bigfoot12
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Jul 7, 2019 9:15:24 GMT
Post by bigfoot12 on Jul 7, 2019 9:15:24 GMT
...but surely "rule number one" trumps all other perspectives on the matter of investment. You know, the rule that goes "never invest more than you can afford to loose". I don't think I've ever heard of that rule. I don't see how it could be a rule. How could most of us get close to that? My cash percentage is at an all time high, but I must be about 80-85% invested. As I can't afford to lose 80% of my wealth should I switch to 90% cash, and split it across multiple bank account earning 1-2%?
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bigfoot12
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Jul 7, 2019 9:50:07 GMT
Post by bigfoot12 on Jul 7, 2019 9:50:07 GMT
... without any reference to the actual point of investing which surely is to hedge your future liabilities. There is no "right answer" Whilst I'm sure you're right and I know you have plenty more knowledge than I in this arena, isn't that though a rather overcomplicated definition for the humble retail investor? No I don't think so. Assuming that you are making some savings it is important to think about what you are saving for. look at JamesFrance a few posts earlier:- My greatest regret when I moved to France was that I had no knowledge of what type of investment worked well for their tax system A 35 year old worrying about school fees in the near future, but still with a good job and a house, might want a very different strategy from someone who is provided with accommodation with the job, or someone else who plans on retiring to Spain in a few years. I think that also ties samford71 later point about increasing bond holdings towards retirement. Less likely now, but if you have a defined contribution pension, with a compulsory retirement age, and were forced to take either 100% annuity, or 25% cash and 75% annuity on a single fixed - often your 60th birthday then tapering towards bonds or a mix of cash and bonds made good sense - from a risk point of view, not necessarily a maximum expected return point of view. These sort of pensions used to be quite common, but fortunately they are generally more flexible now. And to add to samford71's point about active funds is that in many markets they (the median or mean) do outperform the index, just not after their fees. Edit: Added word "active" in last line (ahead of funds)
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bigfoot12
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Jul 7, 2019 10:23:47 GMT
Post by bigfoot12 on Jul 7, 2019 10:23:47 GMT
Put it this way, if the proverbial bottom fell out of the market tomorrow (or you found yourself in a Woodford-esque situation where you invested in the wrong thing at the wrong time), what would happen ? For you, 80%+ invested I suspect you would be cowering in a corner licking your wounds. I suspect we would see you on this forum trying to finger the blame on someone else other than yourself. For me, or anyone else sensible ? Sure, I'd notice it. But I wouldn't be panicing, I could even ride it out if I decided to. Why ? Because I've got the necessary cash reserves to take care of my liabilties and therefore am unphased by periods of turbulence in the market. Over-investment is a path that leads straight to the cliff edge. Many have tried following it. But it always comes to bite them in the backside in the end. Generally always at the most inconvenient time in your personal life.
My 80% is split across several platforms, countries and investment managers and product - equities in UK, Europe, USA, Japan,..., Gilts and Tips, Gold and other commodities, and a few other strange bets/investments. I don't have any art, classic cars or crypto currencies, but i have much of the rest. (I have had bitcoin in the past.) If the bottom falls out of all of these it probably means something truly terrible has happened and I will have bigger worries than posting on this forum. Assuming that it just a normally recession/financial crisis I will tend back towards 100-120% invested (highly diversified with a bit of gearing is fine for me - no tears if I mess up). On the character point, you clearly haven't read many of my posts. I take credit for my successes (sometimes helped by luck) and the blame for my mistakes (again sometimes with luck). I don't panic; sometimes I make a quick decision to change my mind. I was long Russia and Turkey when Turkey shot down a Russian plane. I was still long Turkey when there was an attempted coup. In the second case, I had little idea who was going to win that coup, what the impact would be on the market, and I could easily exit so I did. I did make a gain on Turkey, but that wasn't important to my decision to exit. I also made a quick decision to exit FC when they withdrew the downloadable loan book; 341 loan parts sold in a few minutes.
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JamesFrance
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Jul 7, 2019 10:31:58 GMT
Post by JamesFrance on Jul 7, 2019 10:31:58 GMT
5. Furthermore, this idea that you should reduce equity exposure and increase bond exposure as you age is not really supported by the evidence. What matters most is sequence of return risk vs. your forward liability curve. If anything, the evidence points that once you are in retirement you should start with a decent chunk of less risky assets (bonds and cash) but then increase equity exposure; this is termed a reverse equity glidepath.
