chiangmai
Crazy Mango Extraordinaire
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Post by chiangmai on Jul 27, 2022 16:40:48 GMT 7
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Post by rgs2001uk on Jul 27, 2022 21:26:30 GMT 7
Never, that includes going back to pre KYC days. Products may change, current flavour of the month may change, anyone for endowment policies or annuities, but the basics of investing never change. You either want wealth generation, wealth protection or regular income, in my case wealth generation.What you've described are objectives, this is not about those objectives, it's about how you achieve them and how much risk you are willing to accept in reaching those objectives. If you say up front that it doesn't matter one jot if you lose your entire investment and that you want to generate the largest fastest returns possible, you're saying you have a super high tolerance for risk. In that case you'll probably end up with a handful of risk level 6 or 7, 100% equities funds, pretty much like you have....yours is 100/0. When times are good you'll see brilliant returns, when times are bad you'll see/have seen falls up to 50%, really high volatility, exactly where you end up remains to be seen. But if for example you were to sell say BG European or similar and invest that 10% into a fixed income fund (or similar), you'd could be said to holding a 90/10 portfolio and your volatility (the range of price changes over time) would decrease somewhat as a result. The trade off of course is that whilst you'll see less volatility overall during the bad times, you'll also see lower levels of gain in the good time. I don't know how you feel but if I was in drawdown, the last thing I want is 50% swings in the value of my holdings! If on the other hand you say you are risk averse, you're getting on in years and you'd prefer not to take on anything more than average risk, you'll end up with a mix of mostly level 3 & 4 equities funds and a "handful of other things", pretty much like I have. Mine is 38/22 +40% cash. In between our two approaches, which are pretty much at opposite ends of the spectrum, exists a number of other options that tilt towards my preference or toward yours. FWIW my overall portfolio volatility during the falls this year was around 7%. Note: endowment policies and annuities are way outside of this discussion, they are other financial services products unrelated to investing in the context of our discussions. Some of the things that are in scope are items such as gilts, government bonds, corporate bonds, gold, REITS, fixed income funds, those are some of the things in the 40 component of a 60/40 investment portfolio. Two cheeks of the same ass, your objectives will determine what investments you choose. Correct my portfolio is classified as risk level 6, Thats not something that happened overnight, it took me years to get to this stage, trial and error, spreadsheets and comparison charts blah blah blah. The bottom line is, can you sleep worry free in your bed at night, nothing else matters but peace of mind. I sleep soundly.
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chiangmai
Crazy Mango Extraordinaire
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Post by chiangmai on Jul 28, 2022 4:51:37 GMT 7
What you've described are objectives, this is not about those objectives, it's about how you achieve them and how much risk you are willing to accept in reaching those objectives. If you say up front that it doesn't matter one jot if you lose your entire investment and that you want to generate the largest fastest returns possible, you're saying you have a super high tolerance for risk. In that case you'll probably end up with a handful of risk level 6 or 7, 100% equities funds, pretty much like you have....yours is 100/0. When times are good you'll see brilliant returns, when times are bad you'll see/have seen falls up to 50%, really high volatility, exactly where you end up remains to be seen. But if for example you were to sell say BG European or similar and invest that 10% into a fixed income fund (or similar), you'd could be said to holding a 90/10 portfolio and your volatility (the range of price changes over time) would decrease somewhat as a result. The trade off of course is that whilst you'll see less volatility overall during the bad times, you'll also see lower levels of gain in the good time. I don't know how you feel but if I was in