Should I be investing more?

krish123

enthusiasticsaver wrote: »

This depends on so many variables.

If your main goal in the next 3-4 years is to buy a house then this is what I would be focusing on. How much mortgage can you get, what is the average ftb house price in your area and are you aiming for a 10% or 20% deposit to get a better rate?

If you live in a cheaper property area then you may already be at or near your goal with your £15k in Santander and your H2B account but if you live in the south of the UK you may still have a way to go. If you reckon you can easily save what you need for a house, including fees and emergency fund then by all means put more in your S and S ISA.

Basically the rule is don't put anything into stocks and shares which you may need to access in the next 5-10 years. Without knowing your income or your goals it is difficult to make a blanket decision as to how much of your savings you should tie up.

I would suggest you do an analysis of costs for your proposed house purchase, increase it by 10%, decide on whether you want it to be 3,4 years or longer and make that your goal. Only you can know if you will have enough spare to put more in your S and S ISA.

I live in the midlands so house prices aren't crazy compared to the south.


I would be looking to put down a 10% deposit minimum I think.
I currently do not have a partner but if this changes, it really changes the equation of affordability that's why buying a house now isn't my main priority.



Hence my thinking is to pile intot he S&S ISA while I can. Obviously when I have a mortgage it will be difficult to pile in a lot at that point.

krish123

hutman wrote: »

I would be tempted to invest the savings into stocks as well. Despite the implied volatility of stocks, the fund you mention has a decent performance record.

I fail to understand the proverbial wisdom here to invest only for the long term. In fact I tested this as much in case I've been missing something substantial. I put in £100 in week one, it went up to £102 in week 2; i cashed out my 2% gain. So why can’t you do the same? Considering the above, the opportunity cost of ignoring short term investing (not trading) means losing out.

I have thought the same thing, there has been several stocks I have watched and if I had put my money in I would be laughing.


But as others have said it could easily go the other way and unfortunately I cant risk losing the money, so for now I am avoided in investing in individual shares.

chockydavid1983

It's worth considering that for every 5% of deposit you can muster up to 40% the interest rate on any mortgage is a lot better.
It's difficult as you say though as you're not sure what your plans are. Perhaps best to err on the side of having more in cash for now?

enthusiasticsaver

hutman wrote: »

I would be tempted to invest the savings into stocks as well. Despite the implied volatility of stocks, the fund you mention has a decent performance record.

I fail to understand the proverbial wisdom here to invest only for the long term. In fact I tested this as much in case I've been missing something substantial. I put in £100 in week one, it went up to £102 in week 2; i cashed out my 2% gain. So why can’t you do the same? Considering the above, the opportunity cost of ignoring short term investing (not trading) means losing out.

This works in a rising market but not in a falling one. If the investments have gained and you cash it out you have lost nothing. If your investment has fallen and you need to access the investment then you solidify the loss. As the market is constantly up and down I like to keep ready access money in cash so I do not have to access my investments regardless of what the market is doing.

hutman

enthusiasticsaver wrote: »

This works in a rising market but not in a falling one. If the investments have gained and you cash it out you have lost nothing. If your investment has fallen and you need to access the investment then you solidify the loss. As the market is constantly up and down I like to keep ready access money in cash so I do not have to access my investments regardless of what the market is doing.

Assuming a time horizon of 1 year and the performance record of VGLS vs current account alternative + lets say this is cash I have no immediate need for, even in a year I might not need it. Point being, if I've made gains I can cash it out within a short term time period, if I've made losses, I just leave it parked.

I accept that there is little point not having a longer viewpoint to make further capital gains and not to ignore the costs involved (TER + platform) but it still beats current accounts and its admin intensive cousins.

chockydavid1983

What if you've made a loss after a year and then need the cash though? Then you'd be crystallising your loss. And if you make a gain and cash out, what will you do with your money then? If you keep it in cash and the stock you just sold rises then you made a bad move.
The idea behind holding a fund for a number of years is to hopefully smooth out the losses/ gains to a decent average gain per year,

eskbanker

hutman wrote: »

Point being, if I've made gains I can cash it out within a short term time period, if I've made losses, I just leave it parked.

And this is one of the main reasons investment is recommended as a long-term proposition, because you don't know in advance if you'll be up or down in the short term, so if you may need the money sooner than 5+ years then it would be much more of a gamble as to whether you'd be up or down.

That's not to say there's anything inherently wrong with cashing out at a point when you're sufficiently up but that's very much a tactical approach rather than a strategic one and also assumes you have something better to do with the money instead of leaving it invested.

Or, to use the oft-repeated maxim, good quality investing is all about time in the market not timing the market....

hutman

eskbanker wrote: »

also assumes you have something better to do with the money instead of leaving it invested.

Think you've captured what I'm trying to get across. Each person is different but with rising wealth, especially if its a new phenomena, the desire to spend also goes up. In other words, I might be feeling particularly smug and find myself deserving of a new BMV.

eskbanker

hutman wrote: »

In other words, I might be feeling particularly smug and find myself deserving of a new BMV.

I think you'd be struggling to afford one with your £2 windfall!

george4064

krish123 wrote: »

Well done on piling into your S&S ISA, what are you investing in and how much have you currently got in there?


I think the idea is to not touch the fund as you do not want to destroy the growth that is occurring in there, easier said than done though!

about £50k invested in a variety of individual shares, ITs and ETFs.

I actually started my portfolio many years before I even started about thinking of property, some of it was invested as early as 2010. So originally i didnt even have buying a house/flat in my mind...

I have said before I'd have no hesitation to sell my entire ISA for a hefty house deposit, but over the years I've come to enjoy the growth from it and feel reluctant to sell any of it! Sounds pretty similar to you as well.