So how was that (financial) year for you?

bundly

Thanks, PRISM

Congrats on the 59%. Wow!

bundly

bowlhead99 wrote: »

a balanced portfolio of funds covering a wide variety of sectors. At the start you might have x% in fund 1 and y% in fund 2 and z% in fund 3 and a% in fund 4 and b% in fund 5, and so on, and together the whole lot adds up to your whole portfolio.

From time to time, some will go up, others will go down, or some will go up and others will go even more up.

Yes, this is what I have at present. I am in about 17 funds, and some are in the red a little, and some are making less than 5%, some around 10%, up to the 30+%.

bowlhead99 wrote: »

you don't want a quarter of your money in this one basket. So sell part of them and put the resulting money into something else.

having over £40k of a 160k portfolio in two specialist high risk Japan funds is a bit of a crazy high risk....the Legg Mason fund could lose a hugely significant fraction of its value in any one year, .... sell those two funds down to ...no more than about 5% of your investment,,,,,,instead hold things like bonds, commercial property etc.

This is great advice, Bowl, and just the sort of thing I was hoping someone could advise me. I don't understand the basics, yet, for example, should I buy things when they are down, or on the way down, or on the way up, or when they are right up? Instinct says buy more shares in a fund that is currently in the red, is that correct? I do have some funds in the red right now, should I buy more of them, in the expectation that they will rise, given the zig zag graph pattern of these things?

I still quite fancy Landbay, despite it getting a slating on here, though I see the current return is only 3.5% and not the 8% I gor a year or two ago.

Thanks again, I do appreciate the financial advice very much.

Prism

bundly wrote: »

Thanks, PRISM

Congrats on the 59%. Wow!

Thanks. I also want to reiterate what Bowlhead said which is my allocation. Legg Mason IF Japan is only 8.5% of my portfolio and I don't have any other focused Japan funds. Many would consider even that a bit high. It and other Japan small company funds can be pretty volatile.

I have other funds that haven't performed nearly as well recently just to bring things back to balance. (My india fund is down nearly 9% in the same time period)

ChesterDog

Bundly, the best place to start (and the place you acknowledge that your knowledge is lacking) is with the basics.

Take a look at http://monevator.com/highlights . It's pretty easy reading for the most part - not detailed, complicated, involved, convoluted, time-consuming, uninteresting research - and the website covers all the basics and much more.

Edit. I have Japan at 10% in a pretty high-risk portfolio.

RG2015

I really do not care much about investments so this post is blatantly off topic but I make no apology for this.

I do however, care about this forum and about justice, fair play and respect. This thread has demonstrated the extremes of all of these qualities.

The Moderators do indeed want an peaceful forum but it is the users who should really be concerned about the extremes that have been seen on this thread and the unwarranted post deletions.

Sadly I have been left with a bad taste in my mouth but hopefully it will soon disappear.

bundly

ChesterDog wrote: »

Bundly, the best place to start ...

Take a look at http://monevator.com/highlights .

Oooh thanks for that. I will print out some pages and read one a day.

This is just the thing I need, and also that advice from all 3 of you about Japan being volatile. I did not know that.

bowlhead99

bundly wrote: »

Yes, this is what I have at present. I am in about 17 funds, and some are in the red a little, and some are making less than 5%, some around 10%, up to the 30+%.

It's to be expected that they will all make quite different amounts per year and in total.

Also, you will have probably added to some of them at different times, making comparison difficult. For example you buy a share of some fund at £1 a share, and a year later you buy another share of the same fund at £1.05, and another year later they are worth £1.10 each. In your HL account, it shows that you have paid £2.05 for the shares and they're now worth £2.20, which is a 7.3% rise over the two years.

But that 7.3% shouldn't be compared with what's showing on another fund that you bought two years ago and didn't add to (which would be showing a 10% rise from £1.00 to £1.10) or a fund you only bought a year ago (which would be showing a 4.8% profit from £1.05 to £1.10). They could all be the exact same fund performance even though 7.3% sounds better than 4.8 and worse than 10.

For example you mentioned earlier that with BG Japanese Smaller Companies you had invested £26368 in it which is now worth £34648, which is a 31% rise. That's the rise that you personally got over the period you had it. It's not directly comparable to the rise you would have got if investing exactly one year ago today (which changes daily but is currently about 38%), and the 38% looks nothing like the 16% figure you told us back in post #24 that the fund had done in a year.

The reason I mention this is that from experience of going through this stuff with family members I know some people are less comfortable working with percentage than others, and the 16% you mentioned in post #24 looks nothing like the other figures

. I don't understand the basics, yet, for example, should I buy things when they are down, or on the way down, or on the way up, or when they are right up? Instinct says buy more shares in a fund that is currently in the red, is that correct? I do have some funds in the red right now, should I buy more of them, in the expectation that they will rise, given the zig zag graph pattern of these things?

The problem with trying to buy things on the way up or down or at the bottom or the top is that you only know where you are on the curve with the benefit of hindsight.

