Investment Advice

Sarahspangles

elltomney said:

Thanks, so based off of that FTSE ALL WORLD would be a better option?

Im looking long term so 25-30 years, and i saw that the S&P has averaged 10.733% over the last 30 years, so thought it would be a wise investment choice.

Judging from past performance is such a trap for the unwary that in the US and UK the regulators require providers to make a statement in their ads like ‘Past Performance is not a reliable indicator of future results’. 

Ivkoto

So most advices are based on the history of the financial markets, but at the same time everyone is saying: 

"Past performance is not a reliable indicator of future performance" 

"Investors should be cautious about making decisions based solely on historical returns. Markets evolve, and what worked yesterday might not work tomorrow"


The best advice must be: Don't take advice from anyone, because nobody knows what the future will be!

lr1277

I don't know if you were considering the FTSE250 but the following may or may not make a difference to you.

The FTSE100 is the 100 largest companies on the London Stock Exchange.

The FTSE250 is the next largest companies on the LSE i.e, the companies from positions 101 to 350.

Ivkoto

Here ⬇️ you can see the average longevity of the S&P 500 bull runs and how much return they made.
So the choice is yours.

elltomney

dunstonh said:

elltomney said:

dunstonh said:

And out of the two, FTSE All World / S&P500 what would you say is better to invest in? Thanks

The S&P500 has been very good over the last decade due to US tech companies.   However, many consider tech to be in a bubble and tech is prone to high volatility.    The decade at the start of the millennium, it was the worst place to be by a long way.    So, you shouldn't look at short term returns and think that they are the norm.       The first decade of the millennium, the S&P500 was negative over 10 years.  US equity wasn't the place to be.   So, a lot of what you have had recently is that negative period bouncing back.  

Global is by far more sensible as you are not putting all your eggs in one basket.

Thanks, so based off of that FTSE ALL WORLD would be a better option?

Im looking long term so 25-30 years, and i saw that the S&P has averaged 10.733% over the last 30 years, so thought it would be a wise investment choice.

Except you are a UK investor who lives in a Sterling world, and you suffer exchange rate fluctuations.    The global equity trackers will have around 69% US equity anyway.  

Be wary of how much recent returns makes the S&P500 look better and how things have a habit of returning to norm.
Two charts below.    The left one show the first 10 years of this millennium.  It follows a similar spike in tech.  Green is global. Blue is S&P500 (GBP).  The right one shows 1998 to date and you will see not a lot of difference in them until recent years where tech has bubbled again.    Global and US tend to cycle.  Going 100% into S&P500 now would be after the boom.   That boom could continue for another year or two or whatever but at some point it will burst and typically revert to norm.

Okay cool thanks that's really interesting, so in short/simple terms, the FTSE ALL WORLD would be a better option to start investing into now?

Beddie

elltomney said:

dunstonh said:

And out of the two, FTSE All World / S&P500 what would you say is better to invest in? Thanks

The S&P500 has been very good over the last decade due to US tech companies.   However, many consider tech to be in a bubble and tech is prone to high volatility.    The decade at the start of the millennium, it was the worst place to be by a long way.    So, you shouldn't look at short term returns and think that they are the norm.       The first decade of the millennium, the S&P500 was negative over 10 years.  US equity wasn't the place to be.   So, a lot of what you have had recently is that negative period bouncing back.  

Global is by far more sensible as you are not putting all your eggs in one basket.

Thanks, so based off of that FTSE ALL WORLD would be a better option?

Im looking long term so 25-30 years, and i saw that the S&P has averaged 10.733% over the last 30 years, so thought it would be a wise investment choice.

I'd say that FTSE All World is a better option of the two, for the reasons others have said - better diversity than S&P500 alone.
Bear in mind that it is still considered a higher risk investment, as it's all equity with no bonds or anything else. There are multi-asset funds that offer a mix, such as HSBC Global Strategy funds, but if you are willing to take a risk and leave it in for a few years then stick to your plan above.

Albermarle

elltomney said:

dunstonh said:

And out of the two, FTSE All World / S&P500 what would you say is better to invest in? Thanks

The S&P500 has been very good over the last decade due to US tech companies.   However, many consider tech to be in a bubble and tech is prone to high volatility.    The decade at the start of the millennium, it was the worst place to be by a long way.    So, you shouldn't look at short term returns and think that they are the norm.       The first decade of the millennium, the S&P500 was negative over 10 years.  US equity wasn't the place to be.   So, a lot of what you have had recently is that negative period bouncing back.  

Global is by far more sensible as you are not putting all your eggs in one basket.

Thanks, so based off of that FTSE ALL WORLD would be a better option?

Im looking long term so 25-30 years, and i saw that the S&P has averaged 10.733% over the last 30 years, so thought it would be a wise investment choice.

On this time scale, you are presumably looking at funds for retirement?
In this case investing via a pension is normally recommended due to the tax benefits involved.
Are you employed/have a workplace pension you are contributing to?

eskbanker

Ivkoto said:

So most advices are based on the history of the financial markets, but at the same time everyone is saying: 

"Past performance is not a reliable indicator of future performance" 

"Investors should be cautious about making decisions based solely on historical returns. Markets evolve, and what worked yesterday might not work tomorrow"

The best advice must be: Don't take advice from anyone, because nobody knows what the future will be!

There's no inconsistency in there - the history shows that different companies or markets or sectors will be in the ascendancy at any point in time, but that this won't be indefinite, so the prevailing wisdom is to diversify widely to mitigate risk, rather than trying to chase winners based on recent performance.

Obviously diversification means buying the weak as well as the strong and there will be those who have the time, capability and willingness to conduct extensive due diligence on individual companies (or even markets or sectors) with a view to beating the odds, but it's extremely difficult to do that sustainably, so for most investors, and certainly those newbies asking for guidance on here, a well-diversified portfolio is the most sensible answer, which can usually be delivered with a single fund.

Eyeful

1. Watch this: 
https://www.kroijer.com/

2.Example:
https://www.hsbc.co.uk/investments/products/hsbc-global-strategy-portfolios/#balanced
Read these: 
https://monevator.com/passive-fund-of-funds-the-rivals/
https://monevator.com/best-global-tracker-funds/

3. For a long term perspective of the USA market I suggest you read the following:
https://www.getrichslowly.org/bull-bear-markets/