drawdown, the last thing I want is 50% swings in the value of my holdings! If on the other hand you say you are risk averse, you're getting on in years and you'd prefer not to take on anything more than average risk, you'll end up with a mix of mostly level 3 & 4 equities funds and a "handful of other things", pretty much like I have. Mine is 38/22 +40% cash. In between our two approaches, which are pretty much at opposite ends of the spectrum, exists a number of other options that tilt towards my preference or toward yours. FWIW my overall portfolio volatility during the falls this year was around 7%. Note: endowment policies and annuities are way outside of this discussion, they are other financial services products unrelated to investing in the context of our discussions. Some of the things that are in scope are items such as gilts, government bonds, corporate bonds, gold, REITS, fixed income funds, those are some of the things in the 40 component of a 60/40 investment portfolio. Two cheeks of the same ass, your objectives will determine what investments you choose. Correct my portfolio is classified as risk level 6, Thats not something that happened overnight, it took me years to get to this stage, trial and error, spreadsheets and comparison charts blah blah blah. The bottom line is, can you sleep worry free in your bed at night, nothing else matters but peace of mind. I sleep soundly. I hate to say this rgs but I think there are parts of the risk equation that you don't fully understand. Perhaps you've said to your broker that you don't care about risk, which is why you've never been offered "other" products and why you've never heard of 60/40 and all its variants. I am surprised though that you've never been advised to mitigate your risk whatsoever. Whilst your objectives will help determine what investments you chose, your attitude to risk is equally helpful, if not much more so because there are many ways to meet an objective, using different approaches. I'm not going to comment further. If you're happy with the contents of your portfolio and the position you are in, that's all that matters.
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chiangmai
Crazy Mango Extraordinaire
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Post by chiangmai on Jul 28, 2022 7:54:37 GMT 7
I thought this may help others, it's the contribution analysis for the past year, how much each of my funds gained or lost over the period. Note that total loss over 12 months was -3.47%.
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Post by rgs2001uk on Jul 28, 2022 21:04:04 GMT 7
Two cheeks of the same ass, your objectives will determine what investments you choose. Correct my portfolio is classified as risk level 6, Thats not something that happened overnight, it took me years to get to this stage, trial and error, spreadsheets and comparison charts blah blah blah. The bottom line is, can you sleep worry free in your bed at night, nothing else matters but peace of mind. I sleep soundly. I hate to say this rgs but I think there are parts of the risk equation that you don't fully understand. Perhaps you've said to your broker that you don't care about risk, which is why you've never been offered "other" products and why you've never heard of 60/40 and all its variants. I am surprised though that you've never been advised to mitigate your risk whatsoever. Whilst your objectives will help determine what investments you chose, your attitude to risk is equally helpful, if not much more so because there are many ways to meet an objective, using different approaches. I'm not going to comment further. If you're happy with the contents of your portfolio and the position you are in, that's all that matters. You think risk, I think reward. Its been spoken about on numerous occasions with my broker, and when the time comes my portfolio will be reassessed to suit my needs, for the time being a more defensive portfolio is not on the agenda. I have said it more than once, my portfolio isnt for everyone, for the simple reason not everyone is in my position.
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Post by rgs2001uk on Jul 28, 2022 22:35:51 GMT 7
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chiangmai
Crazy Mango Extraordinaire
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Post by chiangmai on Jul 29, 2022 2:55:06 GMT 7
"You think risk, I think reward".
Yup, hole in one, that's exactly it.
