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MrGeorge

Index fund vs other investments

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Starting looking into the s and p 500 and the global stock index fund am i missing something looking at them they seem to good to be true. You basically dump 1000 a month into one and you get roughly 1 million after 21/22 years. Is it really that simple ? And is everyone doing this and im just late to the party. This seems like a better long term investment that any other ive seen. 

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I'm not sure where you're getting 1M from.

If you're new-ish to investing, take a look at Compound Interest.

 

Investing $1000 a month for the next 22 years would only yield $1m if you achieved over 10.5% growth every single year, without fail.  That is highly unlikely, in itself.

 

Investopedia has some really great guides on this, maybe check them out?

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It really is that simple MrG :)

If you dump £1000 into my bank account every month (I'll PM you the details) for the next 22 years, I promise to give you £1M.

You can't be more simple than that, can you? ;)

Edited by Roy

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S and p 500 averages 10% gain long term been looking at the last 200 year graphs and with compound interest you basically get your million after 21/22 years after doing 1000 a month thats why everyone recommends s and p 500 for new investors 

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1 hour ago, Roy said:

It really is that simple MrG :)

If you dump £1000 into my bank account every month (I'll PM you the details) for the next 22 years, I promise to give you £1M.

You can't be more simple than that, can you? ;)

Looking for serious conversation so please dont reply to my posts

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Check the blurbs on HL.co.uk especially SIPPS and focus on their Wealth 150 funds.
Investing £1,000 per month can and has made many investors considerably richer than they would otherwise be.
However with most investments, if not all, there is risk and some investments could loose all your cash so that's why investing in multiple funds of funds is considered smart provided all your growth isn't taken away by greedy advisors and fund managers so do your homework.
 

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7 minutes ago, Pete said:

Check the blurbs on HL.co.uk especially SIPPS and focus on their Wealth 150 funds.
Investing £1,000 per month can and has made many investors considerably richer than they would otherwise be.
However with most investments, if not all, there is risk and some investments could loose all your cash so that's why investing in multiple funds of funds is considered smart provided all your growth isn't taken away by greedy advisors and fund managers so do your homework.
 

Yea ive been reading up as much as i can over the past few weeks think im leaning towards vanguards global stock index fund just trying to figure out how much to go in for each month, would still like to buy some gold but the power of compound interest is just so tempting 😆 

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7 minutes ago, MrGeorge said:

Yea ive been reading up as much as i can over the past few weeks think im leaning towards vanguards global stock index fund just trying to figure out how much to go in for each month, would still like to buy some gold but the power of compound interest is just so tempting 😆 

Compound interest and tax free growth is even better so take full advantage of ISAs and SIPPs.

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2 hours ago, MrGeorge said:

Starting looking into the s and p 500 and the global stock index fund am i missing something looking at them they seem to good to be true. You basically dump 1000 a month into one and you get roughly 1 million after 21/22 years. Is it really that simple ? And is everyone doing this and im just late to the party. This seems like a better long term investment that any other ive seen. 

You need to take the charges, albeit small I imagine for a tracker, and the cost of inflation from your calculations. Not sure what amount of inflation you want to assume, maybe 2.5% for example. Let's say the 10% is now down to 7%. Try the calculation again to see the real value of the money in 20 odd years time. You may be late to the party, not sure what age you are, I access these kind of funds via a SIPP, not without it's problems though, especially if Labour get in and start faffing with the amount of tax relief that's available.

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The FTSE All share has appreciated annually on average near to that figure since forever, I think 9% including dividends. Its figures like this that make me believe the stock market as a broad investment, attempting to be as diversified as possible with the aim of capturing human capital activity is one the most sure fire ways of generating wealth long term. I have not long been of this opinion though as most of my investing efforts have been in stock picking which can yield much better results, but for the occasional mistake (which happens from 'time to time' in my case :P). Capturing capitalism I believe this theory is called and it has become extremely easy since low cost trackers became widely available. 