Some interesting food for thought, thanks. Just as your point 5. chimes with something else I read recently (and if we can divert to casinos then we can certainly divert to this ) then there's an excellent blog called Early Retirement Now, which ran a very comprehensive study of safe withdrawal rates for early retirees. I've linked to part 19 below just as it touches on the same, but it really covers every aspect. earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/This made me feel much better about my 50% equity allocation, as I can now pretend all along that I'm following a reverse equity glidepath instead of being hideously underweight in equities for my age! Whenever I have had a bond investment during the 25 years since retiring I have found the average return to be poor and with current continuing low interest rates I believe this will continue or get worse.
Other than P2P where the funds came from unspent income, all my investments are in equities, mainly ETFs and Investment trusts and at 81 years old I am not planning to change this now. This has given a good increase in income over the years and I don't worry about market fluctuations. If we should find ourselves with a Corbyn government I will try to align my final exit with a market crash to save my children from the massive inheritance grab which will probably occur, hopefully this will not be anytime soon.
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macq
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Jul 7, 2019 10:33:34 GMT
Post by macq on Jul 7, 2019 10:33:34 GMT
Put it this way, if the proverbial bottom fell out of the market tomorrow (or you found yourself in a Woodford-esque situation where you invested in the wrong thing at the wrong time), what would happen ? For you, 80%+ invested I suspect you would be cowering in a corner licking your wounds. I suspect we would see you on this forum trying to finger the blame on someone else other than yourself. For me, or anyone else sensible ? Sure, I'd notice it. But I wouldn't be panicing, I could even ride it out if I decided to. Why ? Because I've got the necessary cash reserves to take care of my liabilties and therefore am unphased by periods of turbulence in the market. Over-investment is a path that leads straight to the cliff edge. Many have tried following it. But it always comes to bite them in the backside in the end. Generally always at the most inconvenient time in your personal life.
My 80% is split across several platforms, countries and investment managers and product - equities in UK, Europe, USA, Japan,..., Gilts and Tips, Gold and other commodities, and a few other strange bets/investments. I don't have any art, classic cars or crypto currencies, but i have much of the rest. (I have had bitcoin in the past.) If the bottom falls out of all of these it probably means something truly terrible has happened and I will have bigger worries than posting on this forum. Assuming that it just a normally recession/financial crisis I will tend back towards 100-120% invested (highly diversified with a bit of gearing is fine for me - no tears if I mess up). On the character point, you clearly haven't read many of my posts. I take credit for my successes (sometimes helped by luck) and the blame for my mistakes (again sometimes with luck). I don't panic; sometimes I make a quick decision to change my mind. I was long Russia and Turkey when Turkey shot down a Russian plane. I was still long Turkey when there was an attempted coup. In the second case, I had little idea who was going to win that coup, what the impact would be on the market, and I could easily exit so I did. I did make a gain on Turkey, but that wasn't important to my decision to exit. I also made a quick decision to exit FC when they withdrew the downloadable loan book; 341 loan parts sold in a few minutes. Bit confused but then it is Sunday morning - you are obviously an active investor by whats in this post but the last line of your previous post something along the lines of funds can outperform the index but not after fee's i assume you mean trackers not active funds?
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r00lish67
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Jul 7, 2019 10:47:37 GMT
Post by r00lish67 on Jul 7, 2019 10:47:37 GMT
Some interesting food for thought, thanks. Just as your point 5. chimes with something else I read recently (and if we can divert to casinos then we can certainly divert to this ) then there's an excellent blog called Early Retirement Now, which ran a very comprehensive study of safe withdrawal rates for early retirees. I've linked to part 19 below just as it touches on the same, but it really covers every aspect. earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/This made me feel much better about my 50% equity allocation, as I can now pretend all along that I'm following a reverse equity glidepath instead of being hideously underweight in equities for my age! Whenever I have had a bond investment during the 25 years since retiring I have found the average return to be poor and with current continuing low interest rates I believe this will continue or get worse.
Other than P2P where the funds came from unspent income, all my investments are in equities, mainly ETFs and Investment trusts and at 81 years old I am not planning to change this now. This has given a good increase in income over the years and I don't worry about market fluctuations. If we should find ourselves with a Corbyn government I will try to align my final exit with a market crash to save my children from the massive inheritance grab which will probably occur, hopefully this will not be anytime soon.
I confess in reality, I don't have any other bond investments either. I have 50% equities, 20% BTL, 20% cash, 10% P2P, with a view to expanding equities and decreasing cash if the market ever comes down again. (happy to take a shoeing from @wallstreet (or anyone) if required on this, as I seem to always struggle with whether I really should hold bonds at present or not)
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carolus
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Jul 7, 2019 11:10:26 GMT
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Post by carolus on Jul 7, 2019 11:10:26 GMT
I'm aware this is at risk of diverging from the actual purpose of the thread, but what you've said isn't true. The house edge on standard (European) roulette is 1/37, or roughly 2.7%. The house edge on Blackjack varies a littel depending on the exact rules in use, but is normally about 0.5% (assuming you play with correct strategy). It's certainly believable that counting cards (was) a method of play that would give you positive expected value. The major problem nowadays, I believe, is that most casinos will shuffle a large number of decks together, and will reshuffle very frequently, making it difficult to get enough penetration into the deck to get a big edge.
