Stakeholder Pensions and the Stock Market

Retired_I.F.A.

I'm just not keen on stocks and shares. If I made money I'd be happy about it for a day then I'd forget about it. If I lost I'd be miserable about it for years. It's just not worth it!

So tell us this buisness of yours, how much is it worth if you sold it now? 50k 100k 200k 1/2 a million a million? Whatever it is lets call it X

Now tell us again you dont like stocks and shares where you spread your investment around say 10 funds each comprising of a a hundred or a thousand companies that have all been and continue to be scutinised by the fund managers and you think investing X in one company is being cautious.

Your problem is a simple one solved by education, as right now any investment you dont understand is a risk.

[Deleted User]

So tell us this buisness of yours, how much is it worth if you sold it now? 50k 100k 200k 1/2 a million a million? Whatever it is lets call it X

I don't think of our business as being worth anything. If we could sell it at some point in the future then it'd be a bonus (and I guess if things go really well then it will be worth a bit and selling it could be a better option than holding on to it and getting a steady income). But right now it's highly dependent upon our knowledge, and probably not worth anyone elses while paying large sums for it and trying to get up to speed with what we do. We are just a partnership - the business is us! It's not something that I count on or factor into our financial planning because it's too much like pie in the sky. So in my mind it's a nice bonus that might crop up in the future but I don't plan on putting effort into making it happen. We didn't risk any capital in the business - I could never bring myself to do that because of my attitude to risk. If it all goes down the pan tomorrow we've lost nothing and gained a lot. But we do earn a good, steady income with a distinct possibility of really good money without having to put in a great deal of time or effort. So you see, it isn't necessary to take risks in order to achieve the life you want. And even complete non-risk takers like me can make good money - it's just a question of hanging in there and sticking to your principles - and knowing when to be content with what you've got

But I'd absolutely agree that any investment I didn't 100% understand is risk. Which is why I wouldn't touch any investment I didn't 100% understand. My time is *probably* better spent working on my business than trying to get a good grasp of investments. And I'm not prepared to put blind faith in anyone else.

If this is all too much, I recommend NS&I index linked certificates, which will at least protect you against inflation, unlike most other cash investments.

I'm interested in exploring this more. My plan (which I got from reading this site) was to stick with cash ISA's, Regular Savers and high earning interest accounts. I could get a high interest savings account at 6.5% gross and a long term guarantee to stay above the Bank of England base rate. As a standard rate tax payer would I be better off with index linked certificates ?

jem16

Deleted_User wrote: »

I'm interested in exploring this more. My plan (which I got from reading this site) was to stick with cash ISA's, Regular Savers and high earning interest accounts. I could get a high interest savings account at 6.5% gross and a long term guarantee to stay above the Bank of England base rate. As a standard rate tax payer would I be better off with index linked certificates ?

Just and no more.

Current RPI is 4.3%. Current issue of NS&I certificates is RPI plus 1% so 5.3%. That is equivalent to 6.625% for a basic rate taxpayer. To get this rate you have to tie your money up for at least a year and probably 3 years to get the full value.

dunstonh

I mentioned NS&I certs on the Abbey GEB thread as one of the things would have been a good option as an alternative to the GEBs given the risk profile. However, as they are sold by IFAs or bought direct you appeared to dismiss them out of hand because you couldnt buy them from Abbey.

[Deleted User]

EdInvestor and jem16 - I'm interested in exploring the possibility that index linked certificates might be a better option than the ISA's then Regular Investors then high interest instant access account option that many people are following (Based upon advice on the main site).

I'll start up another thread as no-one interested in the topic is likely to find it in a pension thread!

Does anyone else have any thoughts on my question in this thread? If you have a lump sum to invest in an existing stakeholder pension fund does it matter when in that financial year you pay it in? Does it make any difference whether you pay it in when the fund is doing well or when it's at a low?

jem16

Deleted_User wrote: »

EdInvestor and jem16 - I'm interested in exploring the possibility that index linked certificates might be a better option than the ISA's then Regular Investors then high interest instant access account option that many people are following (Based upon advice on the main site).

They won't beat ISAs unless they are S&S ISAs or unless the cash ISA is a very poor rate. Index-linked certificates are good for higher rate taxpayers who have used up all other tax-free avenues.

Does anyone else have any thoughts on my question in this thread? If you have a lump sum to invest in an existing stakeholder pension fund does it matter when in that financial year you pay it in? Does it make any difference whether you pay it in when the fund is doing well or when it's at a low?

Paying it in low is obviously the best time but do you have a crystal ball to tell when that will be? However as has been suggested there are other options which don't have anything to do with the stockmarket.

averageguy11

Lol if u know the 'bottom' let me know...not all yur eggs in one basket...drip feeding yur equity investments r always useful

[Deleted User]

averageguy11, to clarify, my apprehension is due to all the dire predictions of a stock market crash later this year. My fear is that when something is talked about so much it's likely to become a self-fullfilling prophecy.

That aside, are you saying that it's not a good idea to pay in a lump sum? (I'm specifically talking about an existing stakeholder pension). Is it better to pay a small amount in each month? I've no idea whether that would incurr greater administrative charges .... I'd need to check.

Retired_I.F.A.

Scarter, re your own buisness: Fair enough mate, what i asked is a typical IFA's question that usually has a different answer and makes people see that when the majority say they dont like risk in investments they take them anyways, most have to.

There was a sales aid produced by Standard life entitled "Why Invest in Equities" basically it was a graph since records began of the footsie which showed out of hundreds of 10 year periods not once had deposits outperformed and of the even more 5 year periods only on 3 or 4 occasions had deposits outperformed. Updated today I expect it would show more than 3 or 4 times I really cant say but reckon the message would be the same in that it's an odds on bet equities will outperform.

EdInvestor

Deleted_User wrote: »

averageguy11, to clarify, my apprehension is due to all the dire predictions of a stock market crash later this year. My fear is that when something is talked about so much it's likely to become a self-fullfilling prophecy.

That aside, are you saying that it's not a good idea to pay in a lump sum? (I'm specifically talking about an existing stakeholder pension). Is it better to pay a small amount in each month? I've no idea whether that would incurr greater administrative charges .... I'd need to check.

Scarter, you are clearly intrigued by investing but have no real knowledge or understanding of how to do it while reducing risks.Why don't you devote some time to learning about this?It's not that difficult and you will save an enormous amount by avoiding unnecessary charges.