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Amateur Idiot

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  1. Hi WICAO. Congrats on your fantastic achievement! I like your attitude and I respect your effort and determination in setting a great goal for yourself and your commitment in working to achieve it. From reading your posts and considering the above quote about 0.21% investment expenses, I wonder if you use passive stockmarket index-tracker funds (OEICs, Unit Trusts, ETFs) diversified across global regions (UK, Europe Ex-UK, USA, Japan, Asia Pacific Ex-Japan, Emerging Markets)? For many years, I myself have been a great believer in buy and long-term hold of low-cost stockmarket index-tracker funds with dividends re-invested (e.g. "accumulation units"). I was fairly confident that this would give me a good return on investment over the long-term, and although I expected that the stockmarkets would crash every now and then (maybe once every 10 years), I felt that they would probably recover within say, 3 or 4 years, and therefore I could just hold my investments until the markets recovered. It seemed like a sensible strategy based on what I'd read in books and the financial pages in newspapers over the last 20 years. However... When I saw the durhamborn thread: Deflationary collapse and the Reflation Cycle to Come. ... it really shook my faith in index-tracking as an investment strategy. I'm not worried about stockmarkets crashing say, 40 percent and then taking 4 years to recover. I am worried about them crashing 40 percent (or more) and still not recovering after 25 years ("Japan" scenario?). I just wondered what you think of what has been discussed on durhamborn's thread and have you adjusted your investment portfolio as a result of it? I still believe in index-tracking as an investment strategy, but whereas before I read the thread I was probably 99 percent confident, I am now only about, say, 60 percent confident. I have begun to diversify at least a fraction of my investment pot into other assets ("reflation" stocks, gold & silver stored in bullionvault, gold & silver mining stocks). I really did not want to get into stock-picking and trying to actively manage my investment portfolio, but what has been discussed on durhamborn's thread just seems to make so much sense to me that I feel I would be unwise not to at least put a modest fraction of my pot into the kind of strategy that is disussed on the thread. One other motivation I have is simply the thought that index-tracker funds seem to have gone mainstream nowadays, and usually once an investment opportunity becomes very popular it tends not to work as well (too many people jumping on the bandwagon and chasing the same limited opportunities). I suppose that last point could be called the "shoeshine moment". Just wondering what your opinion of this is? Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  2. I'm thinking about opening a new stocks & shares ISA this tax year and was wondering which would be the best one? I know that not all investments (funds/ETFs/shares/bonds) are available on all ISA platforms. I guess for the purpose of what we've been discussing on this thread I would probably consider variety of investment options as the top criteria (as long as charges are not horrendous!). Also, what is the difference between TLT and IBTL? I've not yet found a platform that offers TLT as an investment option. I'm aware of the broker comparison on the Monevator website. Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  3. I'm considering investing a modest amount (approx. 5 percent of my portfolio) in a silver ETC (exchange traded commodity). I accept that the price of PM (precious metal) and ETC can be volatile. I also know that they don't pay any income and therefore the fees could errode the value of my investment over the long term. However, what is holding me back at the moment is the worry that there might be other risks that I am not aware of yet. One thought I had was: do these ETCs allow the investor to actually take delivery of the underlying asset (the PM)? I generally would not want to take delivery because I don't want the risk of storing PM at home. However, it occurred to me that if the underlying PM can never be delivered, then would that fact not undermine the value of the investment? For example, if there were to suddenly be huge demand for silver, what good is an investment in physical silver if that silver cannot ever be delivered (e.g. to a company who uses silver to manufacture goods)? This seems a bit theoretical rather than practical but it does make me wonder. Can anyone comment? Can you see any other risks besides the obvious price movement? My main concern would be to ensure that I cannot lose more than my stake (ie: the amount that I invest). If anyone else has invested in silver, what ETC, mining companies, etc did you invest in? Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  4. Regarding IBTL, I was just wondering how much (as a percentage of investment pot) people were investing in this? I suppose what I'm asking about is asset allocation. I invested about 5 percent of my investment pot in IBTL. About 70 percent of my pot is invested in a collection of stock market index tracker funds. The remaining 25 percent (approx.) is in cash, premium bonds and NS&I index-linked bonds. Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  5. I've seen a few mentions of the IBTL fund on this thread. As I understand it, that is referring to the following fund: iShares $ Treasury Bond 20+yr UCITS ETF USD (Dist) Share Class ISIN: IE00BSKRJZ44 Exchange Traded Fund (ETF) I'm trying to understand the apparent fascination with this fund (and US Treasury bonds in general) on this thread (i.e. why people seem to like the fund and US treasury bonds at the moment). I had a look at the key investor information document for the fund. The fund (ETF) appears to invest in fixed income securities (presumably US government bonds?). I guess that a fund like this could be less risky than a fund that invests in the stock market (US government is less likely to go bust than publicly traded companies are, because US government can print money if it chooses to). I can also imagine that if interest rates fall, then existing fixed-interest bonds would become more attractive and therefore their price on the secondary market would rise. However, since they are fixed interest, is there not a limit to how much their price could rise? For example: Suppose I paid 100 USD for 1 bond that pays a fixed coupon (aka interest) of 2 USD per year (i.e. a 2 percent annual return). If interest rates then fell, such that the US government began issuing new bonds that cost 100 USD each but only paid a fixed coupon of 1 USD per year, new investors would need to buy 2 new bonds (= 2 * 100 = 200 USD) to get 2 USD income (= 1 * 2). Therefore, the price of my existing bond should rise on the secondary market to 200 USD. However, it is not likely to rise higher than that because potential buyers could spend the same amount of USD to buy the newer, lower-yield bonds to get the same overall return. I'm not sure what would happen if interest rates went negative (or if that's possible?), but other than that, is there not a limit to how high the price of current fixed-interest bonds could rise? I suppose that if current bonds were paying, say, 2 percent interest (bond price when issued = 100 USD, coupon = 2 USD), and if interest rates subsequently fell to 0.2 percent and the US government then issued bonds that cost 100 USD and pay 0.2 USD coupon (= 20 cents), then the price on the secondary market for the original bonds could rise by a factor of 10? (because a new investor would need to buy 10 new bonds with 20 cent coupon in order to get 2 USD of annual income). If interest rates were to rise, such that the US government issued new bonds that pay a bigger coupon (for example. say, 4 USD per 100 USD bond), then the price of the existing bonds on the secondary market would be likely to fall. When I first started writing this post, I was thinking that it looked like there is quite limited upside to fixed interest securities. However, after thinking through the above scenarios I have begun to think that it might be possible (although perhaps not very likely) for bond prices to go up by as much as a factor of 10. However, if interest rates rise, then bond prices could fall significantly. Also, I'm not sure how much the fund trades bonds (is it regularly buying and selling, or just buying and holding for the long term?). Have I understood this correctly, or am I talking complete horse manure? I suppose what I'm wondering is: what are the likely scenarios, as regards the US and global economies over the next few years, and how would that be likely to affect the fund and US Treasury bonds? Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  6. Thanks for the comments. I had a look at BullionVault. I like the look of it. Two thoughts I had were: 1) Considering the amount that I was thinking about investing, the fees look higher than for an ETC. There seems to be a buy fee and sell fee in addition to the storage fee. Also, depending on how much is invested it looks like the storage fee could be higher than the OCF on the funds I was considering. 