As it is, there are better ways to beat the house edge at casinos and bookmakers, so I don't think the decline of card counting is really a problem.
Your assumption is an easy get out. If you play using the same strategy as the dealer is forced to the edge will be about 5%, but of course it's not difficult to improve on that a little. If you can ever manage to see a casino's internal accounts of profit per game you will probably see that they make more on BJ than R because players in general cannot beat the edge. Casinos generally have plenty of BJ tables, more than R, and they are not there for any other reason than to make money for the casino. There are plenty of books claiming to know "the correct strategy" which to my cynical mind suggests that there is more money to be made out of writing books for gullible punters than in playing BJ. If there were a sure winning strategy anyone who knew it would make a living out out of it and would be most anxious that knowledge of it did not leak out causing casinos to change the rules back in their favour. The last thing they would do is publish it. On the other hand, suggesting that there is one, known only to a few, is a good way for casinos to encourage play. This isn't correct, and it's not an "easy get out". There is a known, and specific, strategy "basic strategy" or "perfect strategy" tends to be how it's described. This describes exactly what the highest expected value play is in a given situation, and if followed correctly will minimise the house edge, resulting in a house edge of ~0.5%. Of course this is on its own just means you lose money slowly, you still need a further edge to make it profitable. You can read more about it on Wikipedia here. At a guess, casinos will have more BJ tables because a) fewer people can play blackjack at once and b) they typically play for longer (a blackjack hand takes much longer than a roulette spin). As mentioned, there are practical reasons why card counting is no longer particularly easy or profitable at most places, but that doesn't mean it isn't a real method. As for why you'd right a book about it - I assume once casinos have clamped down and the opportunity largely lost, you might wish to make more by selling the story.
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Post by Deleted on Jul 7, 2019 12:05:43 GMT
Some interesting food for thought, thanks. Just as your point 5. chimes with something else I read recently (and if we can divert to casinos then we can certainly divert to this ) then there's an excellent blog called Early Retirement Now, which ran a very comprehensive study of safe withdrawal rates for early retirees. I've linked to part 19 below just as it touches on the same, but it really covers every aspect. earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/This made me feel much better about my 50% equity allocation, as I can now pretend all along that I'm following a reverse equity glidepath instead of being hideously underweight in equities for my age! Whenever I have had a bond investment during the 25 years since retiring I have found the average return to be poor and with current continuing low interest rates I believe this will continue or get worse.
Other than P2P where the funds came from unspent income, all my investments are in equities, mainly ETFs and Investment trusts and at 81 years old I am not planning to change this now. This has given a good increase in income over the years and I don't worry about market fluctuations. If we should find ourselves with a Corbyn government I will try to align my final exit with a market crash to save my children from the massive inheritance grab which will probably occur, hopefully this will not be anytime soon.
I'm like James, only younger. Most of my Funds outperform their natural index after fees. I have a lot of money in Trusts which do very well and some shares. I struggle with Bonds and only buy during a financial crisis when they become under valued. Certainly 90% invested. The Corbyn crash and his avowed aim to tax capital and/or capital gains is certainly a concern. I dislike CG at 28% and up. I would hate CP at 50%!
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macq
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Jul 7, 2019 13:15:03 GMT
Post by macq on Jul 7, 2019 13:15:03 GMT
It seems like the returns on bonds are One of the problems for some and while equity/cash is fine there is also the point that bonds are used for diversification and in theory(theirs not mine) a down turn which is why multi asset funds like Vanguards VLS or L&G multi index etc use them.It could even be worth looking at strategic bond funds or bond ETF's but at the end of the day bonds are not expected to have equity type returns but over the last few decades there have been times where they have done that and that seems to lead to high expectations at present times For myself using the company pension and the choices offered i have used Royal London & Baillie Gifford bond funds for about a 70/30 split with equity,but think that is sufficient so using a ISA i have debt,infrastructure and renewables for income (and hopefully growth) and to spread the risk
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bg
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Post by bg on Jul 7, 2019 13:41:15 GMT
An interesting debate this. I have the majority of my investible assets in equities (as opposed to property and P2P). I believe we are in a secular bull market which is being driven by automation and the switch by companies to using debt as capital. I know lots of people who won't touch equities as they say they are well overpriced...the same people have sat out the huge market rally over the past few years and were quick to say "Told you this was coming" when we had the 15% correction last year (which has now more than reversed). When these people start buying in, maybe that's when I lighten up my positions a little. I can see the merits of passive investing and agree its probably suitable for most people. I however have an entirely active portfolio which allows me to invest in the themes I feel are changing the world and driving growth/profit. These are technology, an ageing population, automation and rise of the east/emerging markets. I also favour smaller companies which I don't think can be hit effectively using a global tracker. I refuse to invest in bonds. I don't day trade, i'm long term buy and hold. My portfolio is made up of 85% investment trusts with the rest in a few self select stocks and a couple of specialist ETF's. The attached screenshot shows my return relative to global large caps. I'm happy with my approach, the results and have no plans to switch to passive.
