yangmills
Member of DD Central
Posts: 83
Likes: 494
|
Post by yangmills on Sept 7, 2017 7:27:28 GMT
martin44. Yes that may be the price return but it's not the total return. The FTSE 100 total return index (inc reinvested dividends) went from 2997 to 6200 (TUKG Index on any Bloomberg terminal). That is a compounded return 3.77%/annum. Hardly good I would agree. But the point remains: you simply can't look at the change in the price index level. You need to look at the change in the total return index level. You can't compare P2P returns generated with coupons with stock market index returns ignoring dividends. This is about as basic as it gets in return attribution analysis.
|
|
jonah
Member of DD Central
Posts: 2,031
Likes: 1,113
|
Post by jonah on Sept 7, 2017 7:28:09 GMT
martin44 I think you are quoting index levels, not total return levels. The latter includes the income from dividends and so more accurately reflects the value gained (or lost) over time. Basically you are making yangmills point for him. Finding figures online is harder than simple indexes (my Google fu is weak today for various RL reasons) but I suspect someone will oblige. My guess over that 17 year period... at least 80% return. Back to the original question, I think that part of this is time. Retired people, not having to work, could* have more time and therefore do DD on loans etc and so the 'fun' part of p2p could appeal to them. *or they could be busy doing other things of course. edit: crossed with yangmills but happy my guess on return levels wasn't a million miles off!
|
|
macq
Member of DD Central
Posts: 1,934 
Likes: 1,199
|
Post by macq on Sept 7, 2017 7:53:26 GMT
while the question is what is most dangerous coming up to retirement there is another way of looking at it.
It is a favorite feature of money sites & magazines of how to get an income in retirement.While it assumes you have a good size pot of money and can tie up a large sum of it and only touch in an emergency & are not worried how much you leave in a will.
The figures they use are £250,000 - 300,000 invested in funds/IT (or shares but more individual risk) paying dividends or income which you use for an annual income.You do not then concern yourself so much with the ups & downs of the market as your looking at income.The market may even crash the next day but historically the funds should still pay out.
With a p2p lump sum invested the same way i.e not to be drawn down but taking the income there would be the risk of loans defaulting and if not paid back you would need to top up the pot to get back to the same income payment.
|
|
macq
Member of DD Central
Posts: 1,934
Likes: 1,199
|
Post by macq on Sept 7, 2017 8:05:52 GMT
would still say the returns given on sites for funds can change from day to day due to what stock market event is included in the time frame.You could have a chart with a black Monday type event not looking great but if you bought the day after you would probably be doing well which is why experts say drip feed in
Also while trackers are cheap they can not beat the market only get just below due to the cost of the fund so at times their figures don't look great
|
|
pikestaff
Member of DD Central
Posts: 2,187
Likes: 1,546
|
Post by pikestaff on Sept 7, 2017 8:27:09 GMT
I would agree that the hypothesis in the OP is questionable, also that when investing in shares it's important to look at the total return and not just index levels. In the UK at least, most of the total return is dividends. The risks of investing in the stock market and p2p are are different and both have their place. I'm recently retired (a little over 60) and have both. The main issue with stock market investment is volatility, which is not just a short-term issue. See for example this historical return calculator for the S&P 500 dqydj.com/sp-500-historical-return-calculator/ which covers all time periods back to 1871. (Periods before 1926 use a different index which is explained in one of the references cited.) The inflation-adjusted total return graph with dividends reinvested, but no provision for tax, shows (among other things) that: 12% of 10 year periods had nil or negative real returns 25% of 10 year periods had real returns of 3.5% pa or less 35% of 10 year periods had real returns of 5% pa or less, which I’m expecting my p2p portfolio (excluding PF backed accounts) to match or exceed 19% of 20 year periods had real returns of 3.5% pa or less 27% of 20 year periods had real returns of 5% pa or less. The graph also shows that, over all time periods from 10 years up, more than 50% of periods had real returns of more than 6% pa, which is the upper limit of my expectations for p2p. However, the risk of underperformance over 10 or 20 year periods is significant, and remember these figures are for the USA which has substantially outperformed the UK. The conclusion I'd draw from this (heavily caveated because the data is from the US) is that if you are happy with the risk it may be rational to prefer shares but if you are risk averse, and particularly if your time horizon is 20 years or less, there is a strong case to be made for a diversified investment in p2p. All that said, my p2p portfolio (TC and AC) is much less liquid than I expected it to be. I have a lot of loans that are not tradeable for one reason or another. For some people this would matter a lot, but it doesn’t really bother me. I’m in it for the long term and happy to remain, for the moment, overweight in p2p. Three main reasons: I enjoy it, I find it easier to understand than equities, and I think equity markets are riding for a fall. But then I’ve thought that for a long time! I will be right one day… [Disclosure: This is a slightly modified version of a post previously made elsewhere.] |
|
|
|
Post by peerlessperil on Sept 7, 2017 21:15:20 GMT
martin44 . Yes that may be the price return but it's not the total return. The FTSE 100 total return index (inc reinvested dividends) went from 2997 to 6200 (TUKG Index on any Bloomberg terminal). That is a compounded return 3.77%/annum. Hardly good I would agree. But the point remains: you simply can't look at the change in the price index level. You need to look at the change in the total return index level. You can't compare P2P returns generated with coupons with stock market index returns ignoring dividends. This is about as basic as it gets in return attribution analysis.
