Tim Hale's Smarter Investing - it's from the 1st edition and I believe he no longer uses that type of chart in subsequent editions.
I believe it's also slightly pessimistic, at least at the 25-30 end of the scale - he shows at least one other chart with no risk of loss around that timeframe.
I'd love a revised version based on actual data from a real index (FSTE 100, S&P 500 or MSCI World), but I still use this because I think it illustrates so well the range of possible outcomes - it's easy to get fixated on the idea of making a profit and doubling your money in 10 years, and the risk of loss is put to one side. Other personalities will be scared of the risk of loss and too afraid to invest their money. I think this chart is really helpful because it shows potential outcomes both ways,
The one tracking the FTSE Global All Cap index is exceedingly popular on /r/UKPersonalFinance, and for good reason.
Heed Lars Kroijer and read his book or Tim Hale's Smarter Investing.
You can't earn returns without taking risk.
There remains a significant risk of loss investing in equities (or basically anything worthwhile) over periods as short as 5 or 10 years.
Read Tim Hale's Smarter Investing.
Two years isn't long enough to get a meaningful answer - whether you under- or out-performed over such a short period, the better investment could still be the other option because you should be expecting to hold equities for periods of a decade or longer.
The answer to which fund comes from fully understanding what you're invested in. I might well say that index funds are easier to understand than any other equity fund. Read Tim Hale's Smarter Investing.
> if someday I have enough money to invest in real-estate that would be great in my opinion.
How is that different from saving for retirement?
Real-estate is low liquidity (also hard to diversify), so you have to hang on to it forever and your returns are the rent you receive.
I'm not sure the best resources for European investors - in /r/UKPersonalFinance we usually recommend Tim Hale's Smarter Investing. Lars Kroijer's short video series is a great introduction.
You should read Tim Hale's Smarter Investing.
If you have to look up what's in your pension pot then you are probably paying high fees, too.
> As I'm still pretty new to investing, I was wondering if any of you had any advice, tips, suggestions for me.
Go here: https://www.reddit.com/r/UKPersonalFinance/wiki/index
Then here: https://www.reddit.com/r/ukpersonalfinance/wiki/recommendedreading
Then buy this book: http://www.amazon.co.uk/Smarter-Investing-Simpler-Decisions-Financial/dp/0273785370/
You'll thank me in 30 years. Best return on £20 you'll ever invest.
Don't forget to keep some cash on hand because you are young and your perspective on life is probably going to change quite significantly in the new few years.
I sat on quite a lot of money for a year or more, figuring out what to do with it, and very conscious that the market was "overpriced". In that time I probably missed out on 10% or 20% of returns - this was basically spring 2017 to 2018, so look it up for yourself.
I guess the trusim that "the market can stay irrational longer than you can stay solvent" applies, strictly speaking, to shorting overpriced stocks rather than waiting with cash in hand, but the same is true that you don't know how long you're going to have to wait for the market to correct. You cannot consistently time the market, and the market has never been like it currently is today, with low rates on fixed-interest returns (which drives investors to equities and allows businesses to borrow cheaply).
Put all the money in a global index fund - choose the distributing version of this and live off the dividends.
There is plenty of room for more sophistication than this - read Tim Hale's Smarter Investing - but IMO this is a good start for someone in your position.
Keep 6 or 12 months' expenses as cash on hand, and then check the dividends every few months.
It doesn't matter if the price of your stocks go up or down, because they represent ownership of factories and supermarkets (and hotels, logistics networks, intellectual property etc) which make and sell useful things.
What matters is their earnings, some of which they reinvest in the business (which is why it's ok to sell stock of a company that has grown), and some of which they pay to investors as dividends.
Go here: https://www.reddit.com/r/ukpersonalfinance/wiki/recommendedreading and look at things about asset allocation.
Make this your first book: http://www.amazon.co.uk/Smarter-Investing-Simpler-Decisions-Financial/dp/0273785370/ref=sr_1_1?s=books&ie=UTF8&qid=1394958561
IMO we should be trying to drive passive investing questions away from this sub, because active and passive investing are so anathemic. I've been meaning to have a discussion with the mods about this.
The vast majority of active investors do not beat the market, when accounting for fees and costs. [1, 2, 3]
A very few active managers succeed in beating the market over very long periods - the primary problem is identifying them in advance.
Tim Hale's Smarter Investing dedicates some pages to this - several years of good returns is indistinguishable from good luck. It concludes, if I recall, that nearly 20 years of data is needed before it becomes probable that outsized returns are the result of skill rather than luck, by which time the manager is likely at the end of his career or wider market conditions may've changed. Neil Woodford is just one salutary lesson here.
On the other hand, the efficient markets hypothesis, which /r/UKpersonalFinance uses to argue that there's no way you can possibly out-know the market, is clearly "twaddle". There are occasions when the market is blatantly and obviously irrational - I can state this with a very great deal of confidence, but I'm not sure what I can prove to you.
If you want to invest actively then no-one can tell you you're right - the odds are that you're not. But, as Ben Graham would say, you're not right or wrong because 1000 people agree or disagree with you - you're right because your facts and reasoning are right.
