Starting with funds

dunstonh

A lot of brokers and fund managers give predictions for the year at the start of it.

And we all have a laugh at their opinions 12 months later. Plus, you usually find a hint of bias in how they present how their fund will somehow avoid any issues.

For example a lot are saying America looks very overvalued at the moment.

It is. However, a fall in the markets is not the only way to reduce that. An increase in company earnings can reduce it. If you were to pull out of US equity just as the P/E ratios are getting lower because of increased earnings, you would be missing a strong growth period.

I will monitor professional financial viewpoints and financial news streams and base my decisions on those.

In every market around the world? How many viewpoints are you looking at. And remember, you are only talking about £25.

If I thought a global recession was on the cards, I may decide to get out of everything.

A global recession has been predicted every year since 2011.

Wassa123

EmilyG2010 wrote: »

Wassa I have the LTGE fund. It's given me excellent returns since I bought in. But this is an example of something I think looks very overvalued at the moment - it is trending way above its average and I am tempted to stop my direct debit into it.

In what way?
It's made 18% profit this year compared to last years 37%.

It's the underlying shares that may be overvalued, rather than the fund itself, but in doing so you make it hard to join other funds that have the same companies in it's portfolio.

You have to be wary when people say the market is overvalued. They also say that we are overdue for a market crash. It might be, but then each year the market hits a new peak and you would have lost out on all those gains. Is the risk of a market crash of 50% that bad when funds are making 78% or 157% over 5 years?

AnotherJoe

EmilyG2010 wrote: »

I am currently doing £25/mo regular savings but think I will scrap this and just put money in when the fund looks undervalued (the minimum here is more though @ £100).
Is it advisable to come out completely when you see a large bear? Then come back in when you think the market is improving again? I know they advise leave alone for a number of years but I think it will be difficult to watch my money fall for long.

Dont take this as a personal attack but for someone starting their first foray into investing in shares/funds, you seem very knowledgeable about when a fund is undervalued and when there's a bear market coming. Shouldn't you already be a mega multi millionaire if you know all that?

And, I'll point out the contradiction between

I wanted to take a fairly large amount of risk as I already have so much in cash. With respect, when I looked at the funds you suggested, they looked a bit boring - returning about 5% on average. I would like to target 10% with my funds at least.

and

I think it will be difficult to watch my money fall for long

If you dont understand why those are mutually exclusive, stick to cash until you do.

EmilyG2010

Wassa123 wrote: »

In what way?
It's made 18% profit this year compared to last years 37%.


I think graphically LTGE has risen exponentially in the last few months and I would expect it to come back to an average linear growth line.


I also think last year's phenomenal rise was largely down to the previous year a lot of shares lost a lot of value - hence there was a larger potential upside.


I don't compare year to year. However I will look at the past 5 year performance or past 10 year performance of one fund manager (I've not looked at Woodford so can't comment there). I also try to avoid funds which have been quite volatile.



I guess it's the start of a learning curve.

Wassa123

All my funds have rose a lot in the last few months, apart from some Japanese ones.


You may want to look into how the value of the £ affects things.
A large amount of the FTSE companies actually use $'s and so a low £ means the company is earning or is worth a lot more than with a high £.
Essentially a low £ means a high FTSE which means more gains.

Brexit is causing the value of the £ to rise and fall sharply which is partly responsible for last years phenomenal gains and the gains in the last few months.

bostonerimus

EmilyG2010 wrote: »

Thanks Dunstonh.



A lot of brokers and fund managers give predictions for the year at the start of it. For example a lot are saying America looks very overvalued at the moment. My personal opinion is that it has a bit further to go. I will monitor professional financial viewpoints and financial news streams and base my decisions on those. If I thought a global recession was on the cards, I may decide to get out of everything. I'm not concerned with short term fluctuations.



Wassa I have the LTGE fund. It's given me excellent returns since I bought in. But this is an example of something I think looks very overvalued at the moment - it is trending way above its average and I am tempted to stop my direct debit into it.

With a small size portfolio of 10 funds and you trying to make buy and sell decisions based on trends, prognostications and your own "feelings" I worry that you are creating the perfect conditions for novice fund investor failure.

Do what everyone is telling you........for now forget about creating a bespoke portfolio, stick with a respectable multi-asset fund. When you get get 50k or 100k do a bit of a rethink. Hopefully you will have been through some market volatility by then and will have gained some experience.

FYI I started investing 30 years ago and have owned some funds for that whole 30 years. The crash of 2008 was tough, but I've mostly kept buying whatever happens and that's been a successful strategy......I'd advise you to do the same.

Thrugelmir

EmilyG2010 wrote: »

I've got cash savings, p2p investments and now want to take some risk and move into equities.

More risk? You do understand why equities yield less than P2P.

bostonerimus

Thrugelmir wrote: »

More risk? You do understand why equities yield less than P2P.

I was thinking that too, but as the interest on the P2P wasn't mentioned I ignored it, but if it's in junk bond territory the P2P might be riskier than the equities.

EmilyG2010

Thrugelmir wrote: »

More risk? You do understand why equities yield less than P2P.

I think I understand yield is different in an income fund. But equities give higher annual return generally with greater risk do they not? I mean you get dividends plus asset appreciation? My P2P return about 4% pa

EmilyG2010

bostonerimus wrote: »

With a small size portfolio of 10 funds and you trying to make buy and sell decisions based on trends, prognostications and your own "feelings" I worry that you are creating the perfect conditions for novice fund investor failure.

Do what everyone is telling you........for now forget about creating a bespoke portfolio, stick with a respectable multi-asset fund. When you get get 50k or 100k do a bit of a rethink. Hopefully you will have been through some market volatility by then and will have gained some experience.

FYI I started investing 30 years ago and have owned some funds for that whole 30 years. The crash of 2008 was tough, but I've mostly kept buying whatever happens and that's been a successful strategy......I'd advise you to do the same.

The general consensus here seems to be to stick with a respectable multi asset fund. But I always thought diversification was paramount. Even though a multi asset fund is diversified in its assets, would there not be a large institutional risk here for eg?


I would intend to fill up my ISA once I understand funds a bit more, so I would be putting in quite a lot more than £25 a month in in the future.