The Investment Thread

[Molotov]

I’ve seen significant growth in my pension over recent weeks. I’m sure others have seen similar growth. 

If only a bit of world peace would break out and we could solve the issues affecting climate change life would be much better.

Incredible to see the rise since the most recent banking crisis circa 2008.

[thistledo]

Everyone with an S&P 500 fund investment. Same actually applies to anyone heavily weighted in North America / US tech firms.  

[Alert Mongoose]

I think about 90% of my investment choices are down (only salvaged by The Alliance Trust which is heavily weighted in North America). Turns out I'm just as shit at picking these as horses.

If Syncona would sort itself out it might not be as bad.

[SH Panda]

In real terms it's still a bit below 2022 highs so may have a bit to go. No doubt there will be at least a bit of a correction this year too.

There's a a good argument that these highs are bad for society overall. Pretty much every rich person, and certainly every politician and person of influence, will be invested in the stock market. Any spike like this only excarcebates inequality, and it's been rich man's heaven since 2010.

A counter analysis to Capital by Thomas Piketty pointed out that real nominal incomes of the wealthy hasn't changed much in previous decades, and the US has seen a surge in wages at lower levels for the last few years. However, most wealth appreciation comes through assets like equity and property, so salary disparity is becoming a less robust measure of inequality.

Most people will have some pensions in the stock market but there's a decent chance they are invested in wildly underperforming life strategy funds, or even worse in the moribund FTSE index.

My portfolio is 97% ETF weighted and most of that is in the US (frankly, I wish all of it was), on capital accumulation alone since November I've more than the annual median salary. And thats not through working or doing anything productive.

The game is rigged, and if you're not benefitting from it you're paying for it.

Tl;Dr check your pension allocation, and invest what savings you have in low cost tracker funds. Never too late to start.

For the last decade or so China has waged a bit of a war on its wealthy asset owning class (or at least stopped bailing them out, and severely restricting outward capital flows). The UK certainly has neither the balls nor means for this though so you should be fine.

[thistledo]

9 hours ago, SH Panda said:

In real terms it's still a bit below 2022 highs so may have a bit to go. No doubt there will be at least a bit of a correction this year too.

There's a a good argument that these highs are bad for society overall. Pretty much every rich person, and certainly every politician and person of influence, will be invested in the stock market. Any spike like this only excarcebates inequality, and it's been rich man's heaven since 2010.

A counter analysis to Capital by Thomas Piketty pointed out that real nominal incomes of the wealthy hasn't changed much in previous decades, and the US has seen a surge in wages at lower levels for the last few years. However, most wealth appreciation comes through assets like equity and property, so salary disparity is becoming a less robust measure of inequality.

Most people will have some pensions in the stock market but there's a decent chance they are invested in wildly underperforming life strategy funds, or even worse in the moribund FTSE index.

My portfolio is 97% ETF weighted and most of that is in the US (frankly, I wish all of it was), on capital accumulation alone since November I've more than the annual median salary. And thats not through working or doing anything productive.

The game is rigged, and if you're not benefitting from it you're paying for it.

Tl;Dr check your pension allocation, and invest what savings you have in low cost tracker funds. Never too late to start.

For the last decade or so China has waged a bit of a war on its wealthy asset owning class (or at least stopped bailing them out, and severely restricting outward capital flows). The UK certainly has neither the balls nor means for this though so you should be fine.

I think you're fairly spot on there. Mine are a mix of index trackers and higher risk tech / north US funds. You really can't go too far wrong with them, as long as you're investing regularly. I don't agree entirely on life strategy funds, but that's because I have the LS 80% equity in Vanguard, while there's been dips in the last 2 years it's well up since I've been investing. 

With the way tax in Scotland is going, paying particular attention to the amount and where you invest your pension in could be particularly beneficial long term. 

[beefybake]

15 hours ago, SH Panda said:

In real terms it's still a bit below 2022 highs so may have a bit to go. No doubt there will be at least a bit of a correction this year too.

There's a a good argument that these highs are bad for society overall. Pretty much every rich person, and certainly every politician and person of influence, will be invested in the stock market. Any spike like this only excarcebates inequality, and it's been rich man's heaven since 2010.

A counter analysis to Capital by Thomas Piketty pointed out that real nominal incomes of the wealthy hasn't changed much in previous decades, and the US has seen a surge in wages at lower levels for the last few years. However, most wealth appreciation comes through assets like equity and property, so salary disparity is becoming a less robust measure of inequality.

