Jump to content
House Price Crash Forum
Gustave

Investing An Str Fund

Recommended Posts

I buy the general analysis on this site that the current bounce is "the last chance to sell" and so have just sold my flat (completing next week at a price 30% below the valuation I was given two years ago - ouch) and will be renting for at least the next year. I share the general pessimism here about future property price movements.

I don't know much about investments and have been trying to decide what to do with my cash (about £100k) while I am renting. I don't expect to make a lot of money - I merely want to protect its value against the day (whenever that is) when I want to buy something again.

I am thinking of doing something like:

50% in boring savings accounts

25% gold

25% stocks

Does that seem sensible to all you experts out there? As I say, my appetite for risk is minimal, so the thinking behind this (such as it is) is purely defnsive.

Share this post


Link to post
Share on other sites

1) Liquidate all financial assets, assets held on margin and bank accounts of any kind in any currency, any bank, anywhere.

2) Put the first part of proceedings towards stockpiling essentials for you and your family. You'll need them.

3) Only keep the bare minimum in GBP and don't keep it in a bank.

4) Put the rest of the proceedings in bu11ion*, either in your immediate physical possession or in allocated, segregated and insured storage in a safe jurisdiction (the UK is not safe for this purpose, nor is any service provided by UK or US companies).

*don't forget silver!

Share this post


Link to post
Share on other sites
1) Liquidate all financial assets, assets held on margin and bank accounts of any kind in any currency, any bank, anywhere.

2) Put the first part of proceedings towards stockpiling essentials for you and your family. You'll need them.

3) Only keep the bare minimum in GBP and don't keep it in a bank.

4) Put the rest of the proceedings in bu11ion*, either in your immediate physical possession or in allocated, segregated and insured storage in a safe jurisdiction (the UK is not safe for this purpose, nor is any service provided by UK or US companies).

*don't forget silver!

:rolleyes:

Share this post


Link to post
Share on other sites
I buy the general analysis on this site that the current bounce is "the last chance to sell" and so have just sold my flat (completing next week at a price 30% below the valuation I was given two years ago - ouch) and will be renting for at least the next year. I share the general pessimism here about future property price movements.

I don't know much about investments and have been trying to decide what to do with my cash (about £100k) while I am renting. I don't expect to make a lot of money - I merely want to protect its value against the day (whenever that is) when I want to buy something again.

I am thinking of doing something like:

50% in boring savings accounts

25% gold

25% stocks

Does that seem sensible to all you experts out there? As I say, my appetite for risk is minimal, so the thinking behind this (such as it is) is purely defnsive.

Being retired, my appetite for risk is also minimal.

Currently, I'm 100% savings accounts and short term government bonds (50/50 EUR/GBP), currently averaging about 4%.

I'm keeping a wary eye on inflation, but with cash you can act quickly if it starts to become a major problem.

Share this post


Link to post
Share on other sites
Being retired, my appetite for risk is also minimal.

Currently, I'm 100% savings accounts and government bonds (50/50 EUR/GBP)...

so let me get this straight:

your plan for avoiding risk is to spend half your wealth buying bonds from a gov't that funded 65% of its spending by printing money in the first quarter, and whose spending was four times that of tax receipts in April :blink:

I'm keeping a wary eye on inflation, but with cash you can act quickly if it starts to become a major problem.

not true.

if everyone thought there would be a currency devaluation next Friday then they wouldn't wait 'till Friday to spend their money.

currency crashes always catch the vast majority of people off-guard.

edit:spell

Edited by InternationalRockSuperstar

Share this post


Link to post
Share on other sites
I buy the general analysis on this site that the current bounce is "the last chance to sell" and so have just sold my flat (completing next week at a price 30% below the valuation I was given two years ago - ouch) and will be renting for at least the next year. I share the general pessimism here about future property price movements.

I don't know much about investments and have been trying to decide what to do with my cash (about £100k) while I am renting. I don't expect to make a lot of money - I merely want to protect its value against the day (whenever that is) when I want to buy something again.

I am thinking of doing something like:

50% in boring savings accounts

25% gold

25% stocks

Does that seem sensible to all you experts out there? As I say, my appetite for risk is minimal, so the thinking behind this (such as it is) is purely defnsive.

I would say you are too high on gold. 10% max is the usual recommendation. The buy / sell spreads are high and you need to decide how you hold it. I don't like it myslef but plenty do so I won't try to talk you out of it for fear of this descending into another gold thread.

