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Stock market dealing
- Thread starter Justin Passing
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Chuck, you say?
Do you mean "buy when prices are low?"
Buying regularly over 40 years you will pass through ups and downs. Monthly contributions are quite normal.
I did, and unsurprisingly have seen long term growth. I have had some bad years and some good years. I am told there has been no ten-year period when the indices ended lower than they started.
Long term investment is quite different from trading as a hobby.
Do you mean "buy when prices are low?"
Buying regularly over 40 years you will pass through ups and downs. Monthly contributions are quite normal.
I did, and unsurprisingly have seen long term growth. I have had some bad years and some good years. I am told there has been no ten-year period when the indices ended lower than they started.
Long term investment is quite different from trading as a hobby.
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Long term investment is quite different from trading as a hobby.
And I'll always reply that it's really only the timescale which is different.
There's the aphorism which says you can't/don't "Time the market" but everyone pays some heed to where the investment is going. You probably wouldn't be using a war zone, or coal. Traditionally, you would favour North America over Europe, for growth expectations.
Semiconductors will probably outdo Transport, etc.
If you think there may be a recession soon, then Gold should be in the portfolio.
Look up "Dollar cost averaging " at Investopedia.
A traditional investing guide would tell you to look at the "200 period moving average" - that's over 200 days, to see if something is cheap.
If you pick an Amazon or a Microsoft you think will be around for a while, that's likely to work. Here's that line:
There's plenty of scope for prices to go lower.
According to the Buffet indicator, they should be half what they are now:
currentmarketvaluation.com
If you compare with say Property, be careful. Buying on mortgage means the gain is "leveraged", so it'll be a better ROI than it looks.
Explanation here https://medium.com/the-investors-ha...ck-market-vs-real-estate-returns-0ca2c9e2f40f
Hence the advice to "diversify".
So an answer to @Elsa TLC
might be to wait until the market stops dropping, but that could be a day, week, month....
+ We are just at the start of a new pension contributons year, of course.
And I'll always reply that it's really only the timescale which is different.
There's the aphorism which says you can't/don't "Time the market" but everyone pays some heed to where the investment is going. You probably wouldn't be using a war zone, or coal. Traditionally, you would favour North America over Europe, for growth expectations.
Semiconductors will probably outdo Transport, etc.
If you think there may be a recession soon, then Gold should be in the portfolio.
Look up "Dollar cost averaging " at Investopedia.
A traditional investing guide would tell you to look at the "200 period moving average" - that's over 200 days, to see if something is cheap.
If you pick an Amazon or a Microsoft you think will be around for a while, that's likely to work. Here's that line:
There's plenty of scope for prices to go lower.
According to the Buffet indicator, they should be half what they are now:
Buffett Indicator Shows Stock Market is Strongly Overvalued
The Buffett Indicator is currently 68.63% higher than its historical average, signifying that the stock market is Strongly Overvalued.
currentmarketvaluation.com
If you compare with say Property, be careful. Buying on mortgage means the gain is "leveraged", so it'll be a better ROI than it looks.
Explanation here https://medium.com/the-investors-ha...ck-market-vs-real-estate-returns-0ca2c9e2f40f
Hence the advice to "diversify".
So an answer to @Elsa TLC
Elsa TLC said:
might be to wait until the market stops dropping, but that could be a day, week, month....
+ We are just at the start of a new pension contributons year, of course.
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If you wait until the markets are up again, you will make the classic amateur error.
You will not know when the market has stopped dropping, until some time afterwards and it has gone up again.
For your pension, you would do well, to pay in x% of earnings a month, every month.
The best time to contribute to a pension is 30 years ago
The second best time is today
The worst time is, some day when I get round to it.
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Yes, very stupid to wait until the prices rise.
Not stupid to wait until they stop falling, though. That's the classic bowler-hat brigade error.
You don't know where THE bottom is, but waiting for A bottom is easy
Shorter term, If you think China is going to get a deal or some good news relative to where it is now. there are a few share choices.
Alibaba would notice tafiffs a lot, specifically. $BABA
Look at $YINN and $YANN for bullish and bearish expectations, or $KWBP ($KWE is the $ one) which is a 3x bullish on large cap/internet related stocks.
We have some small pensions which we do manage actively, and they're way ahead of the housekeeping biggies which put the grits on the table, which we more or less leave alone. They get switched in part from "US" to "World" etc, nothing finely tuned.
