Stocks and shares

[Gob]

Anyone here dabble in the stocks and shares markets?

I will be having a bit of cash coming in, in the UK, and seeing as the interest rates we get over there are at rock bottom, I'm looking at a way to get more bang for my buck out of the money.

Any hints, tips, advice?

[MajGenl.Meade]

Yes, I have a very good investment record in places as diverse as domestically and internationally worldwide. (It would give too much away to name the countries involved, beginning with a U and the other with an N). Seizing the opportunity, taking the risk, avoiding pettifogging questions of detail, these are the parameters of wise investing. If you'll pm me your bank information and power of attorney, I will begin the process of secure enrichment instanter. Hint: I do have 3 Ernie Bonds from the late 50s and early 60s that I can't actually prove are mine but these are available for purchase.

If this of no interest, purchase an IRA (no, not the mad Paddy kind). They must have something like an IRA in the UK, no?

[RayThom]

When I had disposable income I did fairly well with a couple of investment instruments.

Fidelity Magellan Fund is a good performer as a mutual investment. I also had J&J and Norfolk/Southern both listed on the NYSE. They always did well regardless of market mood.

My suggestion -- read the WSJ on a regular basis until something "speaks to you." Once you develop a feel for a specific company buy a handful of shares and track them steadily for a few months. Go or stay? You'll know.

Stay away from brokers especially if they are friends or relatives. Scottrade (online) has a good reliability rating.

[rubato]

An index fund like the S&P 500 index fund is a good bet. Low fees are critical, any fee you pay is a certain loss, guaranteed loss, every year so lower is better. Index funds have outperformed 75% of professional investors, consistently.

If you have more money to deal with mix it between a range of index funds covering different categories; US, Europe, Mixed EAFE, emerging markets, small and large cap funds.

Also, I would prefer to put away the retirement in something and then go live my life and not waste time fussing with it all the time and funds are a good way to do that.

If you like playing at the Big Casino you can buy individual stocks but the penalties are: you will have to spend time every month doing research and if you aren't a professional investor your chance of equalling or exceeding an index is even less than 1 in 4. I only have 1 individual stock and that is because my employer paid the 401k match in their stock, and I get rid of some of it every year to keep the total only a few percent.


"Professional advice" is a fixed loss and certainly not worth it unless you have a lot to invest. Many financial planners and investment counselors have interests opposite from yours; they want you to make trades because they get paid every time you do (and you will pay a fee) and they will often push you into instruments where they get a commission.


yrs,
rubato

[MajGenl.Meade]

An index fund like the S&P 500 index fund is a good bet. Low fees are critical, any fee you pay is a certain loss, guaranteed loss, every year so lower is better. Index funds have outperformed 75% of professional investors, consistently.

If you have more money to deal with mix it between a range of index funds covering different categories; US, Europe, Mixed EAFE, emerging markets, small and large cap funds.

Also, I would prefer to put away the retirement in something and then go live my life and not waste time fussing with it all the time and funds are a good way to do that.

If you like playing at the Big Casino you can buy individual stocks but the penalties are: you will have to spend time every month doing research and if you aren't a professional investor your chance of equalling or exceeding an index is even less than 1 in 4. I only have 1 individual stock and that is because my employer paid the 401k match in their stock, and I get rid of some of it every year to keep the total only a few percent.


"Professional advice" is a fixed loss and certainly not worth it unless you have a lot to invest. Many financial planners and investment counselors have interests opposite from yours; they want you to make trades because they get paid every time you do (and you will pay a fee) and they will often push you into instruments where they get a commission.


yrs,
rubato

[Joe Guy]

I can't add anything to rubato's excellent advice other than the type of investment you make should be based on your goal for that money, total assets, age, and your risk tolerance.

I like no-load mutual funds and they've worked fine for me. You can buy them directly without a middleman taking a big chunk out of your money before it is invested.

Use an investment allocation calculator like this. There are many of them on the internet. They can give you a pretty good general idea of how to invest your enormous wealth.

[Gob]

Thanks all, and many thanks rubato.

[Gob]

We will have £700.00 a month ($1,023.00 US) going into a UK bank account soon. Seeing as UK interest rates are flatlining, I was looking for ways to make the money earn more.

I may risk half of that in some form of shares or "tracker" fund.

