Low interest rates on savings

[Brainaddict]

Just the last few days. og ogilby might be right that the slide is already over. It's difficult to judge. Mostly not worth thinking about the ups and downs, but when you're thinking of buying in it's fun to try to pick a good moment.

 

[kabbes]

The FTSE has been semi-unique in increasing in the last few weeks. The European Stoxx 600 and the S&P500 have both been on a side




It’s all relative, though. Just before Christmas they had a surge and the recent drop is mostly just unwinding that increase. The exceptions are the 6 big tech stocks, which have been much more hammered of late, after increasing by insane amounts in the last few years.

 

[og ogilby]

I just bought some SMT.

 

[strung out]

Just the last few days. og ogilby might be right that the slide is already over. It's difficult to judge. Mostly not worth thinking about the ups and downs, but when you're thinking of buying in it's fun to try to pick a good moment.

It might be fun to try and time the market if you can afford to, but if you're relying on it for future retirement plans, then it's an extremely bad idea.

Good article on it here: Timing the market

"If at the beginning of 1986 you had invested £1,000 in the FTSE 250 and left the investment alone for the next 35 years, it might have been worth £43,595 by January 2021 (bear in mind, of course, that past performance is no guarantee of future returns).

However, the outcome would have been very different if you had tried to time your entry in and out of the market.

During the same period, if you missed out on the FTSE250 index’s 30 best days the same investment might now be worth £10,627, or £32,968 less, not adjusted for the effect of charges or inflation.

Over the last 35 years your original £1,000 investment in the FTSE 250 could have made:

• 11.4% per year if you stayed invested the whole time
• 9.5% per year if you missed the 10 best days
• 8.1% per year if you missed the 20 best days
• 7% per year if you missed the 30 best days

The 1.9% difference to annual returns between being invested the whole time and missing the 10 best days doesn’t seem much. But the compounding effect builds up over time, as shown in the table below. If you had invested in the FTSE 250 it could have cost you more than £19,000 during that time."

 

[platinumsage]

I just bought some SMT.

That's a highly focused trust that could have a loooong way to fall from here if the 10-year bull market in growth stocks unwinds.

 

[og ogilby]

That's a highly focused trust that could have a loooong way to fall from here if the 10-year bull market in growth stocks unwinds.

I know it's high risk but I did follow the golden rule of not investing what I couldn't afford to lose. Pure and simple gambling with my money.

 

[nick]

And here's another reason not to look at balances daily.

Trying not to worry about the 9% my fundsmith is down since Christmas, and instead focusing on the fact it is still up around 8% over the last 12 months
Annoyingly I was going to transfer 50% of it into a mixed bag of funds as advised by new advisor - but it has taken months to get all the paper work etc sorted and it looks like having been a costly delay (although granted the newer funds could also have suffered)

 

[20Bees]

I left investing (in a SIPP) far too late to expect to make anything of note, and made some daft choices, but hoped the small growth of a tiny amount is still better than nothing. The novelty of checking the HL website a couple of times a week did wear off and I’ve just looked for the first time in 3 or 4 months… to see that of five funds, BG Positive Change is down 20%, but the others are all still up - a bit - and the total result is only -2.32%. I can cope with that!

 

[20Bees]

And here's another reason not to look at balances daily.

Trying not to worry about the 9% my fundsmith is down since Christmas, and instead focusing on the fact it is still up around 8% over the last 12 months
Annoyingly I was going to transfer 50% of it into a mixed bag of funds as advised by new advisor - but it has taken months to get all the paper work etc sorted and it looks like having been a costly delay (although granted the newer funds could also have suffered)
View attachment 306872

Yeah, I have a little in FS Sustainable Equity too and that’s doing worse than the main one.

 

[kabbes]

I switched some money from a FTSE all share tracker to a combination of US and EU funds about a week before the former started talking off and the latter started tanking. I really need to start listening to my own advice to not check up on the funds and not fiddle with the allocations. I am crap at timing things and am far better off just leaving it and forgetting about it.

 

[nick]

And here's another reason not to look at balances daily.

Trying not to worry about the 9% my fundsmith is down since Christmas, and instead focusing on the fact it is still up around 8% over the last 12 months
Annoyingly I was going to transfer 50% of it into a mixed bag of funds as advised by new advisor - but it has taken months to get all the paper work etc sorted and it looks like having been a costly delay (although granted the newer funds could also have suffered)
View attachment 306872

I looked.
Another day, another £3500 (of unrealised money) evaporated

 

[UnderOpenSky]

In a few days I've made a whole £3 on £500 in the Emerging Markets Stock Index Fund. I put the least in that one. I should have put more in.

 

[og ogilby]

I should have put more in.

Almost as annoying as a fund going down is when you have one that's going up but you're still not happy, you kick yourself for not putting more in.

 

[Hollis]

"Time in market, not timing market"

From my experience all my attempts to time the maket I might as well have just rolled a dice..

Fwiw - Vanguard did some report I found a couple weeks ago looking at the 10-year outlook for stocks. Overall they were forecasting stocks to do nowhere near as well as the last 10-years, US around 4% growth pa, UK, Europe and Emerging Markets around 6-7% pa. Of course that's just one report and I'm sure there's someone else with the exact opposite opinion.