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Granted:
I took the pension our at 31. I'm 58 and I'll be working until I'm 70.
The markets are down
They may go further down
But ultimately they will go up again.
My question was is it worth putting a lump sum into my pension now?
I appreciate you nor the experts know how much further the market will drop or even rise in the short term.
I have to pur this money somewhere.
Why do you have a lump burning a hole in your pocket this week? How big a lump is it?
With prices bumping up and down every day, you might send it on a low day, and it be invested on a high day. If a large sum, I feel more relaxed splitting in into several slices, to avoid sudden peaks and troughs. I don't know if you mean 1% of your total fund value, or 10%, or 50%
I used to make a decision towards the end of each tax year, but that can't be the reason, as we've just passed one. I used to use carry-forward and carry-back sometimes, but I don't know what rules apply to you.
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I've inherited a small amount.
Let's say I have £30,000
Would £10,,000 at a time be the way to go?
£10 grand woul buy shares at today's prices
£10 new grand would essentially be worth more than Ten grand that's already invested.
I get that they markets will more than likely drop again. If they do I invest 10 more grand.
Wait wait wait. Then starts to rise I invest the final £10 grand.
Baring WW3 the shares will rise again. And potentially go through roof.
If it was me I would probably wedge it in £5k a time, over 6 months, regularly, regardless of whether, on that day, you feel optimistic or pessimistic, by setting up regular payments. Perhaps you are more adventurous than me or crave excitement. Waiting for the "best time" will give you plenty of that.
Over that time you will hit a few peaks and troughs.
Decide your strategy and try to stick to it.
You will be at risk of breaching the tax allowance, so park the cash somewhere tax-free. You can put £20k into an ISA. If it's a stocks and shares ISA you can hold it in cash until you make your investments. There will probably be a poor interest rate.
If it's going into a pension your can hold your cash in a cash ISA or in premium bonds until you make your contributions, both are tax free. Or you could put it all in and request allocation to a cash fund, then request periodic switches. Don't let it moulder in cash for long. You can, if an average working man, contribute up to your gross taxable earnings into pension schemes each tax year. You can have a private scheme as well as an employers scheme.
I would try to avoid holding more cash than you need as a cushion for emergencies, because inflation will erode it.
Use a part of your windfall for something you will be glad of.
I will assume that you don't want to dedicate your spare time to poring over a trading ploy.
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As said elsewhere, if it goes into a pension it'll get upped by HMG, giving you more to play with.
You pay the tax back when you take it out, depending what you have etc etc. (first 25k fee of tax, I think)
Or you could put it in 2 isas - you + wife? where it's equally free of tax but you have less to "use" for growth until you take it out.
WHile it's in, if you want low fees and good access, I'd suggest AJBell or Interactive Investor
We have some smallish SIPPS, in various places, for historical reasons,
A couple are in eg AJ Bell , Interactive Investor QuIck to access and change+
One each in Hargreaves Lansdown That's OK too
AJ Bell has subtle advantages
They've previously been in other paces, such as pension holders (eg Standard Life) before. And a big bank. Those are awful/
Even if you don't want access, The two I cited are low fees, efficient, etc.
(Different fee structures but they'll come out close)
Butfor me the most m portant thing s what yu do with it.
I quite recently switched to these two funds at AJBell
COmpare with normal/building society rates. The Defence stocks one (mix of military stuff, anti hack companies etc) was higher, it wil probably go up again once Europe has dealt with Trump
3.97% isn't bad for a cople of weeks or whatever.It dropper 0.22% today
The othe one is up 77% and rose 13% today, that's not been there long at all.
. 10 days maybe.
If you don't "use" the money and leave it as cash it earns a bit, so you can wait for an opportunity if you want..
SOmething to ponder for you!
So your 30 could have become about 50.
You pay the tax back when you take it out, depending what you have etc etc. (first 25k fee of tax, I think)
Or you could put it in 2 isas - you + wife? where it's equally free of tax but you have less to "use" for growth until you take it out.
WHile it's in, if you want low fees and good access, I'd suggest AJBell or Interactive Investor
We have some smallish SIPPS, in various places, for historical reasons,
A couple are in eg AJ Bell , Interactive Investor QuIck to access and change+
One each in Hargreaves Lansdown That's OK too
AJ Bell has subtle advantages
They've previously been in other paces, such as pension holders (eg Standard Life) before. And a big bank. Those are awful/
Even if you don't want access, The two I cited are low fees, efficient, etc.
