JPM Natural resources & Merriyll Lynch Gold & General

egamar

hyposmurf wrote: »

I also chose to go without the yearly analysis at an extra £20 a year.

Good choice!

hyposmurf

Exactly all I can see that I'll need is the current price and whether its gone up and down.If I want a graphical display I can go to other websites for that.I'll keep looking at financial articles online and take what I feel sounds feasible as a guide to where the market I'm invested in is going.I'm quite pleased with the basic service Chartwell offer, all I need at the moment

purch

As i said before you benefit with regular payments if the market goes down as you get more units.

You want to buy units as cheap as possible so if a fund [or markets generally] is/are particularly volatile monthly payments mean you have a chance of buying when the markets ARE down rather than paying in a lump sum only to see it decline by 10% a few days later

.......another of the 'olde' wives tales peddled by those who know :mad:

It's just as likely, and hopefully as an Investor more likely, as you want the markets and your investments to grow...............that you lose with regular payments as when the markets go UP you get LESS units !!!!!...................or if a fund [ or markets generally ] is/are particularly volatile monthly payments mean you have a chance of buying when the markets ARE artificially UP rather than paying in a lump sum only to see it RISE by 10% a few days later:T

There is absolutely NO GUARANTEE that Investing by regular monthly payments will mean you can buy cheaper than making a lump sum investments, or numerous random lump sum investments.

musehead

As far as I can see, it would be better in general to invest as a lump sum, as the market should be going up (at least you'd hope it would) in the long term.

egamar

purch wrote: »

.......another of the 'olde' wives tales peddled by those who know :mad: .

Errr ...... no.

purch wrote: »

.
There is absolutely NO GUARANTEE that Investing by regular monthly payments will mean you can buy cheaper than making a lump sum investments, or numerous random lump sum investments.

There is no guarantee of ANYTHING except death and taxes. However it can be (and has been) demonstrated that you are statistically more likely to benefit that to lose by £-cost-averaging The more volatile the product the greater the likelihood of benefiting. If you would like the proof, google is your friend - or you can simulate it yourself in Excel using the random number function to generate some volatility.

No-one would dream of dripping into a cash fund which rises steadily and inexorably unless you didn't have the lumpsum in the first place, but as I (and others) have said - and I repeat here: "what it means, in effect, is that over 12 months you buy a volatile fund at various prices, high and low, which tends to give a more favourable result than buying in one lumpsum (unless you see or luckily hit a low at the time you invest your wodge)".

The particular funds we have been talking about have been up and down as much as 10% in a day - and have been doing this for a few months. You cannot know which day is the best day to buy - especially as the price you see when you decide is not necessarily the price you pay when the deal goes through.

£-cost-averaging (dripping, whatever) is the conventional wisdom, it can be seen statistically to be likely to be the better option. There will always be examples where it wasn't, but that's what "statistically likely" means.

purch

£-cost-averaging (dripping, whatever) is the conventional wisdom

....and as always Conventional Wisdom is nothing more than an old wives tale..

Looking at the OP's funds ... lets take Blackrock Merrill Lynch Gold and General, that hugely volatile fund that 'Conventional Wisdom' says' you should invest in Monthly.

If you had £ 1,000 in your skyrocket in January and fancied a punt you could have bought units at 760 odd

If some 'brightspark' had told you the 'olde wives tale' about how much more sensible it would be to drippy drippy drip your money in monthly, you could have bought £ 100 worth each month.

By now you'd have either invested £ 1,000 at 760 or £ 1,000 at 875

Or with JPM Natural Resources you'd have £ 1,000 at 550 or £ 1,000 at 710

I'd bet you'd be straight down the Pub to buy your old mucker a Pint for his 'Conventional Wisdom'

The same Conventional Wisdom that say's you shouldn't invest more than X % of your portfolio in any one area or region, but also that you should invest a much bigger X % in the U.K.

Or the same Conventional Wisdom that say's someone in his/her 50's should have 30% of their portfolio in Bonds.

Any fool with a calculator and time on his hands can 'statistically' prove anything he wants to....(I didn't need to resort to Excel)

Just as you can't time the market, you can't time your drippy drips.

There are over 200 trading days a year, and investing on 12 of them rather than just 1 of them won't statistically make a lot of difference.

This particular old wives tale was invented to encourage people who didn't invest and who only could afford small sums, to invest in the market.

It fits the bill, and will be proven by whatever 'statistics' that can be cobbled together to continue to encourage the nervous and inexperienced to Invest.

egamar

Have you done the simulation?

I have. 'Dripping' works more often than it doesn't in the circumstances I have described. In other circumstances, it doesn't. In some circumstances it would be a nonsense.

That's my evidence-based conclusion. I recommend others to consider the evidence they can gnerate themselves rather than various arguments con or pro designed to produce the desired result.

robp

Incadamy sums up pound cost averaging quite well.

They make the point that not everyone agrees with this Averaging technique, but that it has generally been proven to work.

Thet also point out the opposing argument about generally rising markets over extended time periods.

Sounds to me like you do what is right for you.

egamar

robp wrote: »

Incadamy

http://www.incademy.com what a useful site! Thanks

purch

Incadamy sums up pound cost averaging quite well

....it's complete drivel

If you buy £500 of shares in the company every month for 10 months, regardless of what happens to the share price in that period, you will automatically average out your cost of acquisition. Some shares will be bought too expensively, others very cheaply, but because your monthly allocation is based on an amount spent (£500) not on a number of shares, you will always be buying more of them when they are cheap.

.......What ?????? :eek:

Regardless of what happens to the Share price in that period ???

Since when does averaging out your cost of acquisition automatically mean you average out to a cheaper price ??

7. Pound cost averaging - a way round risk

Well there you have it...........if it says so on the Intergoogle then it MUST be right.

Pound cost averaging means you invest with no risk ...... BRILLIANT