A little harsh me thinks.... Those without a Bloomberg terminal (99% of this forum) will find total return data for the FTSE remarkably hard to come by unless they pay for it - FTSE Russell will provide back to 2015 on their public website, and Investing.com will do 5yrs worth of daily. For this reason you won't find total return index data discussed much outside professional circles. I had a Bloomberg terminal for 20 years before staying home to raise the kids. The TRA functionality for equities is one of the things I miss the most, and it is very difficult to replicate because the data is very messy - firms like HSBC declaring their divis in US$ etc.
|
|
|
|
Post by dan1 on Sept 7, 2017 22:19:29 GMT
martin44 . Yes that may be the price return but it's not the total return. The FTSE 100 total return index (inc reinvested dividends) went from 2997 to 6200 (TUKG Index on any Bloomberg terminal). That is a compounded return 3.77%/annum. Hardly good I would agree. But the point remains: you simply can't look at the change in the price index level. You need to look at the change in the total return index level. You can't compare P2P returns generated with coupons with stock market index returns ignoring dividends. This is about as basic as it gets in return attribution analysis.
A little harsh me thinks.... Those without a Bloomberg terminal (99% of this forum) will find total return data for the FTSE remarkably hard to come by unless they pay for it - FTSE Russell will provide back to 2015 on their public website, and Investing.com will do 5yrs worth of daily. For this reason you won't find total return index data discussed much outside professional circles. I had a Bloomberg terminal for 20 years before staying home to raise the kids. The TRA functionality for equities is one of the things I miss the most, and it is very difficult to replicate because the data is very messy - firms like HSBC declaring their divis in US$ etc. I expect to get cut down for this but you could use a index tracker acc fund as a weak proxy excepting the tracking error and drag of the OCF. Edit: I see paul123 got there before me!
|
|
|
|
Post by martin44 on Sept 7, 2017 22:24:04 GMT
yangmills jonah Both agreeable, i'm not a big share investor having got it wrong on too many occasions, however i have respect for you guys who know the share market, it really seems much more volatile than p2p... and that's saying something, but maybe it isn't if you know your stuff.
|
|
|
|
Post by martin44 on Sept 7, 2017 22:41:38 GMT
You could just check or graph L100 which is a synthetic FTSE100 TR ETF charging 0.1%. Not exactly the same but easy to add to online charting widgets.AAh that reminds me... time for a bodingtons. 
|
|
|
|
Post by martin44 on Sept 7, 2017 22:49:32 GMT
but maybe it isn't if you know your stuff. And that is precicesly the point I was trying to make but was constantly getting shot down by people with a blinkered attitude who think P2P is some invincible low-risk magic. Not a surprise I suppose, given the nature of this forum !! I wish the blinkered P2P lovers luck, they'll need it if they seriously think they can continue to receive high percentage returns from here to eternity without one day being faced with the consequences of their greed and gluttony. But for those who can be bothered to spend a little time learning, the stockmarket is not volatile for those who take a little time to understand it and are willing to invest with a medium or long term perspective. I have more than enough hard facts to back up that statement, but regrettably not the sort of facts shareable in public (although public equivalents are out there if you search for them).I would be more than happy to hear them, any info that can give me an edge over the sharks is more than welcome. 