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macq
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Post by macq on Jul 7, 2019 14:16:31 GMT
what might appeal(but not advice ) to people who invest in p2p and lending on loans but don't like bonds could be something like Sequoia infrastructure (SEQI) which lends money to finance projects over a term but could be considered bond like yielding 5% - 6%.But unlike a P2P platform the lending is via a FTSE 250 company but still obviously with risks p.s just an example there are others to look at as well
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hazellend
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Jul 7, 2019 16:25:23 GMT
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Post by hazellend on Jul 7, 2019 16:25:23 GMT
When talking about bonds I am referring to government bonds. Corporate bonds don’t interest me because they tend to be closely correlated with equities.
As I see it gov bonds should be used if one wants to reduce the volatility of their equity portfolio by sacrificing some gains. Government bonds tend to be inversely correlated to equities so are generally expected to rise when equities fall.
I have a very high risk tolerance and see dips as opportunities to invest new cash at lower prices. I am a member of a DB pension scheme so don’t see any need for low risk assets. I also have a depression proof job unaffected by the economy, as long as I do t get a sacked for incompetence/negligence.
My portfolio is 100% invested. I usually have 1 - 4 % in cash as I prefer to let cash accumulate to a certain amount before I add to my favoured global ETF outside of tax sheltered accounts.
Finally, I invest on a total return basis. A dividend is just a forced capital sale. There is no difference between selling equities vs not re-investing if you need money .
Always thinking about tax efficiency is also very important
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macq
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Post by macq on Jul 7, 2019 16:52:54 GMT
the thing with dividends is they can be seen as good to some i.e retired people,with hopefully smooth payments with no need to sell funds if the market drops for a few years
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hazellend
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Post by hazellend on Jul 7, 2019 17:57:33 GMT
Finally, I invest on a total return basis. A dividend is just a forced capital sale. There is no difference between selling equities vs not re-investing if you need money . Always thinking about tax efficiency is also very important
I'm not sure you get it.
First you mention total returns, then you do a 180 and start bashing dividends.
Then you say there's no problem selling equities to raise cash, whilst the point is that you should not find yourself in a position where you sell to raise money.
Finally you harp on about tax efficiency. Whiilst in the line above you tell people just to sell up whenever they want to raise cash. So what happened to CGT considerations then ? All out the window in your weird view of the world ? Or are you telling people they should sell up in their ISA and take cash out from their ISA ? Something which, quite frankly, would be the dumbest thing the world to do ! Does your aggressive style actually ever help you persuade people? I don’t currently take any money out of my portfolio as I’m in the accumulation stage. When we start to withdraw I will first of all deplete taxable accounts using a combination of not reinvesting dividends and selling capital. There’s (off the top of my head) about 25k per couple per year of capital gains allowance. I do a bit of tax gain harvesting so hopefully will have limited capital gains by that time anyway. Im not bashing dividends. My opinion is that one should not focus on dividends in an equity portfolio and total return is more important, leads to a better diversified portfolio, and has more opportunity for tax efficiency . It is you that clearly doesn’t get it. You come across as very arrogant and immature in your opinions. Don’t forget that everybody’s investment policy will be different due to the fact that we all have unique circumstances. I am managing a largish portfolio for two people spread across 2 ISAs, 2 LISAS, 2 SIPPS, 2 general investment accounts, a DB pension, and one of us is a non earner so am utilising the 18.5k savings income tax free which is available to us with P2P outside of ISAs. Long term I see us getting out of P2P as I don’t want to be actively managing the P2P side of things in retirement.
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michaelc
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Jul 11, 2019 23:19:33 GMT
Post by michaelc on Jul 11, 2019 23:19:33 GMT
Could someone please kindly point me in the direction of a free site that would allow me to list and order stocks on the main markets by their headline statistics? I thought the likes of google finance might do that but I can't see how. e.g. view the stocks by sector, order by market cap, by yield etc. I've just done some searches to find such a site but haven't got very far.
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