Stock market investment help appreciated

Audaxer

Alexland wrote: »

Kidmugsy has genuine concerns, which I share, that this might not be a good point in the market cycle to invest. Sure none of us can time the markets well enough to buy low and sell high but it does seem reasonable that the OP is warned that current asset valuations for both shares and bonds are looking optimistic. This is compounded by our weak currency making overseas assets unusually expensive.

Now over the long term with regular investing the cost will average out but for lump sums it could mean a long period of high volatility and negligible returns. The risk for potential reward ratio is looking less attractive so investors need to approach the market with their eyes open and fully consider their tollerence to seeing losses.

Alex

I agree that maybe we are near the end of a long bull run, and I have hesitated over investing another lump sum, but I am not sure if that is the right thing to do as the only alternative is to leave the money in low interest rate Cash ISAs or transfer out to higher interest-paying current accounts and lose a significant amount of my ISA allowance. My thinking now is that despite stocks being a bit high it would be better to invest it, or most of it, in my S&S ISA, so at least it is earning dividends, even if the capital falls in the short term.

One possible solution for the OP could be to not invest all the lump sum at once. While an immediate fall in capital might not be welcome, it would at least provide a opportunity to invest more of the lump sum at cheaper prices?

cloud_dog

Op, I think you are little light on the details that would enable people on here to give you more considered opinions.

For example:

Charlton_King wrote: »

My wife and I are both newly retired and in a position to invest a fair sum for the (family's) future.

What does this mean? If you mean invest, and you mean a 'fair sum' what is that in context, i.e. what percentage is it of your overall monetary assets?

Charlton_King wrote: »

Deposit rates being as dire as they are at the moment, we're wondering whether there may be a way of making an investment in shares which would be reasonably likely to do better on a like for like basis.

Certainly, as mentioned by the previous posters.

Charlton_King wrote: »

Indefinitely but certainly 3-4 years minimum

Why? What is occurring in 3 to 4 years that you will need access to it and, will you need to access all of it or a portion; if so what kind of percentage?

If this is an immovable financial commitment and it doesn't involve all of these 'free assets' then why not ring fence that element and use the remainder to invest (appropriate for your risk profile).

Charlton_King wrote: »

'Anything too risky' means that a 40% drop would be distinctly worrying - we would be looking for something likely to grow steadily, if perhaps modestly.'Anything too risky' means that a 40% drop would be distinctly worrying - we would be looking for something likely to grow steadily, if perhaps modestly.

Your risk profile is, well, yours so it is good that you can quantify that. But, have you considered the risk of inflation eroding your living standards? It might be that your own personal inflation rate is actually higher that the Governments standard basket used for reporting.

Also, you need to be thinking in terms of protecting (growing) your assets for the next 25 years (at least ) whilst you both enjoy retirement.

Also, also, have you considered the prospect for your OH if you were to precede her, and what that would mean to pension income, i.e. drop in DB pension payments, loss of one persons SP.

badger09

ValiantSon wrote: »

.................


I don't think that investments are really what you are looking for. I'd suggest that you want to try and maximise the interest you can earn in savings accounts. This can be done by making good use of:

Interest bearing current accounts:

Nationwide FlexDirect (5% on £2,500 for 12 months). As a couple you can have three (£7,500).
TSB Classic Plus (5% on £1,500 indefinitely). As a couple you can have three (£4,500).
Tesco (3% on £3,000 indefinitely). As a couple you can have four (£12,000)

Regular savers - especially those linked to current accounts:

First Direct (5% on £300 p/m). Requires First Account. As a couple you can have two.
HSBC (5% on £250 p/m). Requires Advance Account. As a couple you can have two.
Santander (5% on £200 p/m). Requires Santander 123 Lite, Santander 123, or 123 Credit Card. As a couple you can have two.
M&S (5% on £250 p/m). Requires M&S Account. As a couple you can have two.
Nationwide (5% on £250 p/m). Requires Nationwide FlexDirect Account. As a couple you can have two.

Without wishing to detract from Valiant Son's otherwise excellent post:

Tesco 3% interest is guaranteed only until 1 April 2019
Tesco accounts need 3 monthly Direct Debits
M&S requires you to switch an account to them, and have 2 active Direct Debits in order to qualify for the Monthly Saver

Minor points, but using multiple current accounts and associated regular savers is not quite a simple as suggested.

Alexland

Audaxer wrote: »

I agree that maybe we are near the end of a long bull run, and I have hesitated over investing another lump sum, but I am not sure if that is the right thing to do

It's so tricky. I have been reading Ken Fisher's 'Beat the Crowd' book and he observes the market "repeatedly sucks the crowd in, makes them ignore negatives, then doles out maximum pain and suffering". The book focuses on using independent thinking (rather than just taking an opposite view to the herd) to try and be right more often than wrong.

