Investing money now in Bonds and Equities - is it worth it?

Albermarle

Gavlaar said:

Albermarle said:

Gavlaar said:

Notepad_Phil said:

Gavlaar said:

masonic said:

You've missed the majority of the drop in bonds, which are priced quite attractively now. There might be a bit further to fall, but it's a gamble whether you'd be able to time it any better. Equities have also fallen, and could have further to go, but the same argument applies. If you are really worried then you could discuss with your adviser the possibility of phasing your investment over several months, but bear in mind this means most of your investment will be sitting in cash for a while longer.

For the equities, the other potential source of concern would be the weakness of the pound. You could have a conversation with your adviser about whether currency hedging might be worthwhile.

Thanks for the advice. I'm a first time investor so am a bit nervous anyway which is why my risk rating came out as low to medium.

I agree with my IFA that there is never a good time to start as over 5 years plus in investing these bumps should even out, am conversely conscious though that there might be an obviously bad time to start. 

I've read horror stories on this forum about similar new investors starting a year ago and already their money has dropped by 10 to 15% which must be very disheartening.

I thought you were consolidating existing pensions into a new SIPP, so what were they invested in - or were they DB pensions that you've transferred out of?

A drop in investments should not be considered disheartening but rather as part of investment life. They will continue to go up and down, sometimes by less and sometimes by more, but unless we're all doomed then provided you're well diversified then you will eventually recover your losses and your new investments during the gloomy parts will start to look particularly healthy.

Sorry silly question, what's a DB pension? They are workplace pensions I've accumulated over my career as I've moved from job to job if that's what this means, I asked if I could consolidate them together and the IFA recommended investing them all into a SIPP which I don't have currently.

A SIPP is just another pension with investments within it. The pensions you are moving to a SIPP, are presumably them selves invested in various funds (and will have gone down since April)
The point is that you are not starting with £130K in cash and investing it all from scratch. You are moving from one set of investments to another. Hence the question how are they invested in the current/previous pensions?

I have also been advised to invest the same amount of cash in investments in bonds and equities by the IFA, same sort of make up as the investment SIPP, these are sitting in cash accounts currently.

But yes the other amount is currently with a number of previous workplace pension providers with Aviva, Scottish Widows and Legal and General mainly.

I'm embarrassed to say I couldn't even tell you what the funds within those provider schemes are invested in.

No need to be embarrassed, most people with pensions have no idea what they are invested in.

Anyway the logic still holds in that the money coming from these pensions was already invested in shares and bonds, so probably not a big change to have similar in the SIPP. 

Whether you should also invest a similar amount in one go, currently held as cash savings, is probably more a matter of debate.

The rationale is that in the long term, investments will outperform cash savings. So the IFA is not saying something wrong, but on the other hand, you need to feel comfortable with what is proposed. 

You should always have some cash for emergencies, but some people like the security of more cash than that. 

Gavlaar

Albermarle said:

Gavlaar said:

Albermarle said:

Gavlaar said:

Notepad_Phil said:

Gavlaar said:

masonic said:

You've missed the majority of the drop in bonds, which are priced quite attractively now. There might be a bit further to fall, but it's a gamble whether you'd be able to time it any better. Equities have also fallen, and could have further to go, but the same argument applies. If you are really worried then you could discuss with your adviser the possibility of phasing your investment over several months, but bear in mind this means most of your investment will be sitting in cash for a while longer.

For the equities, the other potential source of concern would be the weakness of the pound. You could have a conversation with your adviser about whether currency hedging might be worthwhile.

Thanks for the advice. I'm a first time investor so am a bit nervous anyway which is why my risk rating came out as low to medium.

I agree with my IFA that there is never a good time to start as over 5 years plus in investing these bumps should even out, am conversely conscious though that there might be an obviously bad time to start. 

I've read horror stories on this forum about similar new investors starting a year ago and already their money has dropped by 10 to 15% which must be very disheartening.

I thought you were consolidating existing pensions into a new SIPP, so what were they invested in - or were they DB pensions that you've transferred out of?

A drop in investments should not be considered disheartening but rather as part of investment life. They will continue to go up and down, sometimes by less and sometimes by more, but unless we're all doomed then provided you're well diversified then you will eventually recover your losses and your new investments during the gloomy parts will start to look particularly healthy.