To be an active investor requires a temperamental quality, not an intellectual quality. Or, at least, a temperamental quality which is rarer than the intellect required.
Index investing is demonstrably and provably the best strategy for the vast majority of investors. Socking money into index funds and never touching it will give them the highest returns.
So if you think you can beat the market, you had better have some very convincing reasons for yourself.
IMO you should read all the passive investing books you can - Smarter Investing is very good - and understand the evidence that says it's the best. Diversification is a protection against ignorance and is the best strategy for the majority of people - Buffett is far less dismissive about market-average returns these days, and advocates index funds. I don't need to link that, because that's not controversial.
But IMO Lindsell-Train's recent performance is not a convincing argument for active management. Why do you cite their "Global Equity" fund, and not their "Investment Trust" or "Finsbury Growth" fund? I looked briefly at Lindsell-Train and didn't really understand them - I couldn't see the need for 3 different funds. If I recollect they had some of the same holdings in multiple of their funds - that looks to me a lot like marketing, so that they can sell one fund to investors who like "sustained income" and sell the other to investors who are sold on "global growth", and they can boast about the performance figures of whichever one does the best. (Woodford certainly does this.)
I personally think that a large contributor to active fund underperformance is constraints upon their managers. "Contrast that: if I'm running a mutual fund," Paul Lountzis says, "try getting away with my style of investing." Watch the whole video. IMO big corporates tend towards index-hugging because managers fear getting it wrong - they're not really managers, they're employees who have managers. They are answerable to consumer investors, who are inherently mostly bad investors - the capricious punters pull their money out if the fund underperforms, starving it of capital, and money pours in should it outperform. I've seen JP Morgan funds that have hugged the index for a decade; Moggy's Somerset Capital is like this, too.
From this point of view, Lindsell-Train are probably not as constrained as a JP Morgan fund manager - I guess they're owner-run and can afford to keep the lights on and pay the staff through a few years of bad performance and declining assets-under-management - but they're not for me. I have quite a bit of money with a different fund manager whose views do align with mine - when I listen to him speak I most always find myself agreeing with him, because he just talks sense.
The question is whether she might need it for a house, or whether to put it into longterm investments.
The stockmarket is the best longterm investment for most people, so long as you weather the down periods - needing the money for a house can mean that you need to take it out when the market's down.
In before: Vanguard Lifesaver 100
For your house purchase though I would be slightly more skeptical where you put your money. 20 years anything could happen, but the chances of losing money in a S&S ISA over 10 years is reasonably high so I wouldn't be putting a house deposit there unless I had liquid cash somewhere else, perhaps a traditional ISA
If you want to learn a bit more about markets and investment strategy, this book is very good, easy enough to read and gives good UK specific advice https://www.amazon.co.uk/Smarter-Investing-Simpler-Decisions-Financial/dp/0273785370/ref=sr_1_1?s=books&ie=UTF8&qid=1394958561
> We were planning on investing in two index funds, one tracking ftse 250 and another s&p500
These are a very odd choice - no exposure to Europe, developed Pacific or emerging markets.
I'd buy the book linked below. It is basically the bible of this subreddit.
Before I go on I want to note I am in no sense suggesting this is a sensible portfolio, it was one I was content with. I have a medium term fund I'm using a Vanguard ISA for. It is currently split into a more defensive 50/50 portfolio (50% equities, 50% bonds) as I want it to stand up somewhat better in a stock market crash (bonds have historically tended to go up in a crash though this is not guaranteed). You could probably justify being even more bond heavy than this on a ~5 year horizon but I'm not going to put more than 50% in while bond real returns in normal times are so poor.
Personally I only have 3 funds in there. 50% is in Vanguard's global short term bond fund, most of the rest is in Vanguard FTSE Global All Cap fund. A chunk I've put into their Value Factor ETF as I wanted to experiment with exactly how these risk factor funds actually work in practice, this fund is the safest place for me to run a minor experiment.
Personally I'm opposed to a tilt towards the UK in my fund. All three of these are global market funds. If Britain becomes the next Japan then I don't want excessive exposure to it. Of course if Britain booms I also won't get an excessive gain from that. The key is to diversify your risks.
Removed for low-effort.
Many previous threads in this subreddit already: https://www.reddit.com/r/UKPersonalFinance/search?q=nipper&restrict_sr=on&sort=relevance&t=all
Oh, no that doesn't work does it?
Try this: https://www.reddit.com/r/UKPersonalFinance/search?q=child&restrict_sr=on&sort=relevance&t=all
Heed Lars Kroijer .
You could probably transfer your existing holdings to another UK broker, but realistically "investments that are what's recommended by the group of IFAs he's part of" will probably have expensive costs or management fees and you'll probably want to sell them and buy index funds instead.
Important: are any of your holdings in an ISA? Because you only have a £20,000 per year ISA allowance, it's important not to remove assets from an ISA until you know what you're doing. You should be able to sell and rebuy within the ISA, and/or transfer you ISA holdings or balance to a new ISA provider.
Heed Lars Kroijer .