Investing - Where's the pot of gold?

kempiejon

Martin  Lewis is starting a series on his TV programme about investment soon.

I am occasionally reminded of the tale of the shoe shine boy and 1929 crash.

Albermarle

Heedtheadvice said:

Martin  Lewis is starting a series on his TV programme about investment soon.

Previously he has  concentrated on cash ( managing ones finances, savings and current accounts), taxation, benefits, pensions etc. but steered clear of investment as it is seen as more specialist and risky alongside probably much higher reward than savings.

I think that is a welcome addition.

You can bet it is well worth watching especially for  an introduction and how many of us could do better over the longer term by investing....as well as saving.

I have watched one of these already, so must have already started?

Alexland

Heedtheadvice said:

Martin  Lewis is starting a series on his TV programme about investment soon.

Previously he has  concentrated on cash ( managing ones finances, savings and current accounts), taxation, benefits, pensions etc. but steered clear of investment as it is seen as more specialist and risky alongside probably much higher reward than savings.

I think that is a welcome addition.

You can bet it is well worth watching especially for  an introduction and how many of us could do better over the longer term by investing....as well as saving.

I don't know if he's doing a whole series on it but he's done an investing episode on ITVX broadcast Tue 9th Dec and although I wouldn't normally watch his show I tuned in. It was ok I guess and although he was trying to simplify it there were moments when you could tell he understood less on core areas of the topic than the forum regulars here who kinda specialise on it.

Eyeful

RootOfAll said:

I can get a cash ISA for 4 and a bit percent with no management fees and no risk.  What's so special about investments?  I get the impression I'm missing some vital piece of information or arithmetic.  Without going into madly volatile waters, how do investments get to be our darling?

What your missing:

Anything to do with money will have risk attached. All that changes is the type & size of the risk,

Example: A Low Risk Savings Account protected by the FSCS up to £120,000.

Is at risk of inflation, this is where the same amount of money will buy you less, as time passes.

(a) RPI% graph 1948-2025 -- gov.uk

https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/czbh/mm23

(b) Skilled working mans pay in 1960 was about £1000 per year.

Skilled working mans pay in 2020 was about £25,000 per year. 

(c) If in 1975 you had put £1000 in to a Low Risk Savings Account, then by the end of that year you would have permanently lost over £250 of purchasing power, because in 1975  the RPI% was about 26%.
So the savings account that year was anything but the low risk you thought it was.

(d) When you put money into an investment & it crashes, you still own the assets. 
What goes down quickly in the stock markets can also bounce back, so it is only a paper lose.
 It only becomes a "real lose" when you sell the asset while its underwater.
                                     
Example: 
In 1972 You buy shares in F&C Investment Trust (this invests world wide and has a good reputation). 
By the end of 1974 your investment loses over 70%, but you do not sell F&C
You wait 10 years, share price has fully recovered. During that time you are collecting rising dividend payments. 

Rising dividend payment.is the cherry on top of the cake. 

Hope you have a happy 2026.

LHW99

And savings accounts do have "management fees" it's just that those are not shown explicitly, whereas management fees for funds (and for the platform you choose to use) do now have to be shown in an accessible form.

Eyeful

RootOfAll: 
 If you do consider investing, there is some basic information you  need to understand. 
I suggest you read the following and stick to "Simple Investing".

The Basics for Newbies

1. (a) SAVINGS: means cash in the bank/building society (Low risk)

 Best savings Rates: https://moneyfactscompare.co.uk/savings-accounts/

(b) INVESTING: means you are putting your money at risk; Think shares, bonds, gold etc. (various risk levels)

2, FSCS Protections                            

(a) Savings:

Only Banks, Building Socities & Credit Unions on the FSCS list are covered by the FSCS Savings Protection up to £120,000

(b) Investments: 

You may see something like "Your investments are protected by the FSCS"
 They mean the "FSCS INVESTMENT PROTECTION", where it may or may not be protected.

This basically says if a UK‑authorised platform

(i) Commits fraud or Fails (and you suffer a financial loss as a result) --- you should be protected up to £85000

(ii) Normal investment risk or poor performance --- has no FSCS protection

(c) FSCS Protection Checkers: https://www.fscs.org.uk/check/

3. Use tax shelters wherever possible.

Pension: for the tax rebate, (you do not pay tax on the way in but on the way out)

Cash ISA,s: (Savings account you where you pay no tax)

Stocks & Shares ISA's: (Investment account where you pay no tax, at least for now)

4. Have an emergency savings account to cover at least 6 to 12 months of household bills and car/boiler break downs. You don't want to sell investments when their price may be low.

5. Any money you know you will need within 5 year should be held in either

(a) NS&I, where it is protected 100% as you are loaning  money to the UK Government. 

(b) Bank or building Society Account on the FSCS list where it will be protected up to £120,000.

6. Before investing make sure you have cleared any high interest debt such as credit cards etc.

7. Investing is for money you know you will not touch for at least 10 years.

This is because your odds of winning the game will be high.  The longer the better. 

8. You can make investing as simple or as complex as you like.

Simple can do just as well as complex.

9. Academic research repeatedly shows that most "active fund managers" after charges are applied,

    do not beat a MAJOR  GLOBAL WORLD INDEX like the FTSE All World or ACWI.

10. SIMPLE INVESTING in DETAIL (advantages, easy to understand  & implement)

 a) First watch this: https://www.kroijer.com/

(b) Then read these:

 https://monevator.com/passive-fund-of-funds-the-rivals/

https://monevator.com/best-global-tracker-funds/

             

   

Bostonerimus1

The "pot of gold" comes from exponential growth over decades. If your money grows by 7% every year then after 10 years it will have almost doubled because (1+0.07)^10 =1.97. There's also tax advantages if you use a DC pension or and ISA.

How you get that growth is the issue and IMO the simplest way for most people is to invest in a global equity index fund or a multi-asset fund with a high percentage of global equites. Look for inexpensive funds from respected companies like Vanguard, Fidelity, HSBC etc.

HedgehogRulez

I’m not sure we’re anywhere near exponential growth….

Particularly when there’s the Great Market Crash of our time just around the corner 😗

Linton

HedgehogRulez said:

I’m not sure we’re anywhere near exponential growth….

Particularly when there’s the Great Market Crash of our time just around the corner 😗

If one is globally diversified over the long term equity growth can be assumed to be positively exponential**.  Over the short term the exponent can be negative.  That is why it makes sense to ignore the short term.  Better to do nothing than something that crystalises a loss.

** on the grounds that for this not to be the case the world economy would have collapsed and your investments would not be high on your list of problems.

Rollinghome

LHW99 said:

And savings accounts do have "management fees" it's just that those are not shown explicitly, whereas management fees for funds (and for the platform you choose to use) do now have to be shown in an accessible form.

That was one of the old stock lines used by unit trust salesmen. The reason why the costs, not fees, are not required to be given for saving accounts is because they are irrelevant.  The provider must state the rate of interest they will pay and if that changes they must inform the saver in advance. A bank-rate tracking account must state the methodology. They must also state any fees that might be incurred. A sharia account is arguably a grey area.

Conversely, the rate of return from an investment is normally unknown in advance. That will be determined by the markets, but fees and costs are very relevant because that will directly affect the return, whatever it turns out to be.  Keeping fees and costs from intermediaries and managers and other costs to invest to a minimum is important in maximising investment returns.  Hence, the popularity of low-cost etfs.