2) I could not see any mention of ISA. Does capital gains tax apply to silver investments? Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  7. Hi Guys. Just popped over to this thread after reading the thread titled: Deflationary collapse and the Reflation Cycle to Come. I'm thinking about whether or not to invest a chunk of my savings into silver. I don't fancy holding actual (physical) metal at home because I would be worried about the security risks of storage, and also of transporting it to a shop at the time when I wanted to sell it (and the risks of walking away from a shop with cash, although maybe they could pay me via bank transfer?). I've therefore been considering investing in an ETF type fund (I think they call them ETC; Exchange Traded Commodity) or a Unit Trust, OEIC, or ICVC. Apparently some funds are currently not available in an ISA platform due to some EU rule about certain documentation needing to be available, which apparently is not currently available for some funds. The following is a link to a Telegraph article that I found interesting: http://www.telegraph.co.uk/investing/funds/for-exposure-to-gold-silver-or-oil-these-are-the-best-funds/ The funds I've found that appear to be available in an ISA platform are as follows: ETFS Physical Silver - there seem to be two versions of this fund; PHAG which I think is USD, and PHSP which I think is GBP. Not sure if it really matters which one I invest in? IShares Physical Metals IShares Physical Silver ETC (SSLN) Old Mutual Gold & Silver Fund R GBP Acc Just wondering what people think of these funds? The Old Mutual Gold & Silver fund looks quite expensive (0.98% OCF). My biggest concern about investing in any of these funds is whether it is possible to lose more than my steak (i.e. the amount I invest). As far as I can tell when investing in the above funds it is not possible for me to lose more than my steak. Does anyone know any different? As far as I know, the ETFS and iShares funds are backed by phsyical silver (i.e. they actually own metal bars stored in a vault somewhere). However, the documentation seems to have a lot of warnings about various risks, and I'm not sure whether there might be things I've not anticipated. An example might be: could the value of the fund fall more severely than the price of the underlying physical metal, due to lack of liqudity in the market (i.e. not many investors wanting to buy or sell) at a particular time? These two funds are debt securities, whereas the Old Mutual fund is shares. I'm not sure what the implications of debt scurities vs shares is. Maybe shares have voting rights whereas debt securities don't? Also, I think the Old Mutual fund invests in mining companies, not just physical metal. I am completely new to commodities & precious metals ("PMs") investing. One downside I see is that holding physical metal doesn't generally produce any income, so the investment value could be getting erroded over time simply due to fees, if the value of the metal did not go up enough to at least cover the fees. I suppose the investment I am considering is really just a gamble on the possibility of the price of PMs rising significantly whilst I had money invested in the relevant fund (e.g. if there is a rush into PMs, perhaps as a consequence of a stock market or house price crash). Just wondering what peoples' opinions on the above are? Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  8. The fund name includes the words "Physical Silver" and the factsheet states: "Physically backed with allocated metal subject to LBMA rules for Good Delivery" I guess that means it is physically backed rather than synthetic. Whether or not derivatives (or other stuff) are used as well as physical metal (silver), and if so, what the implications & risks of that are, I don't know. I found some information in the prospectus (Q& A section on page 37 of the pdf) that seems relevant to my question about whether or not it is possibe to lose more than my steak: Can I lose all of my initial investment? Yes, an investor may lose all of their initial investment by virtue of the movements in the price of the underlying physical precious metals. Can I lose more than my initial investment? An investor who buys and holds their Metal Securities cannot lose more than their initial investment. I'm not sure why the answer to the second question is not just a simple "No"? The stuff I've mentioned here does give me more confidence about the idea of investing in this fund. However, there are a lot of details in the prospectus and I did not read it all. I do wonder if there are risks that I'm not aware of. An example might be: price falling much more than I expect, due to problems with liquidity in the market. There could be other risks I'm not aware of. The fund charge appears to be 0.49% per year. On my ISA platform there is also a platform charge (0.35% per year I think), so it would cost me 0.84% per year in fees. Not terrible but not cheap either (with no income to offset it). I've not decided yet whether or not to invest. As always "Do Your Own Research". Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  9. Hi All. I've been reading this thread with great fascination recently. I love reading peoples' opinions on this subject (especially durhamborn's). Currently my savings are about 80% equities tracker funds (across global markets) and 20% cash (including gov bonds). I've been thinking about moving a chunk of my savings (e.g. 10%) into a silver fund. Not yet sure whether I would take that 10% from the equity tracker funds or the cash/bonds or a combination of both (that's another decision I suppose). The following fund appears to be available within my ISA platform: Product Name: ETFS Physical Silver Issuer: ETFS Metal Securities Limited Legal Form: Debt security Domicile: Jersey Assets: Physically backed with allocated metal subject to LBMA rules for Good Delivery Management Fee: 0.49% p.a I notice that in the Risks section of the factsheet it states (among other things): This product is not a UCITS product. Securities in this product are structured as debt securities and not as shares (equity). The value of a security in this product may go up or down and a security holder may lose some or all of the amount invested. My ISA provider's webpage on this fund states the Legal Structure as "Collateralized Debt Instrument". I'm not familiar with "Debt Security", nor with "Collateralized Debt Instrument". My biggest concern would be: Is it possible to lose more than my steak (i.e. the amount that I invest in the fund)? I've not read anything in the documentation to suggest that it would be possible to lose more than my steak, therefore I would guess that the answer is "No". Can anyone comment? Also, is this suitable for riding the silver price boom (if it were to happen)? Another concern I would have (if I held the fund for the long term) is that, presumably it does not generate an income if it is purely intended to track the price of silver? Therefore, if the silver price did not rise, then the fees would be gradually chipping away at the value of my investment? I know that nobody really knows what will happen with the economy. Do your own research, etc. Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  10. Hi durhamborn. Thanks for your comments on this thread. I've found it fascinating to read your opinions and others' opinions. I'm wondering what your view on index trackers is? My ISA is invested in a several index tracker funds, each one tracking a different region within global stock markets (US, UK, Europe Ex UK, Japan, Asia Pacific Ex Japan, Emerging Markets). I chose the weighting myself (a little bit of active management decesion there, I know!) because I wasn't comfortable having more than about 20% in the USA (whereas the global tracker funds seem to have much higher percentage than that in the USA). I understand that stockmarkets could crash. I would not be too worried if markets crashed, for example, up to 40%, as long as they recovered within, for example, 4 years. Of course, I've no idea what will actually happen to the markets. The strategy I've been putting my faith in is drip-feed long-term buy and hold of trackers. I'm in my forties and hoping to be able to retire around age 65. Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  11. I think it's inevitable that there will be a price to pay for the excesses of the (debt / house-price / cheap-credit / <other name>) bubble and that they cannot delay the consequences forever. However, they seem to be following a different strategy:- that of redirecting the crash into other areas (e.g. low or no wage growth, price inflation, savings errosion through low interest rates, currency devaluation, etc). In effect, the price is being paid by people who played no part in inflating the bubble. What can a person do to protect themself from this massive injustice? My own strategy currently is to live as cheaply as I can (old car, no foreign holidays, staying in most nights, drinking cheap beer at home instead of expensive drinks in pubs) to save as much money as I can and investing that money into my stocks & shares ISA (FTSE All-share index tracker fund). Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  12. When I read in the news that the economy grew 0.3%, what is the margin for error on that figure?
