that, interesting numbers.

The linkers are a good idea in my opinion, I don't have any but that's because they're not available to anyone not rolling them over, if they were available then I'd probably purchase.

Ever since the gfc and the consequences of near zero interest rates then the normal spread of risk and return has become very extreme. Returns on safe investments have been poor, yet those on riskier ones have frequently been very good. Shares are high currently, and so risky, but given the lack of opportunity elsewhere there are still reasons for purchasing including relatively good dividend yields as described by chuck Norris. Depending on your timescales a proportion in equities would be a good idea, even if a low percentage.

The problem with remaining in cash is that the aim of the boe, U.K. Government and indeed those world wide is to inflate debt away. They haven't been very successful with near zero interest rates, so moved onto quantitative easing, ie printing money, with somewhat limited success. So we now have the spectre of more money printing and negative interest rates, which have already occurred in bond yields.

So whilst you might not want your capital to reduce the reality is that it is already, by remaining in cash and the value of that cash reducing in relation to inflation and/ or other asset classes, such as shares, bonds, property, p2p, commodities etc

bigadaj

chucknorris wrote: »

Like I said we will never agree. What I have learned is that when you don't have much (like I originally had) if you want to get somewhere then take on risk, which I did. But when you have made it, take your foot off the accelerator.

That's fine, all I'm saying is that you've actually taken on presumably leveraged risk through property rather than shares, whereas my approach has been more equity based.

chucknorris

bigadaj wrote: »

That's fine, all I'm saying is that you've actually taken on presumably leveraged risk through property rather than shares, whereas my approach has been more equity based.

Equities didn't offer the same prospects for me at that time in life when I wanted to get somewhere, now that I've arrived, equities are fine. Also due to the lifestyle intrusions of property, I want to distance myself soon from property.