Woodford Concerns

Jonah01

fun4everyone wrote: »

I don't think investing done properly is a "gamble"........People will work and earn, they will spend their money and companies will continue to make profits. Capitalism is not going anywhere, might as well be a part of it. It is a gamble if you want to only be in the market for a short period of time, or if you are going to concentrate all your money in one or two sectors.

If the Woodford incident has left you scared of choosing the wrong investment/fund then just pick a global tracker aligned to your risk profile. You can sleep easy at night then. I don't know how old you are but leaving money you won't be spending as cash for over 5 years is almost guaranteed a negative return and is not a wise thing to do.

Thanks. Yes I just need something low risk for the short term so I can recover

I'm 39.

My thoughts as a beginner would be like you mentioned a global tracker or I was thinking a multi asset fund with a lower proportion of it being equities.

Is lumping 50k into one of these considered terrible? Obviously the more you diversify the more you can water your investment down.

At the same time I don't want to be exposed to any Woodford scenarios.

Moving forward I was going to also pick a couple of funds that may be suited to whatever Brexit outcome we will likely see. Wouldn't invest loads but the UK could pick up after Brexit depending on the outcome.

fun4everyone

Jonah01 wrote: »

I'm 39.

My thoughts as a beginner would be like you mentioned a global tracker or I was thinking a multi asset fund with a lower proportion of it being equities.

Is lumping 50k into one of these considered terrible? Obviously the more you diversify the more you can water your investment down.

At the same time I don't want to be exposed to any Woodford scenarios.

It is absolutely not terrible and you will not be exposed to any Woodford type scenario as you will be getting roughly the global market return.

By Woodford scenario I mean an active manager losing the plot and having terrible performance. The value of your holding could still plummet if we have a correction or crash. That is why I say pick an appropriate risk level and make sure it is for 5 years+. If/When it crashes and you hold on, history shows it always eventually recovers.

Just saw your edit, forget trying to second guess Brexit or any other global development. Choose your investments/strategy based on you and your situation and stick to it. Don't let the media or the press or anyone else trick you into doing stuff like that.

Jonah01

fun4everyone wrote: »

It is absolutely not terrible and you will not be exposed to any Woodford type scenario as you will be getting roughly the global market return.

By Woodford scenario I mean an active manager losing the plot and having terrible performance. The value of your holding could still plummet if we have a correction or crash. That is why I say pick an appropriate risk level and make sure it is for 5 years+. If/When it crashes and you hold on, history shows it always eventually recovers.

Just saw your edit, forget trying to second guess Brexit or any other global development. Choose your investments/strategy based on you and your situation and stick to it. Don't let the media or the press or anyone else trick you into doing stuff like that.

Thanks for your help.

I suppose there is no point second guessing when to get in. I could invest tomorrow and we have a correction but like you say over the long term there will be gains.

There are a range of trackers available and I suppose the global ones do protect you from crashes in specific regions.


I'll do some research on the ones available.

Thanks again

Herbalus

Jonah01 wrote: »

Thanks. Yes I just need something low risk for the short term so I can recover

I'm 39.

My thoughts as a beginner would be like you mentioned a global tracker or I was thinking a multi asset fund with a lower proportion of it being equities.

Is lumping 50k into one of these considered terrible? Obviously the more you diversify the more you can water your investment down.

At the same time I don't want to be exposed to any Woodford scenarios.

Moving forward I was going to also pick a couple of funds that may be suited to whatever Brexit outcome we will likely see. Wouldn't invest loads but the UK could pick up after Brexit depending on the outcome.

Have a look at the diversification of the global trackers - you will see that each invests in 1000s of companies globally. This will mean you will own terrible companies, and also great companies, but all in small proportions so that individual companies won’t make too much difference to the performance.

E.g. I hold a ftse250 tracker (a small part of my portfolio), which has a tiny amount of Woodford patient capital, probably around £30 in total if you look at the proportions. I’m not fussed. Because ted baker lost over 20% yesterday and I own a bit of that through the tracker, but overall the total performance was slightly positive.

Your diversification question should be - “how much % of my funds do I want to invest in shares, how much in cash, how much in bonds” as opposed to which fund you want for your shares aspect.