Most people will have some pensions in the stock market but there's a decent chance they are invested in wildly underperforming life strategy funds, or even worse in the moribund FTSE index.

My portfolio is 97% ETF weighted and most of that is in the US (frankly, I wish all of it was), on capital accumulation alone since November I've more than the annual median salary. And thats not through working or doing anything productive.

The game is rigged, and if you're not benefitting from it you're paying for it.

Tl;Dr check your pension allocation, and invest what savings you have in low cost tracker funds. Never too late to start.

For the last decade or so China has waged a bit of a war on its wealthy asset owning class (or at least stopped bailing them out, and severely restricting outward capital flows). The UK certainly has neither the balls nor means for this though so you should be fine.

Many people don't understand investing or stock markets, or are not interested, or confident enough to make individual stock decisions. For those people. Life Strategy funds are excellent.  What you are referring to as 'wildly underperforming' is nonsense.  Like any other funds with signifant bond presence, multi asset funds like the life strategies... were heavily hit my last year's collapse in bond markets, from which quite a big recovery has been taking place.

The general tone of your comment here is that of someone who is deeply into growth funds (US) with heavy emphasis on the 6 or 7 giants that are fuelling the surge in US markets..., Microsoft, Nvidia, Apple, Alphabet ( Google ), Tesla etc...

..., and with little exposure to bonds.

There are index trackers for everything, including bonds....,  Government bonds, Corporate bonds, Investment grade corporate bonds, Junk bonds.....,

and they can and do get hit the same as everything else.

 

 

 

Edited February 14 by beefybake

[TxRover]

Life Strategy funds are an answer to the problem of risk tolerance, general stock vs bond inverse returns and inflation erosion of cash positions. With generally conservative mixture adjustments based upon age, they aim to capture a potion of market returns while preserving capital and returning above inflation. While far from optimal returns, they remove much of the threat of emotional decision making and irrational fears on return when bought and held.

[strichener]

1 hour ago, TxRover said:

Life Strategy funds are an answer to the problem of risk tolerance, general stock vs bond inverse returns and inflation erosion of cash positions. With generally conservative mixture adjustments based upon age, they aim to capture a potion of market returns while preserving capital and returning above inflation. While far from optimal returns, they remove much of the threat of emotional decision making and irrational fears on return when bought and held.

Somebody has been on Google or ChatGPT

[Molotov]

The biggest issue I have with the Vanguard UK Lifestrategy 80 portfolio is it’s overweight on UK equities. 

IIRC it has around 19% “allocated” to UK when a global ecconomy has around 4% UK share. 

If it was a more balanced global split I’d probably keep the bulk of my portfolio in such an offering but it’s way too heavy on the UK economy for my personal liking. 

 

[TxRover]

2 hours ago, strichener said:

Somebody has been on Google or ChatGPT

Nope, but it is pretty much the explanation given 20 years ago when the TSP program launched their first lifecycle fund.

Edited February 14 by TxRover

[parsforlife]

2 hours ago, Molotov said:

The biggest issue I have with the Vanguard UK Lifestrategy 80 portfolio is it’s overweight on UK equities. 

IIRC it has around 19% “allocated” to UK when a global ecconomy has around 4% UK share. 

If it was a more balanced global split I’d probably keep the bulk of my portfolio in such an offering but it’s way too heavy on the UK economy for my personal liking. 

 

isn’t there an argument that if you intend to stay in the UK then having your investments weighted towards it are helpful? 

[SH Panda]

15 hours ago, beefybake said:

Many people don't understand investing or stock markets, or are not interested, or confident enough to make individual stock decisions. For those people. Life Strategy funds are excellent.  What you are referring to as 'wildly underperforming' is nonsense.  Like any other funds with signifant bond presence, multi asset funds like the life strategies... were heavily hit my last year's collapse in bond markets, from which quite a big recovery has been taking place.

The general tone of your comment here is that of someone who is deeply into growth funds (US) with heavy emphasis on the 6 or 7 giants that are fuelling the surge in US markets..., Microsoft, Nvidia, Apple, Alphabet ( Google ), Tesla etc...

..., and with little exposure to bonds.

There are index trackers for everything, including bonds....,  Government bonds, Corporate bonds, Investment grade corporate bonds, Junk bonds.....,

and they can and do get hit the same as everything else.

 

 

 

Oh there's definitely a place for bonds, and life strategy funds in general.

