S & P 500 investment in wive's name

GazzaBloom

dunstonh said:

incus432 said:

When you see 'S&P 500' everywhere in posts from new investors it's a warning sign.  The new dotcom boom. 

And most of them don't realise that they are not getting the same returns on the S&P500 that an American would get.

Indeed, a UK investor in the unhedged S&P500 has enjoyed a 22% tailwind of extra gains over American Investors over the last 20 years.

Hoenir

GazzaBloom said:

dunstonh said:

incus432 said:

When you see 'S&P 500' everywhere in posts from new investors it's a warning sign.  The new dotcom boom. 

And most of them don't realise that they are not getting the same returns on the S&P500 that an American would get.

Indeed, a UK investor in the unhedged S&P500 has enjoyed a 22% tailwind of extra gains over American Investors over the last 20 years.

The incoming Trump administration would prefer a weaker dollar to boost US exports. That tailwind works both ways. Supercharges the downside risk. 

GazzaBloom

Hoenir said:

GazzaBloom said:

dunstonh said:

incus432 said:

When you see 'S&P 500' everywhere in posts from new investors it's a warning sign.  The new dotcom boom. 

And most of them don't realise that they are not getting the same returns on the S&P500 that an American would get.

Indeed, a UK investor in the unhedged S&P500 has enjoyed a 22% tailwind of extra gains over American Investors over the last 20 years.

The incoming Trump administration would prefer a weaker dollar to boost US exports. That tailwind works both ways. Supercharges the downside risk. 

In which case it becomes a headwind not a tailwind. Remind me to never to go sailing with you at the helm. 

Considering the S&P500 or the US for investment is an interesting conundrum for me. Is the US overvalued? yes by traditional measures, is a reversion to the mean for the last 15 years of over average US returns likely? Yes, if you subscribe to mean reversion theory. Is this a bubble like the dot com era? I would say no, certainly not yet.

 Technology has not been the strongest performing sector of the S&P500 in 2024, communication services has.

The chart below shows steady growth over the last 5 years with a fairly flat 18 month period from December 2021 to June 2023. I don't see a bubble in the index as a whole, certain stocks are hyped beyond all rational measures such as Nvidia with it's P/E ratio of 55, but there are also some much lower valued laggards in the index such as HSBC Holdings with a P/E ratio of 4.99. On aggregate the index is priced on the high side but not in bubble territory, not in my opinion.



The S&P500 is a solid proven formula with strong criteria for inclusion within the index including profitability, covers a wide range of sectors and is cheap to buy.

I prefer to look at a more general view of the US than macro economic concerns with regards the current or incoming President. I like Warren Buffet's premise he posed in 2013; is American business a place you want to place your investment in for the long term? do you believe America will do well and overcome the difficulties it encounters? if you believe so, then American business will do well and holding a piece of a broad section of them via a low cost S&P500 index fund for the long term will serve to meet your needs.

Will there be crashes and slow periods? yes, and sometimes protracted but if you are looking at a lifetime of investing then I find it hard to bet against America.

If you had been invested over the last 5 years in the S&P500 compared to say, a much lower and some would say fairly priced index, such as the FTSE100, you have a high headroom for a big fall but would probably still remain ahead over time. If you are entering the market now and just buy the S&P500 it is possible you could hit a 10 year period of below average returns but if you have a 30+ year horizon and can hold your position then you should do OK.



Do I invest 100% in the US? No, but we do hold 75% of our retirement portfolio in US stocks via index funds of which 38% are in US exclusive funds including the S&P500, the rest is from allocations within a couple of global (themed) index funds. This is a conscious personal decision and not something I would recommend for others. For complete transparency, we have not purchased any equities, US or otherwise for the last 12 months but have been accumulating cash as a counterbalance position within our portfolio. We have also sold off/top sliced some equity growth to cash a couple of times through 2024 but only single digit percentages each time.

If the US declines over a ten or twenty year period, market cap weighted global equity indexes will rebalance away from the US to which ever country or region is rising, slowly and steadily.

So, perhaps the most sensible, low stress, low maintenance thing to do, for the everyday investor who doesn't have the pretence of being an armchair global macro economist or wise owl stock picking investor, is to just buy and hold a low cost global market cap weighted index such as Vanguard's VWRP or equivalent for their "risk-on" equity investment portfolio allocation.



This is something I mull over for our own equity portfolio and may well switch to at some point now I have just entered retirement.

jimjames

A bit out of date now but chart showing returns by asset class/geography. I think a good example that shows how returns vary year by year. USA was not top in any year in the 2001-2010 period so anyone putting everything into S&P would be disappointed. 

ChesterDog

Here's one a bit more up to date, too.