|
|
|
|
Post by peerlessperil on Sept 7, 2017 23:00:02 GMT
A little harsh me thinks.... I had somewhat given up on this thread given most people here seem to have made up their minds that the OP's hypothesis was correct and that the stockmarket was some evil thing to be avoided. Shame. Nonetheless, I do not feel martin44's conclusion is harsh. Knowing the difference between price return and total return is part of Stockmarket 101. If people cannot spend five minutes to gain the most basic of understanding of the stockmarket then it is no wonder they go one step further and make themselves look stupid saying completely gibberish such as "P2P is less risky than the Stockmarket". We're holding different ends of the same stick... Nearly everyone on this forum understand the difference between total return and capital return - they know their buy-to-let generates rent as well as capital gains (hopefully). However, even financially literate members of the public do often assume (not unreasonably, given how journalists quote it) that the FTSE 100 is already a total return index, and are often quite surprised to discover it is only a price index. The total return index is rarely quoted in the media, and I'll bet that even on a city trading floor you'll get blank looks if you ask today's level. People (incuding graduate trainees and interns at city firms) are therefore often surprised to discover that the total return calc hasn't already been done for them, and are unaware that they need to look for the total return version. It's not because they lack an understanding of capital & income. They do see the total return version frequently in relative performance charts, but since the vertical axis is then expressed in % rather than index figures they rarely realise the difference.
|
|
|
|
Post by peerlessperil on Sept 7, 2017 23:47:23 GMT
but maybe it isn't if you know your stuff. And that is precicesly the point I was trying to make but was constantly getting shot down by people with a blinkered attitude who think P2P is some invincible low-risk magic. Not a surprise I suppose, given the nature of this forum !! I wish the blinkered P2P lovers luck, they'll need it if they seriously think they can continue to receive high percentage returns from here to eternity without one day being faced with the consequences of their greed and gluttony. But for those who can be bothered to spend a little time learning, the stockmarket is not volatile for those who take a little time to understand it and are willing to invest with a medium or long term perspective. I have more than enough hard facts to back up that statement, but regrettably not the sort of facts shareable in public (although public equivalents are out there if you search for them). I share your concerns over p2p (and my equity exposure dwarfs my p2p exposure), but I suspect the medium/long term perspective you're referring to is longer than your audience's. Over the time period of a 6m-12m bridging loan the stock market can be very volatile. UK equities lost 30% in 2008.... If you allow time for dividends to compound up over 5yrs+ you are unlucky to lose money in total return terms on the stock market (but it did happen over 2006-2011). Over 10+ years it may prove difficult to outperform inflation without owning equities, courtesy of QE making index-linked gilts so damned expensive. The annual Barclays Equity Gilt Study has a wealth of data to plough through if you can source a copy.
|
|
|
|
Post by elephantrosie on Sept 8, 2017 1:29:19 GMT
shares is the way to wealth (a lot of wealth!)
|
|
metoo
Member of DD Central
Posts: 555
Likes: 432
|
Post by metoo on Sept 8, 2017 3:10:33 GMT
Those without a Bloomberg terminal (99% of this forum) will find total return data for the FTSE remarkably hard to come by unless they pay for it ... This method is free. I'm not going to put it as a link in case they monitor who links to them and get ideas, though I'm sure they welcome all visitors. Visit: w w w . t r u s t n e t . c o m Bottom right of page: Tools (link) Tick any option that describes you. Click 'Charting' Choose Investment Type: Indices Choose Indices: whatever you want Click "Add" for each index You now have a chart. Make sure the Chart basis (a black rectangle to click in the chart) says "With reinvestment" and "Bid to bid" (it should by default, yellow background). Under the chart is a table. Click three red crosses to get rid of the AFI numbers. You now have a table of Cumulative Performance for any indices you choose (and selected equities / funds if you like). It shows periods of 1/3/6 months and 1/3/5/10 years by default. You can sort by any column.
|
|
|
|
Post by peerlessperil on Sept 8, 2017 7:27:52 GMT
Thanks metooI too have used Tnet, and it is very good, but less help if you want to get hold of the underlying daily data for your own nefarious purposes. What we are really looking for is getting the daily index numbers into excel - with a little bit of heath robinson tinkering you can get pretty much anything that shows on a webpage into excel automatically, so it is possible to run your own charts. Google & Yahoo (& Stockopedia) do many things now, but Total Return and relative plotting of a stock against an index with the index portrayed as a straight line remain beyond them. We better stop now or the mods will have us strung up for subject drift! |
|
