Investment?

[spudulike]

As an investor, you're a consumer. Why not be a producer, and "invest" your nest egg in skills, tools, etc with which you can produce. Make something people are willing to consume and you're return will be much more worthwhile than a bank vault full of paper promises. Hmm?

 

I don't knock the sentiment but we aren't talking about starting up a business but we are talking about taking the earnings from that business or line of work and maximising the growth on those earnings.

 

Most guys on here will work hard for their money and we are talking about the best way they can take spare cash and make it grow in to something worthwhile.

 

There are many ways to invest - houses, shares, antiques, classic cars, wine.........just depends what floats your boat and what sort of growth you want from your investment.

 

Shares in funds are actually a share in the companies the fund has invested in. If those companies do well and increase in value, so do your shares, if the company issues dividends - rewards for investing in the company, the dividend pays for more shares so you then get an increase in the value of the share and a greater number of shares.

 

I find that not too many people have any sort of understanding of investment - I am no expert but know that sensible investment works!

 

By the way - I am not having a go, just putting my point of view across and hope it may help!

[agg221]

Pretty good advice here, Shares are a long game - if you are 20-30 and looking towards early retirement then equity ISAs should be high on the list of investments, tax free and it is possible to double your money over five years but no guarantees.

 

My basic advice is to start as early as possible, keep reinvesting even if the markets are not great (the shares will be cheaper:thumbup:) and you will gain over the years. A balanced mix of funds is good and keep an eye on them - easier than property and can be just as profitable!

 

Compound interest is the game and is all about making gains and reinvesting so the gains add to the original stake and then gain some more!

 

Fully agree with the points made here - although I would say it is still worth doing if you have surplus and are in your 40s or early 50s - you just taper off the risk according to the timeframe you want to invest over, and accept the reduced returns. So you might start out with a fair number of growth focussed funds, with some in emerging markets or smaller companies, and gradually transition towards a mix of larger UK or US companies which pay dividends, and government bonds.

 

The main reason I use an IFA is about the research to pick the right fund in a class.

 

Say you want some of your money in larger UK companies. There will be half a dozen funds at least which invest in this area. In a given year, they may range from 5% to 10% return. You can never pick which fund will make 10%, but you want to put your money in the one which over the years ranges from 7% to 10%, not the one which ranges from 5% to 7%.

 

You can find this out by looking at past performance, and seeing when the fund manager last changed as they usually determine the strategy so their skill influences the return. You then need to see what the relative charges are - if the best one deducts 2% and the next best one deducts 1%, the second one may be better.

 

You can do all this research yourself if you have the time and inclination, but if you are spreading your risk across 10 or so types of fund it is much easier use an IFA whose job it is to do it, and if they get it right they will get more clients so they have an incentive to.

 

Alec

[agg221]

Thanks Alec,

 

so they told you the cheapest option?

 

Yes - without being asked. There used to be a company called Edward Jones, which offered a good service. They were bought out by Towry Law who started using some pretty unpleasant tactics. Investment Sense set themselves up to offer an open, upfront service of the type Edward Jones used to offer, in the process aiming to pick up unhappy former clients of Edward Jones. The business approach has continued in the same vein.

 

Alec

[luftwaffe]

Spud is on the right lines here, making money from business - working is one thing but the other part is what to do with the money after you have it. What are most people going to do for money when they are too old to do manual work?

But it has to be said that the FTSE 100 is range bound, meaning that it is a vehicle for day traders taking small but regular profits, just look at the share charts of the company's that make up the FTSE 100 and FTSE 250, the brokerage platforms encourage day trading as thats how they make their money, the more buys and sells that they get the more they make, as apposed to the buy and hold invester who holds on to his shares through thick and thin for years, some people i know buy and sell shares in the same company many times a day, i couldnt believe it at first but its true, al they do is look at screens flashing red and green on their laptop all day everyday,.

[Two Acres]

Yes - without being asked. There used to be a company called Edward Jones, which offered a good service. They were bought out by Towry Law who started using some pretty unpleasant tactics. Investment Sense set themselves up to offer an open, upfront service of the type Edward Jones used to offer, in the process aiming to pick up unhappy former clients of Edward Jones. The business approach has continued in the same vein.

 

Alec

 

Cheers Alec,

 

Sounds good

[rovers90]

Do you presently have a mortgage?

 

If so you could switch to an offset mortgage. You use your savings to either reduce your monthly payment or the term of the mortgage.

 

For example, if you have a £100k mortgage and £20k savings, you are only charged interest on £80k. Therefore your monthly payment could be lower, or best option, keep your payment the same and you are then overpaying your mortgage every month. This obviously works best if you have everything with the same financial institution as you can offset current accounts as well as savings accounts.

 

The money is still accessible in the savings account so take £1k out and the next day you are charged interest on £81k. Likewise, pay money in or your salary goes in totalling £2k and the next day you are charged interest on £78k.

 

Simples!!

[hamdogg]

Don't have a mortgage as yet hopefully this year!

[wrsni]

Personally I think you should look on it as savings rather than an investment.

 

Savings as in, "save it up for when you REALLY need it", rather than, "I'm going to invest this to make some money".

 

From that viewpoint it should be firstly, as safe as possible, and secondly, as accessible as possible. Once you fulfill those criteria then seek to maximise the return.

 

Twenty grand could do a lot for you if used in the right way at the right time, what it could make for you as an investment is unlikely to be as much use.

 

Oh, and well done you for gathering it up in this day and age when people waste so much and then complain about having nothing!

Edited February 3, 2015 by wrsni

[hamdogg]

Personally I think you should look on it as savings rather than an investment.

 

Savings as in, "save it up for when you REALLY need it", rather than, "I'm going to invest this to make some money".

 

From that viewpoint it should be firstly, as safe as possible, and secondly, as accessible as possible. Once you fulfill those criteria then seek to maximise the return.

 

Twenty grand could do a lot for you if used in the right way at the right time, what it could make for you as an investment is unlikely to be as much use.

 

Oh, and well done you for gathering it up in this day and age when people waste so much and then complain about having nothing!

 

 

I just put half my wage into savings from leaving school! Until I left home!

[growforest]

I don't knock the sentiment but we aren't talking about starting up a business but we are talking about taking the earnings from that business or line of work and maximising the growth on those earnings.

 

Most guys on here will work hard for their money and we are talking about the best way they can take spare cash and make it grow in to something worthwhile.

 

There are many ways to invest - houses, shares, antiques, classic cars, wine.........just depends what floats your boat and what sort of growth you want from your investment.

 

Shares in funds are actually a share in the companies the fund has invested in. If those companies do well and increase in value, so do your shares, if the company issues dividends - rewards for investing in the company, the dividend pays for more shares so you then get an increase in the value of the share and a greater number of shares.

 

I find that not too many people have any sort of understanding of investment - I am no expert but know that sensible investment works!

 

By the way - I am not having a go, just putting my point of view across and hope it may help!

 

No I get you. I was just trying to offer a slightly off-centre view of investment. I understand stocks and shares, at least in principle. But share investment is still risking your money reliant on someone else's productivity. ATB