(Different fee structures but they'll come out close)
Butfor me the most m portant thing s what yu do with it.
I quite recently switched to these two funds at AJBell
COmpare with normal/building society rates. The Defence stocks one (mix of military stuff, anti hack companies etc) was higher, it wil probably go up again once Europe has dealt with Trump
3.97% isn't bad for a cople of weeks or whatever.It dropper 0.22% today
The othe one is up 77% and rose 13% today, that's not been there long at all.
. 10 days maybe.
If you don't "use" the money and leave it as cash it earns a bit, so you can wait for an opportunity if you want..
SOmething to ponder for you!
So your 30 could have become about 50.
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I just want something simple by adding g to my pension. I don't want to tangle myself up with what I don't understand.
The money I inherited is less than 30 grand
Would I pay tax on that.
I get that the government add 20 %
A retired fella i met the other week told me that him paying into his pension was tax deductible.
That didn't sound right
1) Contributions to a pension, out of earned and taxed income, benefit from a tax rebate. So, if you pay 20% income tax, like most people, you pay £800 into your pension, and the pension company reclaims the 20% tax you have already paid, and adds it, so your pension fund gets £1000. IME the tax arrives after about 6 weeks but it may vary.
Less commonly, if you pay 40% tax, the pension company reclaims the basic 20%, and you fill in a tax return showing your pension contributions, and you get the other 20% rebate yourself.
You do not get tax relief on contributions that exceed your taxed income
But
If you pay no income tax, for example you are a full-time parent, unemployed, or on low earnings, you get a small allowance anyway. You are allowed to contribute up to £2880 per year, and the pension company gets a rebate to gross it up to £3600. A person who left work early, or was made redundant, might have enough savings to do that.
Contributions are allowed, but limited if you have already drawn money from a pension, for example you retired early then got another job.
The tax principle currently in force is that money going in (contributions) is untaxed, and money coming out (annuitues or withdrawals) is mostly taxed. There are special offers, allowing most people to take out 25% tax free. This is especially valuable to the wealthy. There were schemes to avoid inheritance tax, especially valuable to the wealthy. Not all generous loopholes last forever.
2) you do not pay inheritance tax or income tax on an inheritance.
The estate might be taxed, but the executors are required to pay inheritance tax before finishing the distribution. The inheritance tax allowance for most people is £325,000 and most people don't have enough wealth to pay it.
The estate might be taxed, but the executors are required to pay inheritance tax before finishing the distribution. The inheritance tax allowance for most people is £325,000 and most people don't have enough wealth to pay it.
3) If you want something simple, and don't have the desire, time or knowledge for anything complicated, a low-charging stakeholder pension may suit you well.
I used a self-managed SIPP, but I don't think that would suit you.
Inside your pension, you might want to divide the total between, for example, a World Index, a European Index, and a UK index. Or a "Managed" fund where the company makes the decisions. If you put the money in and leave it for 20 or 40 years, you might not want to spend time and effort chopping in and out of China/Far East/Commercial Property/Gold/Environmental/Ethical/MoneyMarket or other alternatives according to the latest whim, and eventually you might become too old, too daft or too ill to do it yourself.
It is quite common for "lifestyle" schemes to run down your investments and move the value into cash or bonds as you approach your retirement date. This reduces the chance of a major drop or rise in value. An alternative is to draw out your pension in segments, for example once each five years into separate annuities, or drawdown, leaving the rest to continue growing. This is what I do. Your retirement may last 20 years or more and this avoids a frozen fixed income losing value over time, which happened to, for example, one of my grandmothers.
I used a self-managed SIPP, but I don't think that would suit you.
Inside your pension, you might want to divide the total between, for example, a World Index, a European Index, and a UK index. Or a "Managed" fund where the company makes the decisions. If you put the money in and leave it for 20 or 40 years, you might not want to spend time and effort chopping in and out of China/Far East/Commercial Property/Gold/Environmental/Ethical/MoneyMarket or other alternatives according to the latest whim, and eventually you might become too old, too daft or too ill to do it yourself.
It is quite common for "lifestyle" schemes to run down your investments and move the value into cash or bonds as you approach your retirement date. This reduces the chance of a major drop or rise in value. An alternative is to draw out your pension in segments, for example once each five years into separate annuities, or drawdown, leaving the rest to continue growing. This is what I do. Your retirement may last 20 years or more and this avoids a frozen fixed income losing value over time, which happened to, for example, one of my grandmothers.
