How do you know which funds to invest in?

Lokolo

paul090971 wrote: »

Is 100% equities a good or crazy idea if you are not going to use your sipp for 15-20 years??

Depends on your risk profile as well.

The thing is with equities is that you have the possibility of losing 50% value in a few months. With a longer period before you need the money this would mean it gives more time to recover and also grow.

(you do have the possibility to lose 100% in any investment, but the fact remains that equities have higher risk because of higher volatility vs fixed income instruments)

I am 29 and my SIPP is 95% Equities and 5% Bonds.

bowlhead99

paul090971 wrote: »

Is 100% equities a good or crazy idea if you are not going to use your sipp for 15-20 years??

Crazy idea, for most people.

Prism

bowlhead99 wrote: »

Crazy idea, for most people.

I have no idea what most people do but what others do shouldnt be important. Its all down to the individual. If you are investing for a 15-40 year timescale I can see no current point in having any bonds at all. Having bonds or cash makes it very likely you will have less return in the long run. In the future when bonds actually return something rather than losing money then maybe. if you swicth to wealth preservation before retirement then of course.

Prism

Lokolo wrote: »

I am 29 and my SIPP is 95% Equities and 5% Bonds.

I am 46 and have 100% equities.

sixpence.

Prism wrote: »

I am 46 and have 100% equities.

I am 28 and would do this if I had the balls (excuse my language) but my plan is to be 70-75% equities.

BLB53

If you are investing for a 15-40 year timescale I can see no current point in having any bonds at all.

I think for many people who remember the 30% hit of 2008/09, its more about reducing the volatility in holding 100% equities.

Yes they will deliver better returns in the long run but for those who are of a nervous disposition when the markets start to tumble (as they always do)...there may be no long run. So many inexperienced investors sell out at the bottom and never return.

So it's about timeframe for sure but I think the right mix of equities/bonds/property to mesh the individuals appetite for risk and personality is key to a successful long-term outcome.

Fatbritabroad

bostonerimus wrote: »

This is a good question.

I've been investing for 30 years and I don't know what funds to invest in. So I buy the entire stock market. I have no confidence that anyone can pick and choose what to buy so I buy everything. Such funds are broad "index trackers". The decision I do have to make is how much to put in equities and how much into lower risk things like bonds. I do that by looking at the performance of various ratios of those investments for past markets and while I was working went with 60% equites and 40% bonds.......but if you are young and adventurous you might go with 70% or even 80% equities.

Or if you subscribe to the view that bonds at the moment are dicey and you view your isa as very long term then even 100% equity. I do this. I'm just 37 and view my isa as an extension to my pension. The money in it I'm not going to touch for another 18, to 20 years. I'll start to move to lower volatility in the future

Fatbritabroad

I would say I keep a good slug in cash as well though and a little bit of lose it all money in peer to peer as well

BananaRepublic

I choose the markets and sectors I wish to invest in, then examine historical returns over ten years to find funds with consistent and good performance. I am 54 and 100% in equities. Even when the GFC occurred equities recovered in a couple of years. I do have a fairly large cash pile too (5% of my equities in value) which is my emergency fund.

I am of the view that 100% equities is best as long as you can stay invested during a crash.

Prism

BLB53 wrote: »

I think for many people who remember the 30% hit of 2008/09, its more about reducing the volatility in holding 100% equities.

Yes they will deliver better returns in the long run but for those who are of a nervous disposition when the markets start to tumble (as they always do)...there may be no long run. So many inexperienced investors sell out at the bottom and never return.

So it's about timeframe for sure but I think the right mix of equities/bonds/property to mesh the individuals appetite for risk and personality is key to a successful long-term outcome.

I am sure you are right but considering that funds like VLS hold a good mix of strategic and corporate bonds in addition to gilts, i think that those funds will fall almost as badly as pure equity. Well at least enough to scare of a nervous investor that presumed that they were protecting their investment better. During the financial crisis you only did well if you were invested in government bonds. A fund like VLS60 is only around 20% government bonds.

Have a look at a comparision of IA global vs IA 40-85% shares between 2008 and 2010. The performance is almost identical. The bond allocation didn't seem to help at all on average.

https://1drv.ms/i/s!AoIdgIs-gp6Wj8ABJP9ooLNFAbAuwQ