Maths and investments

pkpk

Perhaps started backwards - working out £50pm over months from my total. My fault for not being more accurate on dates. :eek:

MK62 wrote: »

Can I ask why you only calculated the return over 9.5 years (or 114 months)?

The OP said he started the investment 10 years ago........

MK62

I think the penny dropped.......in the OP you said 10 years, but a total invested of £5700 does actually equate to 9.5 years (114 months) at £50pm.

pkpk

Yep, exactly. Apologies for the confusion.

badger09

1st off - you mention 'interest'. The gain on what you have paid into your S&S ISA is not interest. It is made up of a combination of dividends paid on the shares held by the fund, and any increase in the value of those shares.

The last 10 years has seen growth, with some dips along the way. You need to be prepared for much bigger dips though, when the value will decrease substantially.

That's why its important not to think about your investments in the same way you'd think about money in a savings account.

You might want to do a bit of reading around here

https://monevator.com/category/investing/

EthicsGradient

I think the easiest way of calculating the effective rate is the 'RATE' function in a spreadsheet:

=(1/(1+RATE(114,50,-8451,0,1)))^12-1

That calculates it if you've just paid in the 114th instalment and it's now worth £8451, and gives 8.19% as the annual rate; if it's reached £8451 just before you're about to pay another £50, then the formula is

=(1/(1+RATE(114,50,-8451,0,0)))^12-1

and gives 8.06%. So depending on how long since your last contribution, it's somewhere between those two. Call it 8.1%.

Malthusian

pkpk wrote: »

Yep that was me! Now looking for something similar but with lower fees. Will have a look at HSBC. Thank you.

Well that will teach me to break my usual policy and mention a provider by name.

You should not look at HSBC. You should first look at what asset allocation is suitable for you, then look at a fund manager or managers that delivers what you want.

If let's say you took your money out and invested in all in HSBC Japan Index, that would be rubbish. Not because it is a rubbish fund but because it would be rubbish to invest all of your portfolio in. When I said that HSBC do good tracker funds I mean purely that they are cheap and do what they say on the tin (which is both the maximum and minimum you can expect from an Index fund).

MK62

Albermarle wrote: »

That's interesting , I would have expected larger differences . Not for any scientific reason though.

Those are 10 year figures......the 9.5 year figures could be (a lot) different.

I didn't see some of the replies yesterday before asking about the 10 v 9.5 year period (think it's an issue with sometimes only getting cached browser pages, which can be different to live pages if there have been very recent posts).

TBH, I only posted them as a comparison/yardstick to the OP's portfolio returns......

AnotherJoe

pkpk wrote: »

So do Index Funds keep the same [STRIKE]funds[/STRIKE] companies constantly and growth funds change as the fund manager sees fit?

Pretty much, except that companies do come into and out of the index, though more gradually.

pkpk

Quickly cancels HSBC tracker fund! 😀

I understand what you’re saying and research and educating myself is obviously the way to go. Having no background or successful experiences in this I imagine I’m like many people who are looking for a quick solution from someone who knows they they’re doing.
It’s clearly not the way to go about it but I wouldn’t have a clue how to go about ‘looking at fund managers who deliver what I want’.

I bought a book on pensions that was recommended and am making some progress. The old posts on this forum are a great resource as well.
We may well be in for quite a few more stupid questions for a while though. It would be great if this was something taught at school.

Malthusian wrote: »

Well that will teach me to break my usual policy and mention a provider by name.

You should not look at HSBC. You should first look at what asset allocation is suitable for you, then look at a fund manager or managers that delivers what you want.

If let's say you took your money out and invested in all in HSBC Japan Index, that would be rubbish. Not because it is a rubbish fund but because it would be rubbish to invest all of your portfolio in. When I said that HSBC do good tracker funds I mean purely that they are cheap and do what they say on the tin (which is both the maximum and minimum you can expect from an Index fund).

bd10

It can be calculated the following way:
write a function for a cumulative savings function whereby the only variable you need to solve for is the yield. To find the yield, you need to find the root, such as by bisection. Solve by iteration. Here, if compounded annually:

Years of savings : 10
Annual savings : 600
Total contributions : 6000.00
Total savings : 8451
Iterations : 29
Required yield (%) : 6.143