Index tracker - Ftse 100 vs Global Tracker

DennisTenus

Prism said:

DennisTenus said:

dunstonh said:

DennisTenus said:

dunstonh said:

Index tracker - Ftse 100 vs Global Tracker

Very different investments and not two options you would normally compare as they are not like for like.

e.g. UK large cap vs global all cap.

The FTSE100 tracker would typically be used by some people in building a portfolio of funds.   It would not be held in isolation.    A global tracker is a catchall fund for higher risk investors without the need to have a portfolio of other funds (unless you are using other asset classes to bring the risk down).

I thought a global tracker wouldn't be high risk as its like basically owning the whole stock market isn't it and therefore very diversified? 

It is diversified within equities.  However, it is 100% equities.    So, capable of a 50% loss with major crashes and 80% in extreme rarer ones.  (in the last 25 years, you have had  43% loss, 45% loss and a 35% loss periods)

And in those extreme rarer cases, it took how many years to recover?

From the start of the crash in the summer of 2000 it took the MCSI World Index until the start of 2011 - so almost 10 years. 

According to this chart https://en.wikipedia.org/wiki/MSCI_World#/media/File:MSCI_World_Price_Index_-_History_1969_-_2020.svg it looks more like 2006 than 2011, or is this not correct?

masonic

DennisTenus said:

Prism said:

DennisTenus said:

dunstonh said:

DennisTenus said:

dunstonh said:

Index tracker - Ftse 100 vs Global Tracker

Very different investments and not two options you would normally compare as they are not like for like.

e.g. UK large cap vs global all cap.

The FTSE100 tracker would typically be used by some people in building a portfolio of funds.   It would not be held in isolation.    A global tracker is a catchall fund for higher risk investors without the need to have a portfolio of other funds (unless you are using other asset classes to bring the risk down).

I thought a global tracker wouldn't be high risk as its like basically owning the whole stock market isn't it and therefore very diversified? 

It is diversified within equities.  However, it is 100% equities.    So, capable of a 50% loss with major crashes and 80% in extreme rarer ones.  (in the last 25 years, you have had  43% loss, 45% loss and a 35% loss periods)

And in those extreme rarer cases, it took how many years to recover?

From the start of the crash in the summer of 2000 it took the MCSI World Index until the start of 2011 - so almost 10 years. 

According to this chart https://en.wikipedia.org/wiki/MSCI_World#/media/File:MSCI_World_Price_Index_-_History_1969_-_2020.svg it looks more like 2006 than 2011, or is this not correct?

That chart isn't inflation adjusted, so would present an optimistic view of 'recover'.

Hundeverboten

You can still put £2880 net in a SIPP and get £720 tax relief even if you are currently a non-tax payer.

Is this still the case if I have already contributed to a workplace pension earlier in the tax year and then been made unemployed or will the £720 tax relief have already been 'used up' so to speak.

Hundeverboten

Prism said:

From the start of the crash in the summer of 2000 it took the MCSI World Index until the start of 2011 - so almost 10 years. 

It seems like people are generally overly optimistic - or ignoring the risk involved - of trackers. Normally on forums there a lot of comments that give the impression that all you have to do is in invest in a Global All Cap Index and everything will be dandy.

masonic

Hundeverboten said:

You can still put £2880 net in a SIPP and get £720 tax relief even if you are currently a non-tax payer.

Is this still the case if I have already contributed to a workplace pension earlier in the tax year and then been made unemployed or will the £720 tax relief have already been 'used up' so to speak.

If you have gross earnings in excess of the £3,600 limit in this tax year, then you can make gross pension contributions (including tax relief) of up to 100% of these earnings and the annual allowance. Otherwise the maximum you can contribute is £3,600 gross.

ColdIron

Hundeverboten said:

You can still put £2880 net in a SIPP and get £720 tax relief even if you are currently a non-tax payer.

Is this still the case if I have already contributed to a workplace pension earlier in the tax year and then been made unemployed or will the £720 tax relief have already been 'used up' so to speak.

Put simply your contributions are limited by your annual earnings. So if your salary was £24,000 but you were made redundant after six months your limit is £12,000, obviously more if you start working again

If your current contributions (gross, so would include your employer contribution and basic rate tax relief applied) were £2,000 then you have £10,000 gross remaining. That's £8,000 from you and £2,000 from HMRC

Prism

DennisTenus said:

Prism said:

DennisTenus said:

dunstonh said:

DennisTenus said:

dunstonh said:

Index tracker - Ftse 100 vs Global Tracker

Very different investments and not two options you would normally compare as they are not like for like.

e.g. UK large cap vs global all cap.