I have a SIPP with this strategy at its core, just buy and hold, capture capitalism, be diversified as possible, west/east, emerging, established, the good, the bad, just get the lot and as humanity grows and produces, you take a bit of that production and ingenuity through exposure to it through the companies that drive and profit from it. Capitalism has a good track record and I think its fair to say have been positive on balance, sure there are bad years, but there are more good than bad. Some of the trackers I use are charging 0.06-0.07% per year (on top of platform costs but still!). 

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Just now, KDave said:

The FTSE All share has appreciated annually on average near to that figure since forever, I think 9% including dividends. Its figures like this that make me believe the stock market as a broad investment, attempting to be as diversified as possible with the aim of capturing human capital activity is one the most sure fire ways of generating wealth long term. I have not long been of this opinion though as most of my investing efforts have been in stock picking which can yield much better results, but for the occasional mistake (which happens from 'time to time' in my case :P). Capturing capitalism I believe this theory is called and it has become extremely easy since low cost trackers became widely available. 

I have a SIPP with this strategy at its core, just buy and hold, capture capitalism, be diversified as possible, west/east, emerging, established, the good, the bad, just get the lot and as humanity grows and produces, you take a bit of that production and ingenuity through exposure to it through the companies that drive and profit from it. Capitalism has a good track record and I think its fair to say have been positive on balance, sure there are bad years, but there are more good than bad. Some of the trackers I use are charging 0.06-0.07% per year (on top of platform costs but still!). 

Agreed, I do however prefer actively managed funds, but only if the fund manager shares my view. Fundsmith Equity is my core fund along with Scottish Mortgage for a bit of aggresive stock picking.

If we are talking about odd mistakes, it pains me to recall I sold shares in Asos at 23p, after they tripled in value, they went on to reach £70 at peak (without consolidation). I just never got back in, my kids buy stuff from there, but they are banned from mentioning the company name such is my embarrasment!

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Active management is entirely different to capturing the market, it is the equivalent of stock picking but you pay someone who says they know more than you, to do it for you. But time is money and so maybe its worth it, otherwise you need to do the research yourself and being human you probably come to the same conclusions as the guy you could have paid 1% a year to and saved yourself a few hours a week.

I feel your pain on Asos don't beat yourself up, how many people are going through the same pain with bitcoin I think its got to be a fair few or us :D I have similar failures in the past too you think I would learn, and I am confident ill make similar mistakes again but hopefully not the same ones, all part of learning. Let your winners run is a good lesson, but so is take your profits so what the hell do you do? :rolleyes:

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Index funds are great over long term.  What you have to bear in mind s the Index components changes over the year, with poorly performing companies dropped and replaced by well performing companies.  Only question is whether its all a bit frothy at the moment and due a correction, i've held off further investment due to this, though maybe missing some years of gain.

Edited by Martlet

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You probably want something more diverse than just S&P 500. At the moment, a lot of institutional money is in emerging markets. Bridgewater, for example, has a substantial part of their funds in emerging markets, and they have a strong track record. Also, you don't want to be 100% in stocks. Some cash and some gold are a good idea.

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Ended up going with the ISA vanguard global all cap index fund low fees 0.24% and 0.15% management fee but thats capped at 375£ per year maximum and yeilds 1.7% dividends so pretty happy thats why ive not bought any gold January or February trying to get as much of the 20k a year into it before April. After april my plan is to balance my isa with gold buying each month as i still want to stack gold but probably going to be limited to 1 1/2 oz per month so might finally jump into sovereigns 

Edited by MrGeorge

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Some years ago i had an ISA which invested in the Indian stock market. It was with JP Morgan.