Sorry silly question, what's a DB pension? They are workplace pensions I've accumulated over my career as I've moved from job to job if that's what this means, I asked if I could consolidate them together and the IFA recommended investing them all into a SIPP which I don't have currently.

A SIPP is just another pension with investments within it. The pensions you are moving to a SIPP, are presumably them selves invested in various funds (and will have gone down since April)
The point is that you are not starting with £130K in cash and investing it all from scratch. You are moving from one set of investments to another. Hence the question how are they invested in the current/previous pensions?

I have also been advised to invest the same amount of cash in investments in bonds and equities by the IFA, same sort of make up as the investment SIPP, these are sitting in cash accounts currently.

But yes the other amount is currently with a number of previous workplace pension providers with Aviva, Scottish Widows and Legal and General mainly.

I'm embarrassed to say I couldn't even tell you what the funds within those provider schemes are invested in.

No need to be embarrassed, most people with pensions have no idea what they are invested in.

Anyway the logic still holds in that the money coming from these pensions was already invested in shares and bonds, so probably not a big change to have similar in the SIPP. 

Whether you should also invest a similar amount in one go, currently held as cash savings, is probably more a matter of debate.

The rationale is that in the long term, investments will outperform cash savings. So the IFA is not saying something wrong, but on the other hand, you need to feel comfortable with what is proposed. 

You should always have some cash for emergencies, but some people like the security of more cash than that. 

I have got the same amount of cash left over if I do go with the IFAs advice and stick 130k in an investment made up of equities and bonds. 

It's the timing really that is unnerving me, especially knowing how susceptible the bonds especially are to inflation and high interest rates. 

Am not sure if the correct thing to do is just wait for some indeterminate time before I invest any money or rather than throw 130k from cash into equities and bonds at one go or say drip feed about 10 or 20k per month until I get to that amount. 

aroominyork

Gavlaar said:

masonic said:

You've missed the majority of the drop in bonds, which are priced quite attractively now. There might be a bit further to fall, but it's a gamble whether you'd be able to time it any better. Equities have also fallen, and could have further to go, but the same argument applies. If you are really worried then you could discuss with your adviser the possibility of phasing your investment over several months, but bear in mind this means most of your investment will be sitting in cash for a while longer.

For the equities, the other potential source of concern would be the weakness of the pound. You could have a conversation with your adviser about whether currency hedging might be worthwhile.

Thanks for the advice. I'm a first time investor so am a bit nervous anyway which is why my risk rating came out as low to medium.

I agree with my IFA that there is never a good time to start as over 5 years plus in investing these bumps should even out, am conversely conscious though that there might be an obviously bad time to start. 

I've read horror stories on this forum about similar new investors starting a year ago and already their money has dropped by 10 to 15% which must be very disheartening.

Are you sure the IFA didn't say there is never a bad time to start investing?

Gavlaar

aroominyork said:

Gavlaar said:

masonic said:

You've missed the majority of the drop in bonds, which are priced quite attractively now. There might be a bit further to fall, but it's a gamble whether you'd be able to time it any better. Equities have also fallen, and could have further to go, but the same argument applies. If you are really worried then you could discuss with your adviser the possibility of phasing your investment over several months, but bear in mind this means most of your investment will be sitting in cash for a while longer.

For the equities, the other potential source of concern would be the weakness of the pound. You could have a conversation with your adviser about whether currency hedging might be worthwhile.

Thanks for the advice. I'm a first time investor so am a bit nervous anyway which is why my risk rating came out as low to medium.

I agree with my IFA that there is never a good time to start as over 5 years plus in investing these bumps should even out, am conversely conscious though that there might be an obviously bad time to start. 

I've read horror stories on this forum about similar new investors starting a year ago and already their money has dropped by 10 to 15% which must be very disheartening.

Are you sure the IFA didn't say there is never a bad time to start investing?

Yes you're correct apologies. The point they were trying to make was short term losses should be eroded over a 5 year plus timeframe 

masonic

Gavlaar said:

It's the timing really that is unnerving me, especially knowing how susceptible the bonds especially are to inflation and high interest rates.

They are susceptible to rising interest rates, but they have already priced in the rises that are expected. It would have been far more unnerving to hold them when the yield was 0.2% with a base rate of 0.25%, than now, when the yield is >4% and the base rate 2.25%.