The FTSE100 tracker would typically be used by some people in building a portfolio of funds.   It would not be held in isolation.    A global tracker is a catchall fund for higher risk investors without the need to have a portfolio of other funds (unless you are using other asset classes to bring the risk down).

I thought a global tracker wouldn't be high risk as its like basically owning the whole stock market isn't it and therefore very diversified? 

It is diversified within equities.  However, it is 100% equities.    So, capable of a 50% loss with major crashes and 80% in extreme rarer ones.  (in the last 25 years, you have had  43% loss, 45% loss and a 35% loss periods)

And in those extreme rarer cases, it took how many years to recover?

From the start of the crash in the summer of 2000 it took the MCSI World Index until the start of 2011 - so almost 10 years. 

According to this chart https://en.wikipedia.org/wiki/MSCI_World#/media/File:MSCI_World_Price_Index_-_History_1969_-_2020.svg it looks more like 2006 than 2011, or is this not correct?

I was assuming from the point of a UK investor. That chart is a US chart from the point of a US investor. During that crash the dollar devalued quite a bit and many other currencies rose against it.

So, if you were in the UK, investing in the global index using your UK Pounds, then it took a very long time to recover since all of your US holdings were being devalued by the Dollar at the same time.

aroominyork

coastline said:

Prism said:

DennisTenus said:

dunstonh said:

DennisTenus said:

dunstonh said:

Index tracker - Ftse 100 vs Global Tracker

Very different investments and not two options you would normally compare as they are not like for like.

e.g. UK large cap vs global all cap.

The FTSE100 tracker would typically be used by some people in building a portfolio of funds.   It would not be held in isolation.    A global tracker is a catchall fund for higher risk investors without the need to have a portfolio of other funds (unless you are using other asset classes to bring the risk down).

I thought a global tracker wouldn't be high risk as its like basically owning the whole stock market isn't it and therefore very diversified? 

It is diversified within equities.  However, it is 100% equities.    So, capable of a 50% loss with major crashes and 80% in extreme rarer ones.  (in the last 25 years, you have had  43% loss, 45% loss and a 35% loss periods)

And in those extreme rarer cases, it took how many years to recover?

From the start of the crash in the summer of 2000 it took the MCSI World Index until the start of 2011 - so almost 10 years. 

Bit like this. So if the 35 year cycle works then we have a few years left until 2030 ish. .

FE_eyeLXEAY6jG8 (900×428) (twimg.com)

Interesting Dow Jones graph, but what about dividends? A US tracker currently yields about 1.5%, a UK tracker 3.5%. Was it always so?

Prism

Hundeverboten said:

Prism said:

From the start of the crash in the summer of 2000 it took the MCSI World Index until the start of 2011 - so almost 10 years. 

It seems like people are generally overly optimistic - or ignoring the risk involved - of trackers. Normally on forums there a lot of comments that give the impression that all you have to do is in invest in a Global All Cap Index and everything will be dandy.

Well yes, but if we ignore the graphs along the way and are still contributing then it generally does turn out dandy (different for retirees). 2000 onwards was a great time to be investing. 10 years of contributions during two major crashes and little share price movement while reinvesting dividends - it doesn't get much better than that. Certainly better than trying to build a pot up over the last 13 years since 2010.

Prism

aroominyork said:

coastline said:

Prism said:

DennisTenus said:

dunstonh said:

DennisTenus said:

dunstonh said:

Index tracker - Ftse 100 vs Global Tracker

Very different investments and not two options you would normally compare as they are not like for like.

e.g. UK large cap vs global all cap.

The FTSE100 tracker would typically be used by some people in building a portfolio of funds.   It would not be held in isolation.    A global tracker is a catchall fund for higher risk investors without the need to have a portfolio of other funds (unless you are using other asset classes to bring the risk down).

I thought a global tracker wouldn't be high risk as its like basically owning the whole stock market isn't it and therefore very diversified? 

It is diversified within equities.  However, it is 100% equities.    So, capable of a 50% loss with major crashes and 80% in extreme rarer ones.  (in the last 25 years, you have had  43% loss, 45% loss and a 35% loss periods)

And in those extreme rarer cases, it took how many years to recover?

From the start of the crash in the summer of 2000 it took the MCSI World Index until the start of 2011 - so almost 10 years. 

Bit like this. So if the 35 year cycle works then we have a few years left until 2030 ish. .

FE_eyeLXEAY6jG8 (900×428) (twimg.com)

Interesting Dow Jones graph, but what about dividends? A US tracker currently yields about 1.5%, a UK tracker 3.5%. Was it always so?

Usual problems with most existing graphs out there. They tend to ignore currency, as they are often shown in Dollars, dividends and also inflation. What you end up with is a rough idea of what happened without much real detail.