[liberty]

Robuto, what do think about Gold and Silver? I looked at Silver, but I didn’t see anything in it. I have a little money, but I can’t afford to lose much. I have the feeling that in the future my kids are going to need it.

[rubato]

Robuto, what do think about Gold and Silver? I looked at Silver, but I didn’t see anything in it. I have a little money, but I can’t afford to lose much. I have the feeling that in the future my kids are going to need it.

I think people who invest in commodities and make money at it are professionals with a lot of background in that field and who are willing to spend a lot of time every week at it. I'm neither of the above.

Another thing is that if buying gold (or silver) was a sure-fire bet then people would not be buying ads telling YOU to buy it from THEM they would be offering to buy it from you. When the professionals are are taking the other side of a deal, your side stinks. (like buying 'insurance' on small electronic devices)




yrs,
rubato

[MajGenl.Meade]

Again...

[Guinevere]

The stock market has been awfully volatile the last several years, and I think that's going to continue for a while. As close as you are to retirement, why risk those funds in a short-term gamble. You might as well hit up a casino.

Also, what rubato said. I manage my own funds. If those guys were so good, why are they still working for a living??

[Long Run]

Guin makes a good point about volatility -- you have to be willing to live with it consistent with why you want to invest this money. The current zero interest rate return for bonds has really made traditional investing difficult. The policy goal of central banks supporting such low rates is to encourage people to spend the money to improve economic activity. However, it has caused investors to move more dollars into stocks, which has driven up the cost of U.S. stocks (which have near historic highs in price-earnings ratio). Non-U.S. stocks are not so costly relative to their PE ratio, but that is because the investor outlook is not strong for European, Japan, or emerging markets.

So what are people doing? Some buy utility stocks since these are more stable and return a modest but reliable amount. These are more expensive than in the past but do provide a decent rate of return. Some have bought real estate investment trusts, which are publicly traded portfolios that invest in commercial, industrial and multi-family housing. Again, these have gotten more costly relative to their expected return but do provide a decent return. The risk with these is that if interest rates rise, then they will tend to lose their value (but continue paying their dividend/income stream). You could use the money to help buy your next home or a rental home and thereby "invest" it in real estate and mortgage debt avoidance.

There are plenty of fee-only investment advisors whose main job is to get your investments aligned with your goals and keep them there. They do not have a conflict of interest since you pay them a stated amount (usually a percentage of your portfolio), not the investment vehicle. The biggest mistake individual investors make is a lack of discipline. The market goes down, they panic and get all of their money out, locking in their losses. They see Fund X did well last year and move their into it, but they already missed the big rise that propelled Fund X, which returns to the norm. The market is up, so they buy at the peak. Etc. This is why during the last 30 years, which included great market years along with some serious down years, professionals averaged about 8% in their diversified portfolios (this has trended down slightly over the last 10 years with the 2008-09 cliff). In contrast, investing just in low-risk shorter term bonds would have yielded 4%. But the individual investor averaged 2% due to the factors described above. For such investors, having a financial advisor for a fee of 1% of their portfolio would have been a good deal.

[rubato]

The stock market has been awfully volatile the last several years, and I think that's going to continue for a while. As close as you are to retirement, why risk those funds in a short-term gamble. You might as well hit up a casino.

Also, what rubato said. I manage my own funds. If those guys were so good, why are they still working for a living??

I don't care about short-term volatility because I'm not going to take out all our money the day we retire and we can budget around bad years. I am investing to provide income over the next 20+ years and over that time span the certainty that market averages will prevail is high and longer term returns are much higher than instruments which "preserve value" when inflation is subtracted. To my way of thinking it is a greater risk to take a more certain but low return and then wind up broke at 85-90 as inflation and withdrawals erode the value. If I knew I was going to need a large portion of cash in the short term, 1 mo to 2.5 years or so (as a down payment or to pay off a 2nd mortgage) I might do so but not otherwise. Our cash-equivalent savings for emergencies (so we could pay the bills for 6 months or recover from an earthquake) is safe enough.

This year has not been good but it follows several very very very good years so I'm happy we have very little in bonds or cash equivalent stuff.

yrs,
rubato

[oldr_n_wsr]

I have mine invested in the matress.

[Joe Guy]

I have mine invested in the matress.

That's a good investment as long as you're comfortable with it and can sleep at night...

[MajGenl.Meade]

Or did he mean infested in the mattress?

[oldr_n_wsr]

Money Grubbs?