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chiangmai
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Post by chiangmai on Jul 29, 2022 7:11:09 GMT 7
I've only become so risk averse since I saw the current economic climate starting to unfold, before that point I was as adventurous as anyone else although I was never as adventurous as you! I started investing in July 2019 using a spare, limited pension pot, since that time I've increased the value of my holdings by 32.4% and I'm very pleased with that. This profit is attributable entirely to Fletch who was very kind and patient and I haven't forgotten that I owe a debt of gratitude. But as soon as the yield curve started to invert, the price of the 10 year bond started to fall and Putin began to sabre rattle, I thought a flight to safety was appropriate so I acted....it will go down as one of the smarter things I've ever done. I think if economic conditions warrant it a person should change their strategy, if that's viewed as market timing, so be it, I think it's common sense. Previously I thought only reward, today I think risk/reward but with a much heavier emphasis on risk. BTW, since 2019 I have bought and sold 11 funds, I've chopped and changed and broken all the rules when doing so. I recently sat down and tried to figure out why I dumped each one. Several of the changes had their basis in economics, I dumped a couple because of the 10 year bond performance, GAM was one of those. JPM EM was another, it's a brilliant fund but I was sure that inflation would come along and that EM would get hurt as a result, I even considered TIPS as a result but didn't act. I dumped one or two because they were too expensive but hadn't appreciated that before, a couple of them I wish I had kept them but given the events of the past year I'm glad they are all gone. So, even though I lost money by changing funds I still came out ahead plus I learned a lot on the way. The other issue that separates us is that I will be really happy with 8% or 10% return pa, I doubt that you would be happy with anything under 15%. I think an investor should decide in advance what is their desired return otherwise they'll never know when they've met their objective and it just becomes a hunt to make as a much as possible, without a strategy. The 8/10% expectation, along with the need for low risk, drives my choice of an investment fund. You on the otherhand have made great profits but it will take you the next twelve months to recover your losses from the past year, here's an approximate contribution analysis of your holdings. Note that the one year loss is almost -20%.
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chiangmai
Crazy Mango Extraordinaire
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Post by chiangmai on Jul 29, 2022 8:21:50 GMT 7
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Moobin
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Post by Moobin on Jul 29, 2022 19:07:32 GMT 7
The other issue that separates us is that I will be really happy with 8% or 10% return pa, I doubt that you would be happy with anything under 15%. I think an investor should decide in advance what is their desired return otherwise they'll never know when they've met their objective and it just becomes a hunt to make as a much as possible, without a strategy. The 8/10% expectation, along with the need for low risk, drives my choice of an investment fund. You on the otherhand have made great profits but it will take you the next twelve months to recover your losses from the past year, here's an approximate contribution analysis of your holdings. Note that the one year loss is almost -20%. I would be happy with an 8% to 10% return too. But, unfortunately, it doesn't seem to be happening. Hopefully, I'll have enough cash to cover the first few years of retirement, which starts in 5 months.
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chiangmai
Crazy Mango Extraordinaire
Posts: 6,232
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Post by chiangmai on Jul 29, 2022 19:33:56 GMT 7
It could be a totally different ballgame in 12 months time, the next Fed meeting in September may give some clues. Personally, I'm not in a rush to change/buy anything right now but it's good to know what I intend to do later, so what if that approach turns out to cost me some profit.
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Post by rgs2001uk on Jul 29, 2022 20:57:34 GMT 7
I've only become so risk averse since I saw the current economic climate starting to unfold, before that point I was as adventurous as anyone else although I was never as adventurous as you! I started investing in July 2019 using a spare, limited pension pot, since that time I've increased the value of my holdings by 32.4% and I'm very pleased with that. This profit is attributable entirely to Fletch who was very kind and patient and I haven't forgotten that I owe a debt of gratitude. But as soon as the yield curve started to invert, the price of the 10 year bond started to fall and Putin began to sabre rattle, I thought a flight to safety was appropriate so I acted....it will go down as one of the smarter things I've ever done. I think if economic conditions warrant it a person should change their strategy, if that's viewed as market timing, so be it, I think it's common sense. Previously I thought only reward, today I think risk/reward but with a much heavier emphasis on risk. BTW, since 2019 I have bought and sold 11 funds, I've chopped and changed and broken all the rules when doing so. I recently sat down and tried to figure out why I dumped each one. Several of the changes had their basis in economics, I dumped a couple because of the 10 year bond performance, GAM was one of those. JPM EM was another, it's a brilliant fund but I was sure that inflation would come along and that EM would get hurt as a result, I even considered TIPS as a result but didn't act. I dumped one or two because they were too expensive but hadn't appreciated that before, a couple of them I wish I had kept them but given the events of the past year I'm glad they are all gone. So, even though I lost money by changing funds I still came out ahead plus I learned a lot on the way. The other issue that separates us is that I will be really happy with 8% or 10% return pa, I doubt that you would be happy with anything under 15%. I think an investor should decide in advance what is their desired return otherwise they'll never know when they've met their objective and it just becomes a hunt to make as a much as possible, without a strategy. The 8/10% expectation, along with the need for low risk, drives my choice of an investment fund. You on the otherhand have made great profits but it will take you the next twelve months to recover your losses from the past year, here's an approximate contribution analysis of your holdings. Note that the one year loss is almost -20%. Thank you for that, top lad is Fletch, knows his stuff, also an excellent lad to go on the p**s with, no talking shop, and no airs and graces, a proper diamond geezer and gentleman.