For example, clearly it's better to buy Legg Mason Japanese IF at £90 a share instead of £100 a share. But if you are waiting for it to fall to £90 it might never get there. It might go from £100 up to £120 and £150 and £200 and £300 and £350 and then come all the way back down to £110 before going up again. So you could be waiting forever to buy it. Likewise if it was at £100 and falls a bit, you might buy it at £90 thinking it's good value, but it's on the way to falling to £20 and is not coming back up for five years. The LM fund is an thoughextreme example but the principle is same for everything.

The best thing to do when deciding what to buy, is to try not to be too distracted by what things used to cost at some point in the past. Otherwise you will have funds you don't want to sell because you think they are going up a lot, and funds you don't want to sell because the price is low and you want it to go back to first so you don't make a loss, and funds you don't want to buy now because last time you bought it, it was cheaper. Sentimentality can cloud your judgement.

So the best thing to do is simply decide what proportion of your overall portfolio you are comfortable having in different asset classes (e.g US shares 20%, Japanese shares 5%, UK shares 15%, Europe shares 7%, Asia shares 4%, government bonds x%, index linked bonds y%, UK corporate bonds z%, overseas bonds a%, commercial property b% and so on. (All figures just examples). The values will all move up and down over time. Then if you have more money to put into the portfolio from time to time, add to the bits of your portfolio that are below their target weights. If something is well above its target weight when you look in on it once a year, sell some of it.

In that way you are always bringing the portfolio back to where you want it, not by trying to see what is cheap or expensive but just by taking an overall view of making sure you have a mix of assets in a sensible proportion. You can deliberately change those proportions if you feel they are no longer suitable (eg to reduce risk and volatility as you get older) but your overall attitude and needs and goals are not going to change very often.

The action of rebalancing will always result in you selling the things that have gone up when they are relatively high, and buying more of the things that have gone relatively down as a proportion of the overall portfolio. So the portfolio will keep being held at its target mix of funds, but you don't need to keep scrutinising the prices when you do it.

The problem is picking the "target" mix proportions in the first place. If you don't want the portfolio to be very risky, only allocate a very small portion to volatile risky funds and a larger proportion to more stable funds which don't have equities in them. Some people will tell you that some volatility is nothing to be scared of, as when one thing goes down something else may go up so even though they both move 10%+, the whole thing doesn't move dramatically. Which can be true as long as the funds are not fully correlated to each other. But equities in Japan might move down at the same time as equities in emerging markets and equities in USA and so on, so it is not always as easy as it sounds to get properly diversified.

You have mentioned you have no real interest in reading up and researching umpteen funds to find out what sort of up and down swings their values might have, and learning about asset allocation may put you to sleep. In my view, you shouldn't try to build and maintain a 17- fund portfolio yourself which might be a very poor mix of assets if you don't know what you're doing. You should just go and spend some of this money that you don't really need, on buying professional independent financial advice from someone who will spend some time with you so that both of you can conclude what might be best to do.

If you insist on DIYing it because you refuse to buy the advice you need, the nearest compromise is to sell all the 17 funds and just buy one or two suitable mixed assets funds where the fund manager decides what assets to hold in what proportion across all the main asset classes (the x and y and z etc percentages for all the types of holdings). Professional investment fund managers building and rebalancing their holdings against a well researched model will do that better than you could.

But still, different funds are suited to different people and some will be focused at the higher risk end of the spectrum and others much lower risk. So there are still choices to make and much research to do, which means I would still recommend you see an IFA. You can pretty much ignore anyone here who tells you "oh I just picked the XYZ 100% equity fund, it has low costs and has done great for me". So what. Just because some inexperienced ,(or experienced) other forum user bought it and got away without it being a big mistake for them so far, It doesn't mean it's suitable for you. Because you are unlikely to share their exact same goals or attitude to risk. We know for example you say you hate risk, but have put all your money into funds with a high proportion in particularly risky funds. It would be impossible for us to advise you when we don't know what you're *really* thinking.

So, when I say 'ignore' people recommending funds to you, I'm not saying they are fools who don't have valid opinions - I'm just saying you haven't given us any reason to believe you really know how to pick funds whether from recommendations or from a hat, and when they tell you the names of what they bought they are not also going to give you lots of major caveats and risk warnings to go with their recommendations - and even if they did, you might disregard them because you find it boring and your eyes glaze over, as you've mentioned.

Really, it is better for us not to try to recommend funds - and have you instead go sit across the table from a professional adviser who can better gauge whether you understand what you're being talked to about.

Lois_and_CK

Bowlhead. I don't post often but I do read these forums a lot. I have learnt a great deal from you over the years. I just wanted to say your posts - on all threads but this one in particular - have been extremely helpful, measured and extensive. I feel extremely lucky to have access to such superb and knowledgeable opinions as yours, and many others on these forums who also take a huge amount of personal time to write long and helpful opinions.

Your dignity in the face of quite frankly goady posts and the fact that you continue to be helpful and provide opinion is to be applauded.

bundly

Thanks again Bowlhead for teaching me more about the investment funds.

I need to respond to something you wrote:

"you mentioned earlier that with BG Japanese Smaller Companies you had invested £26368 in it which is now worth £34648, which is a 31% rise....the 38% looks nothing like the 16% figure you told us back in post #24 that the fund had done in a year.... the 16% you mentioned in post #24 looks nothing like the other figures".

