When it's all said and done, is investing simply the best option?

AddictedSaver

Forgive me for making a lot of threads about investing recently but I like to get opinions from real investors, everyday people, rather than a website which is probably just trying to sell you something anything.

Assuming your goal is to have £1million in cash and assets by the time you're 50. Is investing simply the best option for the average Joe? For those of you who are 50+ and have been investing for decades, in hindsight, do you think investing was the best decision or do you wish you'd have done something else?

When I say investing I mean purely putting money into an index tracker or some other long term fund rather than investing in something specific like property. End of the day most of us will never start our own business and those that do, there is a high chance it will a fail and a very low chance of it turning into a multimillion pound company.

So for 95% of us, is investing in the stock market the best and most reliable chance we'll ever have to reach that millionaire status by 50? £1million for a single man, not including your partners assets / savings.

I've been looking at alternative investment ideas but they're either scams or just extremely risky. Aside from the stock market and property, what other investment ideas have you considered?

dunstonh

Assuming your goal is to have £1million in cash and assets by the time you're 50. Is investing simply the best option for the average Joe?

Depends on your age and your objectives at 50.

and have been investing for decades, in hindsight, do you think investing was the best decision or do you wish you'd have done something else?

What would the something else be?

When I say investing I mean purely putting money into an index tracker or some other long term fund rather than investing in something specific like property.

And index tracker would be an awful way to invest. What if the index tracker invested into property? does that count?

So for 95% of us, is investing in the stock market the best and most reliable chance we'll ever have to reach that millionaire status by 50?

The single most important thing it putting aside the money. More so than where you put the money.

Aside from the stock market and property, what other investment ideas have you considered?

Your career is an investment. Study and hard work can lead to greater wealth. You can invest in your family as wealth is not just measured in money but in lifestyle.

AddictedSaver

dunstonh wrote: »

What would the something else be?

That is my question for you guys.

jimjames

AddictedSaver wrote: »

Assuming your goal is to have £1million in cash and assets by the time you're 50. Is investing simply the best option for the average Joe? For those of you who are 50+ and have been investing for decades, in hindsight, do you think investing was the best decision or do you wish you'd have done something else?

100% the best decision was starting investing. In hindsight I wish I'd started earlier and had a more balanced portfolio when I started but hindsight is a wonderful thing.

I'm not 50 and am unlikely to be a millionaire by then but I certainly have a decent portfolio and am in a far more comfortable position than friends who spend rather than invest.

grey_gym_sock

as you say, very few people will make a million by starting their own business. (though that's not the only reason to start your own business.)

other than that, i think the main alternative to investing (in funds, shares, etc) is direct investment in property (which could be commercial or residential). this has certainly worked for some people. i wouldn't try it myself, though - it's far too much like hard work ... being a landlord is in many ways a kind of business. it makes more sense if you have relevant skills and contacts. and the tax system has started to become less favourable to landlords.

so personally, no, i wouldn't try any other method.

and the other key point is (as dunston said) to put more money aside. this is both by:
- increasing your earnings
- cutting out unnecessary expenditure

tara747

dunstonh wrote: »

The single most important thing it putting aside the money. More so than where you put the money.

I agree 100%. It's always better to save £1 than to spend £1, even if only in a piggy bank.

bigfreddiel

AddictedSaver wrote: »

That is my question for you guys.

I thought dunstonh' answer as rather weird, he normally gives good advice and comments!

Anyway, the path I followed was to invest my full ISA allowance and my wife's for the past few years, actually quite a few, in ETF trackers, defensive stocks, bonds and property, not including the property I live in, but it is mortgage free.

Also use your company pension or a Sipp for your retirement income.

So now at 65, our net worth is £1.2m, joint pension net income of £30k


And I have never earned more than £30k in my entire working life!

It was easy enough to do, just make sure you stick to your investment plan, keep it cost effective, reinvest divis, don't panic in the downturns, be prepared to lose say 30% on occasions.

So there you have it, good luck fj

bowlhead99

bigfreddiel wrote: »

So now at 65, our net worth is £1.2m, joint pension net income of £30k

And I have never earned more than £30k in my entire working life!

It was easy enough to do, just make sure you stick to your investment plan, keep it cost effective, reinvest divis, don't panic in the downturns, be prepared to lose say 30% on occasions.

Although you were telling us only yesterday that the largest part of your pension income comes from your gold plated civil service pension where you worked for the last 15 years and had transferred in other previous schemes; it had a normal retirement date below state pension age and was given a nice boost when you got a promotion right near the end so it pays you very well even though you never needed to contribute more than about £40 a month.

Meanwhile most people looking to set themselves up with a secure and decent high retirement income are going to need to make sure that they contribute hundreds of thousands of pounds over their working lives. Most people earning sub-£30k like you don't get to max out their and their spouse's £15k ISA allowances, at least until the house is paid off etc - but the more you can 'do without' to 'pay your future self' with a part of every paycheque, the closer you'll get to a good retirement stash.

So, while most of your post is sound advice: participate in employer pension schemes, put away whatever you can when you can, and use low cost tax efficient investment funds - others should perhaps not expect the same success. The average person starting out now would not expect to be able to get hooked up with a lucrative defined benefit employer scheme, enjoy massive house price growth, or be able to invest 'defensively' in bonds which have enjoyed unprecedented equity-beating rises over the last decade and a half as interest rates crashed to levels lower than in all of human history.

To the OP, yes the stockmarket is mostly the key to future wealth because it allows you to participate in the profits and GDP growth of the world economy, while sticking money in a rainy day fund with your bank does not. "Alternative" investments are the ones that are alternatives to the way the mainstream investor will make decent long-term returns through regulated investment managers' equity funds, bond funds and real estate.

Some of them, such as P2P investing, can be genuine new opportunities for a portion of your wealth - and if you are able to devote the time and a bit of luck to do a good job of assessing risk and reward from that business model (and can invest sufficiently widely to diversify your holdings across platforms without taking on the low quality stuff), there is no doubt some money to be made there with a portion of your overall portfolio.

Other 'alternatives' come up here from time to time and are probably best avoided (car park spaces, hotel rooms, motorhomes, fine wines, lumber, caribbean vacation villages) where they are being pimped out by some unregulated salesman with a too-good-to-be-true sales pitch.

Pincher

If everybody else is doing it, the profit is spread so thin it's positively homeopathic.


Proposition: 10 million sodomites can't be wrong.

As in, if 10 million people practice and even enjoy sodomy, then it is deemed "normal", by virtue of mass acceptance. But should I follow suit and do it because everyone else is doing it?

If 10 million people desperate for yield "invest" in tracker funds, is it just lemmings in season?

If 10 million people tell each other endowment mortgages are the sure fire way to financial security, should they all start an endowment policy?

With 10 million other refugees fleeing low interest rate, you will not be alone.
The comfort of the herd, so cozy.

Thrugelmir

grey_gym_sock wrote: »

as you say, very few people will make a million by starting their own business. (though that's not the only reason to start your own business.)

Depends on how hard you are willing to work and how much profit one is willing to reinvest. .

jimjames

Thrugelmir wrote: »

Depends on how hard you are willing to work and how much profit one is willing to reinvest. .

And being in the right business