Hoenir

GazzaBloom said:

Hoenir said:

GazzaBloom said:

dunstonh said:

incus432 said:

When you see 'S&P 500' everywhere in posts from new investors it's a warning sign.  The new dotcom boom. 

And most of them don't realise that they are not getting the same returns on the S&P500 that an American would get.

Indeed, a UK investor in the unhedged S&P500 has enjoyed a 22% tailwind of extra gains over American Investors over the last 20 years.

The incoming Trump administration would prefer a weaker dollar to boost US exports. That tailwind works both ways. Supercharges the downside risk. 

In which case it becomes a headwind not a tailwind. Remind me to never to go sailing with you at the helm. 

That depends on which way you are facing. I prefer to steer with the prevailing wind and take the appropriate action. Rather than battle against it making little headway. 

GazzaBloom

Hoenir said:

GazzaBloom said:

Hoenir said:

GazzaBloom said:

dunstonh said:

incus432 said:

When you see 'S&P 500' everywhere in posts from new investors it's a warning sign.  The new dotcom boom. 

And most of them don't realise that they are not getting the same returns on the S&P500 that an American would get.

Indeed, a UK investor in the unhedged S&P500 has enjoyed a 22% tailwind of extra gains over American Investors over the last 20 years.

The incoming Trump administration would prefer a weaker dollar to boost US exports. That tailwind works both ways. Supercharges the downside risk. 

In which case it becomes a headwind not a tailwind. Remind me to never to go sailing with you at the helm. 

That depends on which way you are facing. I prefer to steer with the prevailing wind and take the appropriate action. Rather than battle against it making little headway. 

Of course Thugelmir, with all your sage investing wisdom I would expect nothing less. I'll pass on the boat trip and fly. 

The_Palmist

Thanks folks, I have opened a S&S Vanguard account in wife's (basic rate) name and made a small investment 50:50 between S &P 500 and FTSE All world. I have also opened a cash saver with Santander paying just over 5%, this is a bonus rate for 12 month and looked better than any cash ISA I could see.

There is a very small amount of savings left which I will leave in easy access as rainy day funds for now.

Really appreciate everyone's help and comments.

Cus

Kotokos said:

dunstonh said:

As usual whenever/wherever S&P 500 is mentioned on forum dunstonh chimes in with his dose of doom and gloom.

As usual, when I post risk warnings to people who do not understand the risks of what they are doing, another person who is equally uninformed often makes disparaging remarks.

Nobody is unhappy when things are going well.   Being aware of the potential negatives and being informed is a good thing as you can avoid silly mistakes.

Nonsense dunstonh, nonsense! Your comments were initially ok with your first rant, namely - OK, that fills the US allocation but what about the rest of the world? - Why not leave it there instead of going nuts about S&P500? Why not preach about diversification, risk tolerance etc?
There's an argument for and against for virtually every investment, and as for the S&P500 nosediving you'll be absolutely bang on!, but when will this be? You've been shouting from the rooftops about this for years now, you've also been wrong for years too, but yes, one day you'll be right, and oddly enough at some point you'd also be right if you chose to berate any other fund in the same  manner. It seems to me that somewhere on your life's journey S&P500 bit you hard on your horse!

And your remark -another person who is equally uninformed -  with immense pleasure I can confidently say, "you're wrong!"

The past 10/15 years have seen an explosion of DIY investing, with many looking at huge paper gains especially with S&P investments. If I was an IFA, on the one hand I would be annoyed that this success means that so many people see paying for advice and having an IFA manage your investments and then to not make the same gains as pointless and a waste of money. On the other hand I would also see a lot of people having a shocker when it all turns again and would want to warn them.

Hoenir

Cus said:

dunstonh said:

As usual whenever/wherever S&P 500 is mentioned on forum dunstonh chimes in with his dose of doom and gloom.

As usual, when I post risk warnings to people who do not understand the risks of what they are doing, another person who is equally uninformed often makes disparaging remarks.

Nobody is unhappy when things are going well.   Being aware of the potential negatives and being informed is a good thing as you can avoid silly mistakes.

[Quoted post removed by Forum Team]

The past 10/15 years have seen an explosion of DIY investing, with many looking at huge paper gains especially with S&P investments. If I was an IFA, on the one hand I would be annoyed that this success means that so many people see paying for advice and having an IFA manage your investments and then to not make the same gains as pointless and a waste of money. On the other hand I would also see a lot of people having a shocker when it all turns again and would want to warn them.

How many people got burnt holding Scottish Mortgage Trust. The S&P 500 wasn't even on small investors radars 10 years ago. Perceptions very easily get skewed. With the benefit of hindsight.