I clicked the link to post 24 and the 16% related to Baring and not to the BG Japanese Smaller Companies.

You asked about my attitude to risk. It has changed. When I first invested I was petrified. It took my ex years to convince me that I would not lose every penny. I have been poor and/or in debt all my life; 20 yrs ago I was homeless, potless, jobless and 30k in debt. When I finally managed to accumulate a bit of money I was paranoid about losing it and was therefore a "no risk" person. However, now I have been in the black since 2007 and in the stocks and shares game for 18 months I don't feel so scared. I have not lost; I have gained, and as I've become more accustomed to being a person of means instead of stone broke I can accept a bit of risk.

Lastly in one of your posts you mentioned inheritance and I just want to say that I have never inherited or received in any way whatsoever any money at all from anyone. Everything I have I acquired on my own, from my own hard work and ingenuity.

bowlhead99

bundly wrote: »

I need to respond to something you wrote:

"you mentioned earlier that with BG Japanese Smaller Companies you had invested £26368 in it which is now worth £34648, which is a 31% rise....the 38% looks nothing like the 16% figure you told us back in post #24 that the fund had done in a year.... the 16% you mentioned in post #24 looks nothing like the other figures".

I clicked the link to post 24 and the 16% related to Baring and not to the BG Japanese Smaller Companies.,

Well, this is the bit of post 24 to which I was referring, which I had also quoted in one of my earlier posts without you saying it was an error...

bundly wrote: »

audaxer I can't give away all my secrets but here are two I chose myself: Legg Mason IF Japan Equity (gained 38% over the year) and Baillie Gifford Japanese Smaller Companies (16%).

Two that I am in with my ISA are Man GLG Continental European Growth (15%) and Baring Europe Select (16%).

In those two separate paragraphs you mentioned that both BG Japanese Smaller Companies and Baring did 16%. Maybe your BG number there was a typo.

I don't really have much interest in the answer, and was only highlighting the inconsistency because sometimes people who are brand new to investment and describe themselves as an 'old biddy' or a 'twit' or 'utterly clueless' or as someone who just doesn't 'get' concepts that aren't spelled out to them....may not be very numerate, or at least not fluent with evaluating investment returns and comparing like with like. When you have a lot of funds and a big mix of returns on your online investment tables, and are new to this stuff, you sometimes need to take care when reviewing them to draw the right conclusions.

Lastly in one of your posts you mentioned inheritance and I just want to say that I have never inherited or received in any way whatsoever any money at all from anyone. Everything I have I acquired on my own, from my own hard work and ingenuity.

You don't need to be defensive. We all have different backgrounds and ways of sourcing and growing our money and largely we don't care how anyone made their money. Of course, when exchanging ideas with people about investment, how they had built their wealth to that point can be informative and useful.

For example, someone who has invested £20k and turned it into £150k by investing in the markets at a 7% annualised return for thirty years, will probably have seen a lot of swings and roundabouts and market surges and crashes, and be comfortable with many of the different potential outcomes from the market over time. Whereas someone who just got £149k inheritance last month and turned it into £150k by investing it in the market when the market happened to be going up, and has never really held significant investments before in their life, is generally a very different conversation when it comes to talking to them about risks and pitfalls and market volatility. So that's why people who are looking to help may speculate about where the money might have come from.

My comment about windfalls was just a throwaway one as an example of something that might bridge the gap between what you had before and what you have now, to understand your personal circumstances better. You had said, thanks for reminding you that a year or so ago you only had about £100k, now you have £155k, which you later corrected to £165k. Not too shabby you said, in the context of growing your money through hard work and shrewd investment.

Yes, growing £100k to £165k is a rate of growth of wealth that anyone should be extremely proud of. But investment returns of say 15% a year on the starting amount and £10-15k from lodgers after tax, wouldn't turn the £100k into £165k. There's a gap to be bridged in reconciling the two figures, which is either from earnings (e.g. unused ESA in excess of your living expenses) or windfalls of some sort, or just the simple fact that the numbers aren't really comparable at all, because the opening figure excludes some assets that are in the closing figure.

None of this matters a great deal in terms of what to do next with the £165k. You are, where you are - whether it was all funded by blood sweat and tears, a boring desk job, rental income, a generous rich uncle, compensation for an industrial injury, or the tooth fairy. But if there really is £50k+ of investment growth on top of what was once £100k of capital being invested, then the amount that isn't in the ISA or SIPP is likely to be subject to capital gains tax if you were to sell it all at once, because the annual exemption for gains realised outside the ISA is just under £12k per tax year. So despite having a poorly-balanced portfolio, one might choose to keep some of the existing funds to avoid creating tax liabilities, and only sell down part of them.

I don't want to call you 'paranoid' because you probably don't find that pleasant. But hopefully you can see from the examples and explanations above, the things you are being defensive about and feel the need to justify or make a statement about, or worry that is none of our collective business, are not really us trying to be disrespectful or insulting or overly nosy. By contrast, there is always a reason for asking questions or highlighting inconsistencies, and often it's because exploring those issues can take you on to new places in the learning experience.