Pensions/Investment

[PeterLe]

Morning
I submitted this in the general section as its not really directly associated with trading...

Just recently I received my annual pension statement to find that since 2009 I had increased my pension fund by almost 30% yet my predicted annual pension had fallen by more than half. (I'm 48 now)
time to do something different I think...

Probably like most people on here I would prefer to take a 'little' more risk with higher returns than play it entirely safe...

I'm looking to invest most of my profits from Betfair and just wondered what the rest of you think/do?

I picked up on a couple of threads; I know Peter is of the Warren value school of thought and Freddy mentioned using the profits to finance some business venture (Which I've consider too, together with more property etc..)

Some prudent like minded people on here so would welcome any thoughts as to what you do?

regards
Peter

[rubysglory]

There was an interesting video post on the forum a while back on Gambling Vs Investing. People that do not know me would say I am a Gambler. Needless to say that most of what I have ever won from years 'At the Track' was lost during the GFC on stocks that I knew little about. What ever I didn't lose is now getting hammered by the 50% appreciation of the $AUD versus the $USD. Most my losses will never be recovered. Society will say that I made certain investments (based on the professional advice of 'those that know') and failed. I say that I gambled and lost. Do what you do well Peter, and perhaps even increase you staking levels relative to your profits. If that is trading on Betfair, then let that be your primary focus. If it is buying and selling the Euro, so be it. By all means however diversify, and put aside the cream for a rainy day. For me, cash is king !

rg

[Euler]

I've been a long term investor for years and it's worked really well for me. I originally started specualting using TA and the like but with limited effect, it was only when I started investing that things really began to work for me, but it's a long term game. I'll typically hold positions for very long lengths of time and often never sell. The longer you hold quality positions the more chance you get of producing very significant returns.

When you dig under the surface you realise that the modern world has often forgotten what true investment is and it actually works very well if you do the sensible things. Ultimately you are searching for yield and not price action. If you do that it tends to work out in the long term.

Buffett taught me a load of lesssons but they took quite a few years to really sink in but, for example, during the financial crisis I already had a good idea of stocks I wanted to buy and roughly when I would buy them. Since then my portfolio is up four fold. The good thing about investing is that you don't actually need to do anything on a day to day basis to earn money. Dividends arrive each month in my account whether I sit behind my screen or not. It's very liberating!

If you have spare cash from your activities I would recommend investing some of it, even if you are novice as it will get your on the right path; even if you make a few howlers.

Ultimately I will probably end up investing only as Betfair does not allow you to speculate with infinite amounts of capital and it's polices appear to be deliberately restrictive in that context. On the stock market that can only happen when you get in tens of billions, that would be nice!

[Euler]

BTW, I had some old pensions schemes from former employers and as my confidence grew I took the money out of those and reversed them into a SIPP.

[superfrank]

It's a difficult time for those not already invested and looking for yield and also relative safety.

Markets have effectively been bailed out by central banks desperate to keep asset prices high (to maintain "confidence"). Those who bought during the financial crisis have done very well, but only because of these bailouts, and the young and future generations have been left to pick up the tab.

Ever cheaper money (through low interest rates and latterly QE) is the default policy response of central banks to any crisis, but it is just as unsustainable as other bubbles. The unstated policy is now to try to slowly inflate away debt, effective devaluation, which makes protecting wealth very difficult.

I have a small chunk of my stash in physical precious metals as an insurance policy (against currency debasement and possible hyper-inflation) but, as Euler will tell you, there is no income stream from such holdings.

In times like these if you can protect the purchasing power of your wealth then you're doing very well. My advice is to do your own thing and don't buy into managed funds etc. (on average they perform worse than an index tracker) - people have been saying "buy Japan" for years, but it would have proved folly.

SF.

[freddy]

I put most of my profits into property,

It's still one of the safest investment there is imo,
you just carn't go wrong, if you take a long term view that is .

[superfrank]

I put most of my profits into property,

It's still one of the safest investment there is imo,
you just carn't go wrong, if you take a long term view that is .

Try telling that to people in Ireland!

Property is over as an "investment" - the banks know it which is why they don't want any more of it on their books.

[freddy]

It has it's up's and downs like everthing else,
But long term you will make money, althoe
obviously buying at silly prices you will be waiting a long time to see a return.

Ive heard that Property is over as an investment many many times over the years and so has my dad and my grandad who were both buiders, it's nothing new.
Im confident In 5 years time property will be worth considerably more than it is now, just as it has in the past.

[Euler]

Try telling that to people in Ireland!

You need to work out value to be succesfull at investing. The property market in Ireland was significantly overvalued. At it's height it had negative rental yields which is just crazy. As long as ou can work to yield then investment decision are easy.

[superfrank]

Im confident In 5 years time property will be worth considerably more than it is now, just as it has in the past.

In real or nominal terms?

I can't see gains in either given the outlook for the economy and declining real incomes.

[hgodden]

With property, just like with shares or anything else, it depends where you're looking. You can't generalise about it accross the board because it varies so much from country to country and region to region. IMO there are some bargains to be had at the moment in some of the more distressed markets (I don't mean Ireland!)

[freddy]

Im confident In 5 years time property will be worth considerably more than it is now, just as it has in the past.

In real or nominal terms?

I can't see gains in either. 5 years is not long term for property.

To clarify, If i were to buy a house now in the uk (there are some real bargins about), then in 5 years time im very confident i would be selling it for more than i bought it for.

Longer term then im 99.99% sure i would be.

this is why i still see it as one of the safest investments around, providing you not paying silly money for the property and are doing it as a long term plan.

[Iron]

Hi Freddy

I disagree.

The UK housing market is a bubble waiting to burst. IMHO, the trigger could be a rise in interest rates (which is bound to happen sooner or later). If people can't pay their mortgages, then that could trigger a flood of selling (with few buyers), causing prices to drop.

Also, the economy is in a very bad way, mortgages are unaffordable for most non-owners, and banks are reluctant to lend. Until those things change (which is unlikely to happen anytime soon), it's hard to see where the demand will come from to push up house prices...

I hope I'm proved wrong by events, but I doubt I will be...

Jeff

If i were to buy a house now in the uk (there are some real bargins about), then in 5 years time im very confident i would be selling it for more than i bought it for.

[superfrank]

To clarify, If i were to buy a house now in the uk (there are some real bargins about), then in 5 years time im very confident i would be selling it for more than i bought it for.

Longer term then im 99.99% sure i would be.

Without taking inflation over the period into account it's a pretty meaningless statement.

Where are these bargains?! 'none round my way!

+1 Ferru123 - the BoE and successive governments have propped up the UK market with 0.5% base rates, £ devaluation, stamp duty holidays, SMI, shared ownership schemes etc.

SMI (Support for Mortgage Interest) is the biggest joke. If someone is made redundant and owns a house the government pays the mortgage interest (until recently at a flat rate of over 6%!). Someone who rents a place and has savings over 16k gets no support whatsoever.

The UK market will adjust just like the markets in Ireland and the US have done. The day of reckoning has only been postponed here.

They don't make barge poles long enough for me to touch UK property.

[Iron]

Something else to consider is the difficulty of renting out a property once you've bought it.

I read recently that, in some areas, there's heavy demand for properties to rent. However, I suspect that, in less economically successful areas, that's not the case, as people are leaving those areas in search of work.

I started looking for a room to rent a couple of months ago, in North or Central Lancashire. I'm now looking again, as things haven't worked out at my new place, and it's surprising just how many rooms are available now that were available when I started looking...

Jeff

Without taking inflation over the period into account it's a pretty meaningless statement.

Where are these bargains?! 'none round my way!