Alex

ValiantSon

Alexland wrote: »

It's so tricky. I have been reading Ken Fisher's 'Beat the Crowd' book and he observes the market "repeatedly sucks the crowd in, makes them ignore negatives, then doles out maximum pain and suffering". The book focuses on using independent thinking (rather than just taking an opposite view to the herd) to try and be right more often than wrong.

Alex

Ultimately, however, "independent thinking" amounts to guesswork: informed guesswork, perhaps, but still guesswork.

I am not blase about the risk of a downturn, and indeed, I expect one to occur much sooner, rather than later, but with regular investing (and, in my case, admittedly, the capacity to buy cheap when prices drop significantly) I don't think it is a particularly good idea to try and time the market.

Even with a single lump sum investment, the impact of a crash should only be a short(ish) term loss. As the markets recover, the loss will be recuperated. Time in the market really is the only way to have confidence about managing volatility and ensuring growth.

Alexland

ValiantSon wrote: »

Ultimately, however, "independent thinking" amounts to guesswork: informed guesswork, perhaps, but still guesswork.

Yes but if it can result in being right more often than wrong it shouldn't be discounted. Markets are not completely random there are patterns occurring. Still I haven't finished the book yet...

ValiantSon wrote: »

I am not blase about the risk of a downturn, and indeed, I expect one to occur much sooner, rather than later, but with regular investing (and, in my case, admittedly, the capacity to buy cheap when prices drop significantly) I don't think it is a particularly good idea to try and time the market..

I agree - we are both much younger than the OP and Audaxer so our cost will average with time however with current valuations I am being more conservative than I would be if the market was looking better value.

ValiantSon wrote: »

Even with a single lump sum investment, the impact of a crash should only be a short(ish) term loss. As the markets recover, the loss will be recuperated. Time in the market really is the only way to have confidence about managing volatility and ensuring growth.

Sure a lump sum investor will do ok in the long term whenever they invest however they should do better if the risk taken is aligned to the probability of return.

Alex

C_Mababejive

I am an amateur investor and there are plenty of people with more knowledge and experience than I but there are some things i have learned and which i think apply to most people like me;

a) In General dont buy individual shares, buy collective investment vehicles

Keep charges low

c) If your talking big money, have an eye on tax now and future tax.

d) know how ISAs and SIPPs work and how they affect your personal tax position

e) Know the difference between a "fund",Investment trust and an ETF and the charges involved with each

Audaxer

ValiantSon wrote: »

Ultimately, however, "independent thinking" amounts to guesswork: informed guesswork, perhaps, but still guesswork.

I am not blase about the risk of a downturn, and indeed, I expect one to occur much sooner, rather than later, but with regular investing (and, in my case, admittedly, the capacity to buy cheap when prices drop significantly) I don't think it is a particularly good idea to try and time the market.

Even with a single lump sum investment, the impact of a crash should only be a short(ish) term loss. As the markets recover, the loss will be recuperated. Time in the market really is the only way to have confidence about managing volatility and ensuring growth.

I agree with regular investing to benefit from price drops, certainly in the accumulation stage. However I'm retired with a fair bit invested but still with some to move from Cash ISAs. I'm going to invest some now, but I'll still hold some back waiting for a drop in the market as I've no desperate need to invest it all at this time. Even if I was to put a larger percentage into defensive assets like bonds or wealth preservation funds, I'm not sure it would do much better in the short term than leaving some in cash savings?

Alexland

Audaxer wrote: »

I'm going to invest some now, but I'll still hold some back waiting for a drop in the market as I've no desperate need to invest it all at this time. Even if I was to put a larger percentage into defensive assets like bonds or wealth preservation funds, I'm not sure it would do much better in the short term than leaving some in cash savings?

I agree bonds and defensive shares also look highly valued and as we saw earlier this year there was a broad drop in asset prices with nowhere for an investor to hide.

In terms of cash rather that trying to time the investment I find it helps to think of it as a percentage of your portfolio which you can rebalance around for now.

Its so hard to ignore recent market and currency performance but that cake has been eaten already so investors need to look forward to identity and scale what opportunities may still exist.

Alex

ValiantSon

Audaxer wrote: »

I agree with regular investing to benefit from price drops, certainly in the accumulation stage. However I'm retired with a fair bit invested but still with some to move from Cash ISAs. I'm going to invest some now, but I'll still hold some back waiting for a drop in the market as I've no desperate need to invest it all at this time. Even if I was to put a larger percentage into defensive assets like bonds or wealth preservation funds, I'm not sure it would do much better in the short term than leaving some in cash savings?

I understand what you mean, but the short term is never the timeframe to be considering with investments anyway. I have a pretty sizeable sum in cash, and choose to keep it that way because I have no intention of selling investments if I need money. I have to manage that sum to ensure it at least matches inflation, but I'm comfortable with it. If there were a market crash tomorrow then I would invest a substantial amount and still be okay, so in a way I am doing similar, although in my case it is more to do with buying if a bargain appears, rather than holding off buying because I worry about current values.