Investment advice

masonic

2_4 said:

masonic said:

2_4 said:

Albermarle said:

Lastly they/we are considering perhaps starting with the 20% equities in case shares suffer another big Covid-related fall and then maybe moving some or all into a higher one as and when that happens. Then, perhaps after a few years as they get older they could move back down again to a less risky one. Does that seem reasonable?

The problem with this approach is that you are trying to predict the future and second guess global financial markets .

It is just as likely that the markets will stay steady/ go up and then crash in three years due to some as yet unknown reason.

Better to just pick you risk level and go for it . If it makes them feel better they could add the money in stages .

I'm not sure it's "just as likely" but I appreciate your point. Some of the funds I'm looking at are more or less at their pre-covid highs and with the situation far from over and a vaccine not seeming a realistic possibility any time soon and the real economic impact not yet kicking in, the chances of prices going up seem lower than them going down. I do appreciate your point about it being impossible to predict the future but it seems hard to think that now is a great time to pile into equities when the prices are high yet there is a very big, known, cloud lurking.

That is the Dunning-Kruger effect kicking in. In March it was obvious to a lot of people that markets were going to continue falling and stay down until the Covid crisis had been resolved. Over much of the last 10 years, various people have proclaimed how markets are overvalued and at all time highs and it was not a good time to invest. Yet in those 10 years, investing in a global index tracker would have generated average returns of over 10% per year.

You can be absolutely certain that there is another market crash around the corner, but nobody has a clue if it will happen next week, next month, next year or in 5 years.

Not sure how you can say it's DK when everything I've offered is couched in uncertainty and it is you claiming great knowledge.

I didn't detect any uncertainty in your belief that the real economic impact of Covid has not yet kicked in, prices are high, and there is a very big, known, cloud lurking. Markets price in information that is known to participants in the market, so if you believe the market has not adequately accounted for what is known to you, then it is because you either possess inside knowledge, you possess superior foresight, or you overestimate your abilities. You'll have to forgive me for jumping to the conclusion that someone starting a thread asking for investment advice from others is most likely to fall into the latter category

Most of what I stated in my post above is a matter of verifiable fact. My last statement is not something I would call great knowledge - that crashes are inevitable, but nobody knows when they will happen.

2_4 said:

Also, seems strange to say "You can be absolutely certain that there is another market crash around the corner, but nobody has a clue if it will happen next week, next month, next year or in 5 years." Not sure we could say "around the corner" is in five years (and of course the next big dip COULD be 10 years away or more in theory).

You can nit-pick about my use of "around the corner" and the particular timescales I used to exemplify the concept that nobody knows when the next crash will happen if you wish. For the avoidance of doubt it was not an exhaustive list of options and that particular figure of speech was used rather loosely.