  13. Thanks for your comments guys. Here's some more info: 10) I have a workplace defined-contribution pension into which my employer is contributing 5 percent and I am contributing 10 percent. If I can continue at this rate until retirement (hopefully around age 65 to 67) then I should get a reasonable pension income (but probably not spectacular). 11) My auntie is 70. She eats healthily, doesn't smoke, and doesn't drink. I reckon she will soldier on for at least another 10 years, and quite possibly 20 (her mum lived into her 90's). She is the sociable type and I imagine she would quite enjoy living in a retirement home if she becomes house-bound. I think she probably has the means to afford that for at least 5 years, maybe 10. I don't see that happening before she is 80 though, so I can probably live with her for another 10 years maybe. 12) I don't know whether I am in my auntie's will. I would guess I am. However, I really don't like to count on inherittence, so I like to plan things as though I will inherit nothing. That way, any money I do inherit will just be a nice & unexpected bonus. 13) My FTSE All-Share Index Tracking ISA is the Legal & General one. I buy accumulation units so that the dividend is effectively re-invested. I think this is very important because in the long-run, most of the growth comes from the compound-interest effect of dividends re-invested, not from getting huge captial appreciation in share price (just look how share prices have zig-zagged up and down over the last 10 years!!). 14) I am currently putting 420 quid per month into my FTSE All-Share Index Tracking ISA, so yes I am pound-cost-averaging. 15) I have thought about looking for an index tracker with lower charges, but I understand that the platform review is scheduled for autumn 2013 and is likely to shake things up, so I want to let the dust settle on that first, before I consider starting a new ISA. Also, although the L&G tracker isn't the cheapest, I do think it is pretty good. The "on-going" charge is 0.56 percent, and I think this is effectively the same as what a TER would be if they quoted one. The only other charges I'm aware of are share-dealing & admin fees. I probably over-estimated it when I said that the overall total cost was 1 percent per year. (I would guess it's more like 0.80 percent, but that is just pure guess-work). 16) I am living (in my auntie's house) in the Manchester area. 17) I have considered investing in gold, but my gut feeling is that it's already been ramped up a lot over the last few years. I could see it going even higher in the short term, but it doesn't pay any income and I think there is a big risk that it could suffer a price crash in the next few years (e.g. once the europe situation settles and they stop printing money). With a house - it can be lived in, and with shares - they usually pay dividends, but what use is gold other than if someone wants to buy it for more than I paid for it? Has anyone done any historical analysis to compare stockmarket returns with property returns over the longer term (20 years)? Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  14. Hi All, Newbie here, so appologies if I am posting something that's already been discussed or posting in the wrong sub-forum. What I'm wondering is, where should I put my money: 1) FTSE All-Share Index Tracker ISA or 2) Buy-to-let property My situation is as follows: I'm 39 years old. Living cheaply at my auntie's house (she is retired & widowed). I already have about 40K invested in a FTSE All-Share Index Tracking ISA. I have some other money in savings accounts that I have earmarked as a deposit for when I eventually want to buy a home to live in. I work full time on a 30K salary. Have had occasional periods out of work in the past and fully expect to have similar at some point in future I was waiting for the long anticipated house-price-crash, but never thought the powers-that-be would go to such extremes to keep the bubble inflated. Seems to me that instead of a house-price-crash, we will just get a long & gradual decline in real-terms-prices. I don't fancy the hassle of dealing with tenants (I would probably get a lettings-agent to handle the BTL if I bought one). I also don't much fancy the worry & risk of having a mortgage on a BTL. The FTSE All-Share dividend yield varies but typically seems to be about 3.3 percent. From that would be deducted the AMC (currently 0.56 percent) plus any other charges (share dealing & admin fees?), so I would guess total charge of maybe 1percent, leaving a net yield of 2.3percent. Plus hopefully I would get some capital-value appreciation in the long run. I've heard it said that the stock market tends to return about 6 or 7 percent per year on average (obviously varies wildly in the short term). Maybe a reasonable guess would be that in the long term I would get about 5 or 6 percent return per year on average in the Index Tracker after the charges have been deducted. As for BTL - what is the yield on that? I vaguely remember reading something about a 6 percent return, but I'm not sure and it was a few years back. As you might have guessed, I'm leaning more towards keeping my money in the Index Tracker ISA and maybe adding any new money I save into it. However, I know that BTL has been very profitable for some, and as they say, they 'aint making any more land! Perhaps if a proper house-price-crash had occured, I might then feel tempted to buy a house cheaply and get into BTL, but at the moment it just feels like I would be buying too close to the peak prices and that I would therefore simply be too late to the party (no jelly & ice-cream left!!). Cheers, Amateur Idiot Disclaimer: I'm not an expert. The above comments are just my opinions only and they may not be factually correct. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
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