The shares did not do very well for a start. i think i started buying when they were 60-70p. They slid down to 30 something pence. i kept paying in every month (cost averaging). i think i even increased my payments and got my average price right down. When i eventually liquidated the shares in 2008 they were over £3 a share. i guess i made 10x or 1000% profit. Other than i believed the Indian stock market would out perform there was no great skill, just the application of principles. i remember when i started work many years ago i was big on Fidelity Special Situations. The last i looked i would have been up over 10 000% on the early shares i bought. Sadly i was forced to sell these shares due to my circumstances.

The most important idea posted here is that these stocks have done very well in the past. Vanguard is a massive investment company. They shovel $billions into markets and have done well as prices rose. They are herd investors and the herd has done well. When the markets fall they do badly. 

So if one invests with Vanguard and many others you are punting on markets continuing to climb.

Now we have for several years now seen the doom and gloom merchants peddling collapse. What they have said was fundamentally correct but what has happened has not been what they have predicted. Personally i feel we are reaching a point where their predictions will start to come true.

i expect gold and silver to rise - a lot. We are seeing crazy amounts of Exchange for Physical contracts - 10's of tonnes of gold. i am told there was over 30 tonnes of EFP gold and 186.5 tonnes of silver yesterday - that is just for yesterday. The day before it was 40.85 tonnes of gold and 205 tonnes silver. Day after day long contracts are standing for delivery on the COMEX but there is no gold or silver to deliver so they get shunted over to the spot markets - https://www.bullionstar.com/blogs/koos-jansen/london-hong-kong-gold-used-to-settle-comex-futures/

This is all quite recent. It is ramping up and up. The London market is highly leveraged - i have heard 1000 paper to 1 physical. As physical is sucked out this leveraging goes up and up in a hockey stick exponential fashion. It was never envisaged there would be this demand for physical. They have used the controlled media to brainwash people into thinking SLV, GLD and futures are physical. They should be physically backed but from the volume of EFP's it is overwhelmingly obvious that futures are not. They have repeated and repeated that silver is just a commodity and not money. They have smashed the prices again and again to kill positive sentiment. It has not worked well enough.

i firmly believe that physical gold and silver will explode upwards. There will have to be a cash settlement to square the bankers' books. Longs on the COMEX will get the Friday closing price. The price will reopen on Monday much higher. Longs will have been cheated and shorts will be bankrupted. There will be no gold or silver for sale. SLV and GLD will have been drained. There will be excuses and obfuscation.

i have made another application for tokens in Kinesis. This is a crypto token backed by gold or silver. Those minting these tokens (like me) will get a 'royalty' every time they change hands. This is drawing a lot of attention. The initial offering will be oversubscribed. This is very attractive to institutions desperate for yield.

The Fed had another FOMC meeting yesterday. The Fed claims rates will rise 4 times this year. The Fed dictates nothing. The markets are looking towards higher yields. Rising bond yields for pension and investment companies might sound good but consider this.

$1 million of bonds yield say 2.5% 

If that yield went to 5% (for easy reckoning) the price of the pre-existing bonds must fall to a half their present value. That means $trillions will be wiped off the books. 

A pre-existing $1 million bond holder gets $25 000 in interest. If interest rates dictated bond yields moved to 5%, these bond holders will still get $25 000 in interest but their bonds will drop to $500 000 in value.

Also consider that falling bond prices are not seen as good for stocks.

https://www.cnbc.com/2018/01/11/why-falling-bond-prices-are-traditionally-seen-as-bad-for-stocks.html

Do the paper markets look like a good bet at the moment?

Gold and silver look good if you are in physical or something that is 100% physical say like PSLV (Sprott's equivalent of SLV). It looks good in the likes of Kinesis, crypto title of ownership over vaulted metal with a yield. Mining shares are down and when metal prices climb then miners will follow up. I keep mentioning global cooling. Expect food prices to go up - A LOT. So agriculturals will increase. i would not be in a general index fund. We have had a warning with the indices taking a recent tumble. This happens before big falls.

Edited by sixgun

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Peter schiff has been heralding a crash, saying gold will go up, stocks will go down and despite the opposite happening, he has been right for the past 30 years. Eventually fundamentals and reality will come home to roost. 