 

[Elpenor]

Every fall is an opportunity to buy £1 of value for £0.98 - hard to tell yourself that though isn’t it

 

[Hollis]

This chart's enough to give anyone nightmares - Dow Jones over the last 100+ years. Beginning to see why people were jumping out of windows in 1929... if you'd invested at the peak then you'd have had a long wait to get your money back!

 

[kabbes]

This chart's enough to give anyone nightmares - Dow Jones over the last 100+ years. Beginning to see why people were jumping out of windows in 1929... if you'd invested at the peak then you'd have had a long wait to get your money back!

View attachment 306937

I don’t know how much difference it makes to that graph, but you have to be very careful when drawing conclusions based on the Dow Jones. Firstly, it’s only 30 companies, which makes it very volatile. And during the 20s, it actually went up to 30 companies — it was fewer still at the start of that period. Secondly, the DJ doesn’t reflect an arithmetic mean of the value of the companies. It’s a simple average of their share price. As such, it is very dominated by any company that has a high share price. But yes, there were certain events that occurred, particularly during 1939-45, that affected private trade!

 

[platinumsage]

Also, the graph doesn't take into account inflation or dividends. If you'd invested at the peak in September 1929 and reinvested the dividends you received, by the next peak in January 1937 you'd be up 6.8% in real terms, instead of down 29% as indicated by the graph.

 

[kabbes]

Ah yes, I’d forgotten that the graph is also not plotting total returns.

Dividends are the whole point of shares, the same way that profits are the whole point of companies. If you buy and hold then the ups and downs of the price shouldn’t really be an issue. The FTSE 100 currently pays out 3.3% in dividends, for example (although this is the market that has always paid out more profit as dividends than other markets). Ignoring the dividends is missing the wood for the trees.

 

[Gromit]

Ah yes, I’d forgotten that the graph is also not plotting total returns.

Dividends are the whole point of shares, the same way that profits are the whole point of companies.

It should be.

But now we have 'value' shares where companies just reinvest all their money to increase value of the company and never pay dividends. Instead you are meant to sell a few shares now and then if you want income but otherwise just leave them.

US Tech stock being prime examples.

As selling shares incur commission fees and dividends don't, I disapprove of companies doing this.

My disapproval doesn't seem to stop them or the market trading that way though

 

[Hollis]

Also, the graph doesn't take into account inflation or dividends. If you'd invested at the peak in September 1929 and reinvested the dividends you received, by the next peak in January 1937 you'd be up 6.8% in real terms, instead of down 29% as indicated by the graph.

I've never really been clear what happens to dividends on index tracker funds though? How do they get built into the value/price, or do they?

 

[kabbes]

I've never really been clear what happens to dividends on index tracker funds though? How do they get built into the value/price, or do they?

Depends on the graph. Mostly, though, they just show prices, with dividends being ignored. By contrast, when you look at an investment fund, that’s when you normally see total return.

 

[kabbes]

It should be.

But now we have 'value' shares where companies just reinvest all their money to increase value of the company and never pay dividends. Instead you are meant to sell a few shares now and then if you want income but otherwise just leave them.

US Tech stock being prime examples.

As selling shares incur commission fees and dividends don't, I disapprove of companies doing this.

My disapproval doesn't seem to stop them or the market trading that way though

The valuation of value stocks is still based on dividends, it’s just that the dividends are projected as arriving in the distant future. The likes of Google didn’t use to post dividends, now they do and investors are betting that their future dividends will grow substantially.

 

[ATOMIC SUPLEX]

Ah yes, I’d forgotten that the graph is also not plotting total returns.

Dividends are the whole point of shares, the same way that profits are the whole point of companies. If you buy and hold then the ups and downs of the price shouldn’t really be an issue. The FTSE 100 currently pays out 3.3% in dividends, for example (although this is the market that has always paid out more profit as dividends than other markets). Ignoring the dividends is missing the wood for the trees.

My house goes up and down in value, but the dividends are that I get to live in it without paying rent.

 

[UnderOpenSky]

.

 

[strung out]

I've never really been clear what happens to dividends on index tracker funds though? How do they get built into the value/price, or do they?

Depends on whether you've bought an accumulation or income version of a tracker fund. Income funds pay out the dividends to the share holders, whereas accumulation funds will use the dividends to purchase more shares.

You can see how this effects the price when you compare the two different versions of the same funds:





Explanation from HL about why the price is different puts it better than I could:

Where a fund offers a choice between income and accumulation units, you will often see that the price of the accumulation units is higher. This is because any income received from the underlying holdings will be retained within the fund, where it is ‘rolled up’ over time and reflected in the value of the units on a daily basis. In contrast, income units are structured to pay out any dividends/distributions to the unit holders, whether on an annual, bi-annual, quarterly or monthly basis. It is therefore common to see the difference in the price of the income and accumulation units diverge over time.

 

[danski]

I really want to be into this stuff but fuck me is it dull.
Where do you learn about it? I’ve just never been around people that have known about it.

 

[strung out]

I really want to be into this stuff but fuck me is it dull.
Where do you learn about it? I’ve just never been around people that have known about it.

I just went on the UKpersonalfinance subreddit and asked questions, read other people's questions etc.

 

[danski]

I just went on the UKpersonalfinance subreddit and asked questions, read other people's questions etc.

Thank you

 

[teuchter]

I really want to be into this stuff but fuck me is it dull.
Where do you learn about it? I’ve just never been around people that have known about it.

Enough info on this thread actually.