What is wrong is that most pension funds default to them, id consider bond exposure to be generally not suitable for anyone under 50. I think my pension from the age of 21 until I changed it a few years ago was about 40% bonds - a huge waste of money given it would be circa 35-40 years before that money can be accessed.

For a younger person, they certainly have wildly underperformed relative to your bog standard global or US equity tracker.

I also don't invest in any growth funds, just a normal tracker, the magnificent 7 have been driving most of the growth for the whole market.

8 hours ago, parsforlife said:

isn’t there an argument that if you intend to stay in the UK then having your investments weighted towards it are helpful? 

Not really, I can't see how it would make much difference.

You can buy US equity ETFs in the UK, in GBP, and held in your UK ISA, pension,  or SDA.

If you're already living in the UK, you're invested in it's future anyway*, can put your money elsewhere.

It's an imperfect analogy, but same reason you don't want to be too invested in the company you work for.

*The UK has been in decline for decades and this is accelerating. Its stock market is one of the last places I'd be putting my money.

Edited February 15 by SH Panda

[parsforlife]

7 minutes ago, SH Panda said:

 

It's an imperfect analogy, but same reason you don't want to be too invested in the company you work for.

I agree with that. But you do want to be invested in the company you work for to a reasonable extent. 

 

[SH Panda]

3 minutes ago, parsforlife said:

I agree with that. But you do want to be invested in the company you work for to a reasonable extent. 

 

You should take advantage of any share save schemes they have as they are often quite generous (i.e. you buy 5 shares and they give you 6).

Beyond that, you should sell as soon as you can though. You already want the company to succeed, no need to have your equity tied up in it too. If it goes well you still have the upside of working in a thriving company, if it goes badly you don't want to lose your job and all your savings.

No doubt long term RBS employees who didn't diversify got wiped out by the firms collapse.

[Molotov]

8 hours ago, parsforlife said:

isn’t there an argument that if you intend to stay in the UK then having your investments weighted towards it are helpful? 

@SH Panda has answered this already. There was likely an argument about this before when it was possibly more cost effective but the simplification and availability of global funds bought in GBP eliminates that argument. 

ETA: I don’t intend to stay in this country after retirement.  

Edited February 15 by Molotov

[Left Back]

7 hours ago, SH Panda said:

You should take advantage of any share save schemes they have as they are often quite generous (i.e. you buy 5 shares and they give you 6).

Beyond that, you should sell as soon as you can though. You already want the company to succeed, no need to have your equity tied up in it too. If it goes well you still have the upside of working in a thriving company, if it goes badly you don't want to lose your job and all your savings.

No doubt long term RBS employees who didn't diversify got wiped out by the firms collapse.

This definitely happened.  I know a few people that lost hundreds of thousands as well as their jobs because most of their bonus was paid in shares and they left it there thinking it was bomb proof.

[Leith Green]

8 hours ago, parsforlife said:

I agree with that. But you do want to be invested in the company you work for to a reasonable extent. 

 

Not sure I agree with this. 

If you are employed, they are buying your labour. If they give you "shares" or options, its because - in some way - it is advantageous to them to give you some kind of bonus/deferred pay in this manner.

As @SH Panda mentions, these are fine and dandy but once you hit a decent profit and are eligible to get out - do it before everything goes breasts skyward.

The company I worked for decades in is unrecognisable now, due to numerous rounds of redundancies and new managers/directors with Emperors new clothes syndrome.

Regular rounds of cost cutting and pension scheme changes (for the worse) kinda remove any thought that the company (small when I joined as a teenager) has your good financial health at heart.

Toward the end, I just prayed that the - excellent at that point - redundancy scheme would be in place when I go the bullet.

Thankfully it was, but it has now been cut in half for any poor schmucks who remain.

[Molotov]

If you’re wondering how much of your investment you lose in fees to platforms, IFAs etc then this is a quick and dirty guide.

https://larrybates.ca/t-rex-score

Simple maths but if your IFA (salesman) told you this at the start you’d decide to spend some time doing much of your analysis yourself.

Don’t get me wrong. IFAs are valuable on an hourly rate for advice relating to certain situations like inheritance tax, etc but be careful how much you leave on the table for other people (year on year)….
 

[Molotov]

The title refers to a story about a visitor to New York who admired the yachts of the bankers and brokers. Naively, he asked where all the customers' yachts were? Of course, none of the customers could afford yachts, even though they dutifully followed the advice of their bankers and brokers.