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Just now, KDave said:

Peter schiff has been heralding a crash, saying gold will go up, stocks will go down and despite the opposite happening, he has been right for the past 30 years. Eventually fundamentals and reality will come home to roost. 

You can massage figures, you can tell bold faced lies. You can create quadrillions of fiat, you can tap dark pools of fiat dollars. You can do corporate buy backs, you can get the controlled media to spout nonsense. What you cannot do is deliver physical gold and silver when there is none to deliver. This is what the Exchange for Physicals are telling us. This telegraphs the end times for this paper precious metal charade. There will be defaults. There will be a failure to deliver at some point. This time is racing towards us. Hundreds of tonnes of gold EFP's every week. This is the face of reality and the Money Masters are going to have to face it.

Goldman Sachs has been stashing physical gold for almost a year. JP Morgan has been trashing the paper markets to bleed out a mountain of physical silver. These people are not stupid, they may be psychopaths but they are not stupid.

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Do you remember the Chinese commodities default a few years ago, I can't remember the tonnage but it was an issue with aluminium that didn't exist being used as collateral. When the fraud was discovered, no one batted an eyelid at what should have been a confidence killer if you think about it. Like I say I'm not sure the sums involved, so it may have been easy to sweep under the carpet, just scape goat one company and on they carry. The gold market at 1000 to 1 is clearly a different and much larger beast. But it does raise doubt as to whether a gold paper market default will be managed in the same way, shrugged off some of the more overleveraged and on we carry? 

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@sixgun why do you not recommend index funds ? There literally the easiest way to get a 💩 load of money and the global all cap index has slightly done better than the s and p 500 tnink its was 10.4% vs 10.2% over the past 20 years so basically the same. So going on history and i know just cause it happened in the past doesn’t mean it will happen in the future but i am very happy to take my chances and bring on the next bear market cause im in the index fund for the long term, people who go into stocks short term are gamlers not investors in my opinion 

Edited by MrGeorge

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12 minutes ago, MrGeorge said:

@sixgun why do you not recommend index funds ? There literally the easiest way to get a 💩 load of money and the global all cap index has slightly done better than the s and p 500 tnink its was 10.4% vs 10.2% over the past 20 years so basically the same. So going on history and i know just cause it happened in the past doesn’t mean it will happen in the future but i am very happy to take my chances and bring on the next bear market cause im in the index fund for the long term, people who go into stocks short term are gamlers not investors in my opinion 

i have been following the stock markets for over 30 years, my experience tells me to be very cautious at this point in the cycle and so i do not recommend the indices. i have explained my reasoning for this. We are due for a big correction. All the stars are aligning for this. Of course there will be many pundits recommending the paper markets. Vanguard wants to carry on making money. The smart money which is leaving the markets need someone to sell to. For me the only thing that can keep the markets rising is inflation. The best returning stock market has been in Venezuela.

Dow-Jones-Long-Term-Chart-2000-2017-NEW.png

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yea I know lots of people going about corrections and bear markets incoming but after reading unshakable and the little book on common sense investing, its something thats going to happen regardless and regularly when in stocks and you should be taking advantage of they times. Even with all these corrections bear markets show me another long term investment that would give you the same return for very little risk 

Edited by MrGeorge

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14 minutes ago, MrGeorge said:

 Even with all these corrections bear markets show me another long term investment that would give you the same return for very little risk 

Probably anything rare and historically collectible, antiques, paintings etc prices only ever seem to go up and up (assuming it's not something that's a short term fad) 

Domains in the past 20 years also, but who can say what will happen with the internet in the long term now so maybe that's not as safe anymore. 

Personally I like investing in myself, trying to use my own knowledge and skill, at least then if it goes tits up I only have one person to blame

Investments that require nothing but giving someone else a meaningful amount of my wealth make me feel very uncomfortable, that's why I would avoid anything like this. 

 

 

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