Jonah01

Herbalus wrote: »

Have a look at the diversification of the global trackers - you will see that each invests in 1000s of companies globally. This will mean you will own terrible companies, and also great companies, but all in small proportions so that individual companies won’t make too much difference to the performance.

E.g. I hold a ftse250 tracker (a small part of my portfolio), which has a tiny amount of Woodford patient capital, probably around £30 in total if you look at the proportions. I’m not fussed. Because ted baker lost over 20% yesterday and I own a bit of that through the tracker, but overall the total performance was slightly positive.

Your diversification question should be - “how much % of my funds do I want to invest in shares, how much in cash, how much in bonds” as opposed to which fund you want for your shares aspect.

I am happy to lock the money away but could do with some way of seeing a risk analysis of the various asset types.

For example 100% equities versus 60%. While I know the first is riskier but how much riskier?

A very vague question sorry

I know this is a very simplistic way of looking at it but I just need to invest in something that will show a positive return short term just for my mental well being ha ha


Another question - If you take the fundsmith or Lindsell Train global funds. Are there people that just lump their entire pot into these?

For the last 5 years the gains have been amazing. Obviously I understand the risks involved with doing this now but does it go on?

Uxb1

fun4everyone wrote: »

If/When it crashes and you hold on, history shows it always eventually recovers.

Not in Japan it doesn't.
The Nikkei index has never yet (by a long way) regained its peak of 37000 reached in the asset price bubble of 1990.

Johnnyboy11

Jonah01 wrote: »

I am happy to lock the money away but could do with some way of seeing a risk analysis of the various asset types.

For example 100% equities versus 60%. While I know the first is riskier but how much riskier?

A very vague question sorry

I know this is a very simplistic way of looking at it but I just need to invest in something that will show a positive return short term just for my mental well being ha ha


Another question - If you take the fundsmith or Lindsell Train global funds. Are there people that just lump their entire pot into these?

For the last 5 years the gains have been amazing. Obviously I understand the risks involved with doing this now but does it go on?

I like the core-satellite investment approach. Currently in 70% passives (VLS60 avd VDWExUK) 20% managed (Fundsmith and Lindsell Train) and 10% cash (to be invested when the opportunity arises). Lets me sleep at night, plus have some satisfaction when the managed funds do well.

fun4everyone

Uxb1 wrote: »

Not in Japan it doesn't.
The Nikkei index has never yet (by a long way) regained its peak of 37000 reached in the asset price bubble of 1990.

That's true, but it is an example of single sector investing which is bordering on gambling coupled with choosing a time to suit the argument. If you had put everything into Japan in January 90 and held till now you would still be down. Nobody with a brain would have done that. It also will no doubt (eventually) recover.

AnotherJoe

Jonah01 wrote: »

I am happy to lock the money away but could do with some way of seeing a risk analysis of the various asset types.

For example 100% equities versus 60%. While I know the first is riskier but how much riskier?
40% more

A very vague question sorry

I know this is a very simplistic way of looking at it but I just need to invest in something that will show a positive return short term just for my mental well being ha ha
Two issues there. You shouldn't be investing until you understand there will be times you will be lower than what you put in. You could drip feed in but still not guaranteed . Second, if you are regularly investing you need to understand that low and falling prices at the start are good as long as you are widely invested. I've underscored understand to emphasise you really have to take on board that investments can go down and that buying cheap is good subject to provisos about over concentration .

Another question - If you take the fundsmith or Lindsell Train global funds. Are there people that just lump their entire pot into these?
Probably. That doesn't mean it's a good idea. It isn't.

For the last 5 years the gains have been amazing. Obviously I understand the risks involved with doing this now but does it go on?

Again you need to understand no one knows what the future holds

steampowered

Jonah01 wrote: »

I know this is a very simplistic way of looking at it but I just need to invest in something that will show a positive return short term just for my mental well being ha ha

This is not possible.

You are investing for the long term.

With stocks some years they go up, some years they go down, there will be dividends do. You have to accept that. The long term trend is up - about 8% on average each year is the historic return on the major stock markets.