Well done on chopping in your flat; crack open a cool one for that.

Edit: Personally I have an earmarked part of my savings to buy a house. That's all in NS&I index linked which pay 1% over inflation. Safe, chop in at any time, and the house it buys gets better every month. You can only put in 15k each issue but there are two at a time and usually two issues a year so 60k a year, soon mounts up. You don't lose money in a deflation year as they can't drop below their last anniversary value.

The rest gets moved about a lot. I manage that for growth and income, sometimes it works well, sometimes it doesn't.

Edited by Frank Hovis

Share this post


Link to post
Share on other sites
I buy the general analysis on this site that the current bounce is "the last chance to sell" and so have just sold my flat (completing next week at a price 30% below the valuation I was given two years ago - ouch) and will be renting for at least the next year. I share the general pessimism here about future property price movements.

I don't know much about investments and have been trying to decide what to do with my cash (about £100k) while I am renting. I don't expect to make a lot of money - I merely want to protect its value against the day (whenever that is) when I want to buy something again.

I am thinking of doing something like:

50% in boring savings accounts

25% gold

25% stocks

Does that seem sensible to all you experts out there? As I say, my appetite for risk is minimal, so the thinking behind this (such as it is) is purely defnsive.

If you are wanting to use the money to buy another house/flat at some point id keep it 100% UK sterling.The house you will buy will be here so you really want the money here.You dont want currency risk.

If you intend renting for a long time 5 years+ id go 50% cash sterling 30% equities,20% physical gold.

Depends on your time frames.If you are looking to buy in under 5 years,id guess you are id hold it in cash.

Even if you only get 2% a year,if houses fall another 30% in 2 years thats a good deal.

If you owned already id say 10% cash 60% foreign equities,30% FTSE tracker for a decade.

As you think (as most of us do) houses will keep falling,really your not looking to invest your fund.Your looking for it to hold its value against an asset that is getting cheaper.

Would be foolish to get out with a good STR fund only to lose it on "investments".

Investments in my book are for when you debt/mortgage free.

Well done on the sale.Flats prices will be decimated.

Or you could buy this house below.

Its around the corner from me,was £250k,right on edge of town,views to the pennines,fantastic location for 149K,.

Thats a house price crash.

http://www.rightmove.co.uk/property-for-sa...n%26index%3D120

Share this post


Link to post
Share on other sites
so let me get this straight:

your plan for avoiding risk is to spend half your wealth buying bonds from a gov't that funded 65% of its spending by printing money in the first quarter, and whose spending was four times that of tax receipts in April :blink:

Did I say what government? Anyway, governments don't default on bonds, they just print more money.

Actually, bonds represent less than 20% of my net worth, 80% is in various savings accounts.

not true.

if everyone thought there would be a currency devaluation next Friday then they wouldn't wait 'till Friday to spend their money.

currency crashes always catch the vast majority of people off-guard.

Hence my 50/50 GBP/EUR split.

Although nothing in life is certain, I'm reasonably happy with my current strategy but it's constantly under review.

I'm not into digging large holes in the ground and filling them with baked beans, weapons and various metals.

Share this post


Link to post
Share on other sites
I buy the general analysis on this site that the current bounce is "the last chance to sell" and so have just sold my flat (completing next week at a price 30% below the valuation I was given two years ago - ouch) and will be renting for at least the next year.

Just out of interest Gustave when did you buy and did you make a loss? genuinely interested.

Share this post


Link to post
Share on other sites
If you are wanting to use the money to buy another house/flat at some point id keep it 100% UK sterling.The house you will buy will be here so you really want the money here.You dont want currency risk.

you can't avoid currency risk by keeping 100% of your wealth in currency.

facepalm.jpg

Share this post


Link to post
Share on other sites
you can't avoid currency risk by keeping 100% of your wealth in currency.

facepalm.jpg

Of course not if we are talking inflation,hence me saying IF it is to buy another house.The house will be priced in sterling.I wouldnt hold much in any currency,but its a different game if its to buy a house.

Share this post


Link to post
Share on other sites

This is all about managing risks, but not removing them altogether. You have taken on one significant risk/position - that the value of property will fall relative to alternatives over the short to medium term.

The obvious thing is to leave the money in cash, paying the highest of interest possible. If houses are falling in value in nominal terms, this will prove to be a winner.

