40k to invest today over long term, your thoughts

Lee_F

dunstonh wrote: »

It appears to be using sector allocation which is good. The sectors suggest a medium/high risk spread although the investments within each sector can obviously be tweaked to use higher or lower risk investments than the sector average.

thanks dunstonh,

You are right, it is supposed to be medium/high risk allocation. Unless I am mistaken, reading the news I am under the impression that predicted world economy growth over next 2 years isn't good. And that kind of ties in with that Boom/Bust 2010 book I have been reading extracts from. I am wondering whether it may be best to keep the money in high interest saving account and then invest me £40k when things start picking up. Or given that I have no need to touch the money for at least 15-20 years then maybe I should just get on with my multifund even if it does go south to start with. Any views?

cooper2110

"It's time in the market, not timing the market". Nobody has a crystal ball to time when the best time to enter the market is, but stats prove that over that length of time, then investing in this way is more profitable. I would do it now.

Lee_F

ok, thanks cooper2110, I have been doing a bit more research this afternoon and i am thinking along those lines. I think I will go ahead!

nicko33

Lee_F wrote: »

any views? thanks

is it a bit overweight in Japan?

I know nothing myself, but,
Mick Gilligan, director of fund research at Killik & Co is reported as saying
"In a typical growth account we would allocate 2% to Japan"

Aegis

dunstonh wrote: »

I think there is some terminology confusion here. Skandia Multifunds is a fund supermarket. Indeed, IIRC it was the first fund supermarket in the UK. The "multifunds" doesnt mean multi-manager in the sense Aegis is mentioning.



So what if most IFAs make a good living. Would you really want to invest with someone that hasnt made money? Skandia Multi-funds is no different to cofunds, fidelity and other fund supermarkets and use of a fund supermarket is what you would expect.

I think I was confused by the comment "My financial adviser has advised a Skandia MultiManager." Sounded to me like it was a recommendation for a fund of funds rather than a platform.

My bad!

dunstonh

I know nothing myself, but,
Mick Gilligan, director of fund research at Killik & Co is reported as saying
"In a typical growth account we would allocate 2% to Japan"

And what risk profile was that relating to?

nicko33

If I knew, I would have said.
Would it be reasonable to assume "typical" means neither cautious nor adventurous? (If it is reasonable to assume anything at all)

"The fund range is MultiFund and the risk level is 4 out of 10."
Where would your med/high rating come on an x/10 scale?

dunstonh

Would it be reasonable to assume "typical" means neither cautious nor adventurous? (If it is reasonable to assume anything at all)

I dont think you can make any assumption really. If you were to define the typical UK consumer then you would class them as cautious. Yet far too many exceed their risk profile by getting carried away at the wrong time.

Where would your med/high rating come on an x/10 scale?

7-8 on a 1-10 scale (1 = cash)

Lee_F

dunstonh wrote: »

I dont think you can make any assumption really. If you were to define the typical UK consumer then you would class them as cautious. Yet far too many exceed their risk profile by getting carried away at the wrong time.



7-8 on a 1-10 scale (1 = cash)

do u mean by this that people are too keen to try and get big returns and therefore take on too much of a risky portfolio? And then are in a pickle when their gamble backfires (get carried away at the wrong time) and their original capital value is slashed? ie.they never really factored in that their investment could end up being worth less? Seeing as I am investing for long term then I don't mind if it goes down for a bit, say to £25k from £40k. But then if it was only worth £25k in 15 years time, yeah that would hack me off.

Given this, do u think i should take a more cautious portfolio?

dunstonh

do u mean by this that people are too keen to try and get big returns and therefore take on too much of a risky portfolio? And then are in a pickle when their gamble backfires (get carried away at the wrong time) and their original capital value is slashed? ie.they never really factored in that their investment could end up being worth less?

Exactly that.

Have you come across anyone who says "I wont invest in the stockmarket because i lost a lot of money in the past"? Well that is the typical person that invested above their risk profile. They now rule out any stockmarket content when chances are they went high risk in the past or went 100% into medium/high and lost 30-50% in the last crash and pulled out before it recovered. I have known some that went along with fashion investing and lost 90% of their money.

These people cannot see and did not know the levels of risk they were taking and treat stockmarket as all one level of risk. The best way to avoid that position is to invest within your risk profile. Even if it means you wont have a portfolio capable of 70% a year returns in the short term. Because you wont have a portfolio capable of 70% losses in the short term either.

Seeing as I am investing for long term then I don't mind if it goes down for a bit, say to £25k from £40k. But then if it was only worth £25k in 15 years time, yeah that would hack me off.

Given this, do u think i should take a more cautious portfolio?

In the last major decline, medium/high dropped 45% which is about what you would expect in a typical major drop. In a 15 year period you would expect 2-3 major prolonged drops so as long as you know they are possible and very likely to happen on multiple occassions then you should be ok with medium/high. As you get closer to the end date you can always reduce your risk profile and protect profits. Remember that investments should be treated as a living thing that needs to be natured altered to adapt. Invest and forget usually results in lower returns over the long run. However, fiddle around too much with it and you run the risk of reducing returns as well as you can micro manage them too much.