Newbie to Index Tracker Investing

2

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  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    samuelodog wrote: »
    whats the difference between the 40% and 60%?

    If I fire £30 a month into this - what will it mean say... 5 yrs down the line?

    thanks again


    Nobody can tell you with any certainty I`m afraid. If you are only investing £30 a month you would be just as well buying premium bonds or lottery tickets IMO.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
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    Have a read at this, relatively simple concepts, but the guy is an ex hedge fund manager and knows what he is talking about IMO. It advises a cautious widely diversified approach, but there is a lot of food for thought about how you may want to develop your own approach as you gain knowledge. The bits about how having all or most of your "savings" in London property could lead to disaster and how volatility can affect returns are just two interesting observations among many.


    https://www.amazon.co.uk/Investing-Demystified-Speculation-Sleepless-Financial/dp/0273781340
  • Lungboy
    Lungboy Posts: 1,953 Forumite
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    Crashy_Time wrote: »
    Have a read at this, relatively simple concepts, but the guy is an ex hedge fund manager and knows what he is talking about IMO. It advises a cautious widely diversified approach, but there is a lot of food for thought about how you may want to develop your own approach as you gain knowledge. The bits about how having all or most of your "savings" in London property could lead to disaster and how volatility can affect returns are just two interesting observations among many.


    https://www.amazon.co.uk/Investing-Demystified-Speculation-Sleepless-Financial/dp/0273781340

    Or watch the distilled version on youtube.
  • samuelodog
    samuelodog Posts: 7 Forumite
    many thanks all.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    You've received some good advice ie invest in a multi-asset fund inside an ISA. But if you have a pension you should also be contributing as much as you can to that.....and probably using a similar multi-asset approach with an equity bias if you are thinking long term. The advantages of a pension over an ISA are the employer contribution and that it reduces your current taxable income....but the ISA is far more flexible and there's no tax on withdrawals. So they are sort of complimentary.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Tom99
    Tom99 Posts: 5,371 Forumite
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    [FONT=Verdana, sans-serif]If you invest in Vanguard Lifestrategy 60% or 80% then 40%/20% of your investment is going to be in bonds rather than equities.[/FONT]
    [FONT=Verdana, sans-serif]What is likely to happen to bond values if interest rates rise as they are expected to do? Many think bond values will fall.[/FONT]
    [FONT=Verdana, sans-serif]If you are also of that view you may want to decide on a equity/cash split rather than equity/bond/cash split.[/FONT]
  • jimjames
    jimjames Posts: 17,596 Forumite
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    Crashy_Time wrote: »
    Nobody can tell you with any certainty I`m afraid. If you are only investing £30 a month you would be just as well buying premium bonds or lottery tickets IMO.

    I disagree. It's good to get started even with small amounts which you can then increase later on
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Zola.
    Zola. Posts: 2,204 Forumite
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    edited 18 April 2018 at 2:33PM
    Getting started is the most important thing!

    However, I agree that you should really try to put in more each month if possible, to make any sort of difference. But you can build up to that.

    Agree with Dunstonh in that it takes a long time to show the worth. E.g I have been investing for around 3 years now, and the last time I checked my fund value, it was only up £100 compared to what I have been putting in (almost 10,000).

    Its all about the compound interest, and time. The value of my fund doesn't really matter now, as I don't want to touch it for a very long time.

    Albert Einstein famously said:

    "Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it. Compound interest is the most powerful force in the universe."

    Would recommend this website, to see what you could expect / play around with some numbers.

    https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

    Do you have a number for a goal? This will help you determine what you need to be putting in to have a chance of achieving it.
  • A_T
    A_T Posts: 959 Forumite
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    Zola. wrote: »
    I have been investing for around 3 years now, and the last time I checked my fund value, it was only up £100 compared to what I have been putting in (almost 10,000).

    What are you invested in almost everything has grown at least 10% in the last 3 years?
  • Bravepants
    Bravepants Posts: 1,502 Forumite
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    Tom99 wrote: »
    [FONT=Verdana, sans-serif]If you invest in Vanguard Lifestrategy 60% or 80% then 40%/20% of your investment is going to be in bonds rather than equities.[/FONT]
    [FONT=Verdana, sans-serif]What is likely to happen to bond values if interest rates rise as they are expected to do? Many think bond values will fall.[/FONT]
    [FONT=Verdana, sans-serif]If you are also of that view you may want to decide on a equity/cash split rather than equity/bond/cash split.[/FONT]


    They WILL fall. As far as I understand it...if the BOE interest rate increases, bonds in issue seem less attractive to potential purchasers. To compensate for this the price of the bond will fall (thus maintaining yield, which is return divided by capital cost) to a value that matches newly created bonds with the new higher interest rate. The effect of any fall in value is also proportional to the duration of the bonds - so the longer the duration for any given increase in interest rate, the greater the fall in price. So in these days of increasing interest rates it is advised to hold short term bonds (5 years' duration), rather than longer term ones.
    If you want to be rich, live like you're poor; if you want to be poor, live like you're rich.
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