Your risk of investing in cash is inflation - this could result in in asset prices rising while interest rates languish. Hedges to this could be gold, other currencies, index-linked bonds, high-yielding blue chip stocks.

I would keep investments in non-GBP denominated assets to a minimum - currencies are very volatile and with sterling quite weak, these assets, including gold, could lose value if sterling appreciates.

My suggestions:

£60,000 cash, 90-day notice.

£10,000 GBP credit quality non-financial bonds, less than 2 years to maturity

£10,000 index-linked bonds or similar

£10,000 4 share holdings in UK good quality blue chip UK companies, paying a high dividend. Mix up the type of business. e.g. VOD, GSK, BP etc. Should not be in the same names as any bonds you buy above.

£10,000 Gold

You may like to adjust these proportions slightly, but they are broadly right for the plan you have in mind, and balance and hedge risks reasonably well.

Share this post


Link to post
Share on other sites
...

The obvious thing is to leave the money in cash, paying the highest of interest possible. If houses are falling in value in nominal terms, this will prove to be a winner.

...

since both houses and GBP are falling in value and will continue to do so, I don't see any point in having either of them.

...

Your risk of investing in cash is inflation .. Hedges to this could be... index-linked bonds

...

not much of a hedge given that the index bears little resemblance to actual inflation.

...

£60,000 cash, 90-day notice.

£10,000 GBP credit quality non-financial bonds, less than 2 years to maturity

£10,000 index-linked bonds or similar

£10,000 4 share holdings in UK good quality blue chip UK companies, paying a high dividend. Mix up the type of business. e.g. VOD, GSK, BP etc. Should not be in the same names as any bonds you buy above.

£10,000 Gold

...

so 80% GBP is basically what you're saying? :blink:

Share this post


Link to post
Share on other sites

Given that Sterling is likely to bomb big time and inflation and high interest rates are on the horizon, holding cash isn't really that clever. That leaves gold and the stock exchange. A lot of stocks are bargain basement, but its like playing roulette. How about property? I've been seeing some serious bargains around the 110 - 130K region in the south west, for really nice properties, but they are going under offer/sold very fast, and a few estate agent visits have confirmed this.

Reckon its time to change my tag from bear to bull. Keep up at the back...

Share this post


Link to post
Share on other sites
Just out of interest Gustave when did you buy and did you make a loss? genuinely interested.

Bardon - I bought in 2005 and have made a 25% profit - but a 30% loss against the starting valuation in late 2007/early 2008.

I attribute this to:

- crazy local house price inflation 05-07

- buying at a very competitive price back in 05 (relative to what happened over the following two years).

Obviously it would have been better to have got out successfully earlier than this - but at the moment I'm grateful to have escaped with more than I started four years ago.

Share this post


Link to post
Share on other sites
Reckon its time to change my tag from bear to bull. Keep up at the back...

Never fear brother you will be in good prosperous company

Share this post


Link to post
Share on other sites

From what I can gather, even seasoned investors don't know how to play these markets so what chance does the amateur have?

The only thing I can think of is to keep nimble, don't tie yourself into ANYTHING, and read as much as you can from as many different sources as possible on a DAILY basis.

And just remember the three Vs that currently seem to rule the markets:

Volatility - up, down, sideways - who knows where next?

Violence - sudden and extreme market moves.

Vindictiveness - the markets are out to part you from your money.

Share this post


Link to post
Share on other sites
Bardon - I bought in 2005 and have made a 25% profit - but a 30% loss against the starting valuation in late 2007/early 2008.

I attribute this to:

- crazy local house price inflation 05-07

- buying at a very competitive price back in 05 (relative to what happened over the following two years).

Obviously it would have been better to have got out successfully earlier than this - but at the moment I'm grateful to have escaped with more than I started four years ago.

Thanks for the feedback it just goes to prove a point. Good on you Gustave, a gain is a gain in any mans language. You should be grateful, and you have it all to do again (excue the pun) all the best.

Share this post


Link to post
Share on other sites
1) Liquidate all financial assets, assets held on margin and bank accounts of any kind in any currency, any bank, anywhere.

2) Put the first part of proceedings towards stockpiling essentials for you and your family. You'll need them.

3) Only keep the bare minimum in GBP and don't keep it in a bank.

4) Put the rest of the proceedings in bu11ion*, either in your immediate physical possession or in allocated, segregated and insured storage in a safe jurisdiction (the UK is not safe for this purpose, nor is any service provided by UK or US companies).

