Have we got more "new" stockmarket investors?

ClarkeKent

As interest rates drop again we have more and more savers chasing a yield of some sort.

I am sure many now look towards the stockmarket which can in turn result in a bubble.

But with some yields at 4% on some FTSE companies and the bonus of potential capital growth. You can see why?

Personally at these market levels, and so much money printing going on globally and madness with interest rates I would be cautious at best.

Have you/friends entered the markets in recent years for the first time DUE to poor interest rates?

enthusiasticsaver

Yes I am a new investor (since January 2015) due to poor interest rates. Spent November and December 2014 reading up about it. Opened investment account with Cavendish in January 2015 investing £500 per month in a Vanguard lifestrategy fund. Bed and ISA in April 2015 and transferred matured fixed rate ISA with £35k. None of it did brilliantly last year but doing much better this year. I hope to continue investing £5-10k per year as far as poss although DH retiring this October so may have to rethink this. I hope to retire Feb 2018 at 58 but not intending to touch portfolio as will be living off OHs pension and lump sum until that runs out then will claim my pension and ultimately draw on s and s ISA unti spa.

andrewm1981

Yes, I certainly am, for the last 18 months. And again, the first year was a little rocky, but this year is better.

But as you mention, with dividends averaging 2-3%, and **average** gains of perhaps 6-9% year (yes, over long periods) then I really can't see where else to put it. I'm in for the long term - 20-30yrs+.

I think I've missed the boat on property, commodities seem like a poor choice, banks pay 2% at best, so it's just p2p and the stock market left! toes well and truly dipped in p2p with 25%, but the remaining 75% is deffo in funds (and a few shares). I don't see what the other options are.

Glen_Clark

ClarkeKent wrote: »

But with some yields at 4% on some FTSE companies

Many of them (like National Grid) have huge borrowings - that doesn't matter when interest rates are peanuts. But if interest rates normalise it will be a double whammy for them. Increased interest rates will reduce their profits and yield to peanuts, whilst the yield on cash increases.
Thats why some people would rather pay to store cash (negative yield bonds) than buy equities at these prices.
I don't know who is right, so have a bit in each

AnotherJoe

ClarkeKent wrote: »

As interest rates drop again we have more and more savers chasing a yield of some sort.

I am sure many now look towards the stockmarket which can in turn result in a bubble.

But with some yields at 4% on some FTSE companies and the bonus of potential capital growth. You can see why?

Personally at these market levels, and so much money printing going on globally and madness with interest rates I would be cautious at best.

Have you/friends entered the markets in recent years for the first time DUE to poor interest rates?

Personally at these market levels, and so much money printing going on globally and madness with interest rates and new investors piing in as rates are so low, I would be investing.

... and if all was doom and gloom and there was no chance of any revival whatsoever, and everyone selling, I'd also be investing.

bigadaj

Glen_Clark wrote: »

Many of them (like National Grid) have huge borrowings - that doesn't matter when interest rates are peanuts. But if interest rates normalise it will be a double whammy for them. Increased interest rates will reduce their profits and yield to peanuts, whilst the yield on cash increases.
Thats why some people would rather pay to store cash (negative yield bonds) than buy equities at these prices.
I don't know who is right, so have a bit in each

The old fashioned utilities have leveraged up, but when interests rates rise they will, no doubt, be allowed to push up prices by the toothless regulators because their business plans will show they have to pay the debt!

Probably different for electricity or gas suppliers who are in a competitive market, but for national grid, water companies etc then that is no doubt how it will pan out.

expansion

The first rule of investing is to not lose capital. If you're putting your savings into dividend paying shares for the interest be prepared for losses as well as gains (yes in long term also).

bigadaj

expansion wrote: »

The first rule of investing is to not lose capital. If you're putting your savings into dividend paying shares for the interest be prepared for losses as well as gains (yes in long term also).

It's not the first rule with the amount of negative interest rates, quantitative easing and genera, devaluation occurring, this is a worldwide phenomenon bit is as acute in the uk as anywhere.

Keep your money in cash and watch devaluations and inflation erode it away, there's unfortunately little option for most people than to ove up the risk curve.

Glen_Clark

bigadaj wrote: »

they will, no doubt, be allowed to push up prices by the toothless regulators .

Jeremy Corbyn?

bigadaj

Glen_Clark wrote: »

Jeremy Corbyn?

Well he presumably uses electric, water and other utilities but I can't see his relevance otherwise.

ClarkeKent

andrewm1981 wrote: »

I think I've missed the boat on property, commodities seem like a poor choice, banks pay 2% at best, so it's just p2p and the stock market left!

This is my concern, and this is what partly caused the Chinese stock bubble in 2015 and ruined many lives, now 40% lower than its peak (the stock market was the only decent return etc and everyone piled in) along with generous trading accounts etc. Not saying we have that here, but this classic bear trap situation could happen here.

Not advising against it but just issuing some caution, as someone else mentioned capital preservation is key. But inflation is low too so not all bad for savers.

We live in crazy times economically and this interest rate madness that has gone on for almost 10 years will bite us in the !!!! at some point. All a matter of when.

So just a reminder to myself really and perhaps others, if the market was to lose 20/30%+, could you/your finances handle it?