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Post by rgs2001uk on Jul 29, 2022 20:59:06 GMT 7
The other issue that separates us is that I will be really happy with 8% or 10% return pa, I doubt that you would be happy with anything under 15%. I think an investor should decide in advance what is their desired return otherwise they'll never know when they've met their objective and it just becomes a hunt to make as a much as possible, without a strategy. The 8/10% expectation, along with the need for low risk, drives my choice of an investment fund. You on the otherhand have made great profits but it will take you the next twelve months to recover your losses from the past year, here's an approximate contribution analysis of your holdings. Note that the one year loss is almost -20%. I would be happy with an 8% to 10% return too. But, unfortunately, it doesn't seem to be happening. Hopefully, I'll have enough cash to cover the first few years of retirement, which starts in 5 months. Go for it, best of luck.
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chiangmai
Crazy Mango Extraordinaire
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Post by chiangmai on Jul 30, 2022 10:29:27 GMT 7
There is either one heck of a crash coming or all the rules surrounding economics and investing are about to change, even if the S&P did increase by 8.5% since mid June. Markets are saying that inflation has been beaten and that rates won't need to go any higher than are already priced in, good luck with that one! "You would think that a stock rebound is a good thing, even if it’s just a bear market rally. But some say this isn’t the case. That’s because rising stocks mean a loosening of financial conditions. And the Fed is seeking to tighten financial conditions to slow inflation". www.thestreet.com/investing/why-rebounding-stocks-may-not-be-a-good-thing?puc=yahoo&cm_ven=YAHOOIf I was a betting man, which I'm not, I'd bet that getting out of the markets now would be a good thing, as long as it didn't mean crystalising substantial losses to date that is.
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chiangmai
Crazy Mango Extraordinaire
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Post by chiangmai on Jul 30, 2022 10:45:19 GMT 7
The other issue that separates us is that I will be really happy with 8% or 10% return pa, I doubt that you would be happy with anything under 15%. I think an investor should decide in advance what is their desired return otherwise they'll never know when they've met their objective and it just becomes a hunt to make as a much as possible, without a strategy. The 8/10% expectation, along with the need for low risk, drives my choice of an investment fund. You on the otherhand have made great profits but it will take you the next twelve months to recover your losses from the past year, here's an approximate contribution analysis of your holdings. Note that the one year loss is almost -20%. I would be happy with an 8% to 10% return too. But, unfortunately, it doesn't seem to be happening. Hopefully, I'll have enough cash to cover the first few years of retirement, which starts in 5 months. I tried to model the effect of different rates of growth each year alongside different pension drawdown amounts each month. I said that markets growth would produce conservative returns of between 4% and 8% per year for the next 10 years. I then said that my drawdown, if I chose to take it, would vary between 6.5% and 7.2% per year over the same period. The difference between the two figures varied from -2.5% to 0.8%, the effect of that being that the pot (not adjusted for inflation) only shrinks by about 4.5% over the 10 years whilst still providing consistent monthly income during the same period. All of that is a round about way of suggesting that you might want to try and figure out how much you want to drawdown from your pension pot each year and see how that percentage compares against the returns the markets might produce. The bottom line is likely to be that you can tolerate poor markets performance for longer than you think, provided your drawdown amount isn't excessive.
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