*don't forget silver!

I'm sure you said how old you are in a post some months ago. I can't remember, was it twenty five?

Share this post


Link to post
Share on other sites
What's an STR fund?

I think you are wondering how we hold our wealth?

As this rally goes on, I am selling into strength, and the portfolio is gettimg more "boring":

25% : Hong kong residential properties (equity portion, selling some properties to reduce debt)

40% : Junior miners

25% : Cash (almost all C$ and A$, minor amounts of US$ and Sterling)

10% : Options, and geared investments

The big change has been a steady liquidation of Juniors, and building of C$ cash

The Juniors are up 50% from the December 2008 Low, HK property up maybe 25% on a geared basis

Would you be kind enough to answer the following quries?

Why C$ and not US$? Are the two not closely linked or could they/have they decoupled?

And I thought the outlook for the US$ was up, up and away, after the present bottoming out. So, why not US$?

Share this post


Link to post
Share on other sites
since both houses and GBP are falling in value and will continue to do so, I don't see any point in having either of them.

not much of a hedge given that the index bears little resemblance to actual inflation.

so 80% GBP is basically what you're saying? :blink:

Considering that he wants to buy a property valued in sterling in the short to medium term, sterling is where he should leave his money.

The 20% of non-sterling denominated investments would be a hedge against a 100% concentration of sterling.

Share this post


Link to post
Share on other sites
Considering that he wants to buy a property valued in sterling in the short to medium term, sterling is where he should leave his money.

1) if you read Gustave's original post you'll see that he intends to rent for at least one year.

2) just because UK house values are quoted in pounds in no way means that the value of houses and the value of GBP are linked.

you'll lose a lot of your savings by keeping them in GBP for a whole year.

Share this post


Link to post
Share on other sites
1) Liquidate all financial assets, assets held on margin and bank accounts of any kind in any currency, any bank, anywhere.

2) Put the first part of proceedings towards stockpiling essentials for you and your family. You'll need them.

3) Only keep the bare minimum in GBP and don't keep it in a bank.

4) Put the rest of the proceedings in bu11ion*, either in your immediate physical possession or in allocated, segregated and insured storage in a safe jurisdiction (the UK is not safe for this purpose, nor is any service provided by UK or US companies).

*don't forget silver!

LOONEY :P

Share this post


Link to post
Share on other sites
If you are wanting to use the money to buy another house/flat at some point id keep it 100% UK sterling.The house you will buy will be here so you really want the money here.You dont want currency risk.

If you intend renting for a long time 5 years+ id go 50% cash sterling 30% equities,20% physical gold.

Depends on your time frames.If you are looking to buy in under 5 years,id guess you are id hold it in cash.

Even if you only get 2% a year,if houses fall another 30% in 2 years thats a good deal.

If you owned already id say 10% cash 60% foreign equities,30% FTSE tracker for a decade.

As you think (as most of us do) houses will keep falling,really your not looking to invest your fund.Your looking for it to hold its value against an asset that is getting cheaper.

Would be foolish to get out with a good STR fund only to lose it on "investments".

Investments in my book are for when you debt/mortgage free.

Well done on the sale.Flats prices will be decimated.

Or you could buy this house below.

Its around the corner from me,was £250k,right on edge of town,views to the pennines,fantastic location for 149K,.

Thats a house price crash.

http://www.rightmove.co.uk/property-for-sa...n%26index%3D120

Not a LOONEY :)

Share this post


Link to post
Share on other sites
1) if you read Gustave's original post you'll see that he intends to rent for at least one year.

2) just because UK house values are quoted in pounds in no way means that the value of houses and the value of GBP are linked.

you'll lose a lot of your savings by keeping them in GBP for a whole year.

If you mean that you believe that house prices are going to rise in nominal terms, or at least rise in value at faster rate than the interest you can receive on them, then it was probably a mistake to sell the property in the first place.

2) I never said that the value of UK property and the value of GBP are linked. However, if you have sterling today and expect to spend sterling in a year or so time, exchanging it into a different asset in the intervening period exposes you to currency risk. You may have an opinion, but the market can stay irrational longer than you can stay solvent. There is no point in putting £100,000 into euros for a year only to find that they are worth £80,000 a year from now. Speculative losses are generally more painful than the upside benefit of speculative gains.

From a risk management point of view, gaining substantial exposure to non-sterling assets is a mistake in this context.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   324 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.