Nest Egg advice please!

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Old Mar 5, 2011, 6:52pm   #1
 
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Nest Egg advice please!

A while ago, I inherited some money and decided (after some advice) to invest it into the British stock market through an investment manager.

Having done some reading around, I learnt that I may be better off investing it into an index tracker fund directly and avoiding the costly management fees.

I guess I have three questions:

1) Does this sound like a good idea?
2) If so, how should go about finding a suitable tracker fund to invest into?
3) Should I diversify my portfolio by investing in bonds as well?

Thanks very much for people's advice in advance.
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Old Mar 5, 2011, 10:41pm   #2
 
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Re: Nest Egg advice please!

Quote:
Originally Posted by The Handler View Post
A while ago, I inherited some money and decided (after some advice) to invest it into the British stock market through an investment manager.

Having done some reading around, I learnt that I may be better off investing it into an index tracker fund directly and avoiding the costly management fees.

I guess I have three questions:

1) Does this sound like a good idea?
2) If so, how should go about finding a suitable tracker fund to invest into?
3) Should I diversify my portfolio by investing in bonds as well?

Thanks very much for people's advice in advance.
Don't waste your money on these sort of things. Most fund managers lose money over time. Those who are actually able to make any money usually cost YOU money by their hefty commissions. Why would you just hand over your money to someone and think they would have any incentive to protect it?

Unless you're willing to manage your money yourself and make all the decisions as to where it goes, I suggest you invest in real estate. Not only are the returns greater, but you'll have something physical to represent your cash. Focus on finding property in prime areas - no matter how bad the economy, those places will not fall in value.

Don't just throw your money in an index tracker fund and hope the market will give you 10% a year for the rest of your life - it simply doesn't work like that.
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Old Mar 5, 2011, 10:56pm   #3
 
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Re: Nest Egg advice please!

Quote:
Originally Posted by The Handler View Post
A while ago, I inherited some money and decided (after some advice) to invest it into the British stock market through an investment manager.

Having done some reading around, I learnt that I may be better off investing it into an index tracker fund directly and avoiding the costly management fees.

I guess I have three questions:

1) Does this sound like a good idea?
2) If so, how should go about finding a suitable tracker fund to invest into?
3) Should I diversify my portfolio by investing in bonds as well?

Thanks very much for people's advice in advance.
We had lows in the stock market in 2002 and 2008, i reckon we are going to another chance to buy stocks cheap before this secular bear market in stocks comes to an end.
I would recommend keeping your powder dry until then.
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Old Mar 6, 2011, 9:00pm   #4
 
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Re: Nest Egg advice please!

The Handler started this thread Thanks for the responses guys.

With regards to real estate, I probably should have mentioned that the inheritance is mid 5 figures, which doesn't seem enough to purchase a worthwhile property. I also prefer the liquidity of stocks.

Donaldduke, could you explain what you mean by 'keeping your powder dry'? Forgive my ignorance. Are you suggesting I should stay with the investment manager? If so, what would be the advantages of that compared to investing in a tracker fund? From what I've been led to believe, if they are, more or less, investing in the same thing, you're better off avoiding the management fees by taking the tracker fund.

Thanks again.
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Old Mar 6, 2011, 9:18pm   #5
 
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Re: Nest Egg advice please!

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Originally Posted by The Handler View Post

Donaldduke, could you explain what you mean by 'keeping your powder dry'? Forgive my ignorance. Are you suggesting I should stay with the investment manager? If so, what would be the advantages of that compared to investing in a tracker fund? From what I've been led to believe, if they are, more or less, investing in the same thing, you're better off avoiding the management fees by taking the tracker fund.
I was suggesting that if you do decide to go down the tracker route you might consider waiting for a large correction in the stock market before you invest in a tracker fund.
Only do this if you share my belief that there will be another correction similar to what we saw in 2002 and 2008. The risk of course is that the correction never happens.
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Old Mar 6, 2011, 9:19pm   #6
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Re: Nest Egg advice please!

It depends. Some managers are rubbish, some are mediocre, and some are excellent. Do your reasearch.

Personally, I think trackers are a waste of time. Find a good manager, or trade ETFs if you prefer. But sticking it in a tracker is for bummers.



Quote:
Originally Posted by The Handler View Post
Thanks for the responses guys.

With regards to real estate, I probably should have mentioned that the inheritance is mid 5 figures, which doesn't seem enough to purchase a worthwhile property. I also prefer the liquidity of stocks.

Donaldduke, could you explain what you mean by 'keeping your powder dry'? Forgive my ignorance. Are you suggesting I should stay with the investment manager? If so, what would be the advantages of that compared to investing in a tracker fund? From what I've been led to believe, if they are, more or less, investing in the same thing, you're better off avoiding the management fees by taking the tracker fund.

Thanks again.
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Old Mar 6, 2011, 9:21pm   #7
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Re: Nest Egg advice please!

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Originally Posted by donaldduke View Post
I was suggesting that if you do decide to go down the tracker route you might consider waiting for a large correction in the stock market before you invest in a tracker fund.
Only do this if you share my belief that there will be another correction similar to what we saw in 2002 and 2008. The risk of course is that the correction never happens.
Secular bear market my arris DD. Fiver says you'll be waiting for your 08-style correction until the Book of Revelations starts happening.
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Old Mar 6, 2011, 9:31pm   #8
 
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Re: Nest Egg advice please!

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Secular bear market my arris DD. Fiver says you'll be waiting for your 08-style correction until the Book of Revelations starts happening.
There is always the possibility we keep going up.

But its ONLY a 50% drop from current levels to take out the 2008 lows.

When the VIX goes to 50, the market falls 5% a day, day after day.
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Old Mar 6, 2011, 9:36pm   #9
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Re: Nest Egg advice please!

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There is always the possibility we keep going up.

But its ONLY a 50% drop from current levels to take out the 2008 lows.

When the VIX goes to 50, the market falls 5% a day, day after day.
Enough of your prevaricatin'. Are you puttin' up the 5 note or not?

(Serious response - look at what it took to get us down there in 2008. We'd need to be looking at some bad sh1t to take us that far down again).
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Old Mar 6, 2011, 9:40pm   #10
 
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Re: Nest Egg advice please!

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Originally Posted by Pazienza View Post
(Serious response - look at what it took to get us down there in 2008. We'd need to be looking at some bad sh1t to take us that far down again).
Maybe, or it could be that the market is in a multi decade range.. and was going to go down anyway, regardless of the news.

Anyway i accept your bet!
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