What Saving/investment Plan?

[Blake7]

I have a few investments in the Uk - couple of properties, pension plan etc but would like to put away another 200 - 300 pounds a month somewhere safe. Has anyone got any good advice? Unit trusts? Gold? Also I am registered as a non uk resident and reside in Thailand.

Edited January 22, 2005 by Blake7

[pedro01]

I have a few investments in the Uk - couple of properties, pension plan etc but would like to put away another 200 - 300 pounds a month somewhere safe. Has anyone got any good advice? Unit trusts? Gold? Also I am registered as a non uk resident and reside in Thailand.

<{POST_SNAPBACK}>

Don't bother with mutual funds - they exist purely to line the pockets of brokers.

With 200-300 pounds per month, it's essential to keep fees at a minimum, otherwise, they'll eat a large % of your investment. For instance, if you pay 20 pounds per trade each month, you already have to make 7.5-10%.

Common wisdom says diversify - with this kind of money, I'd save each month in the bank until you have 1,000 & then invest.

If you have 1,000 each quarter, put that 1,000 into a different investment type (Govt bonds, stocks, REITS) each quarter. For stocks, the best way to invest is to not go for individual stocks but for a good, fee free index tracker - QQQ to follow the NASDAQ.

So maybe first quarter a stock tracker on the UK market, then next quarter an Asian REIT (Real Estate Investment Trust) , then next quarter a US Govt Bond. This will be pretty diverse - theory being it's unlikely they'll all crash as there's little correlation between them.

Read "What Wall Street Doesn't Want You to Know" by Larry E Swedroe & you'll avoid being fleeced on charges...

[Harmonica]

Blake,

Property market in UK has already turned -- this is a far bigger investment than the 200-300 pounds/mo. you're talking about. Why not secure that by taking profits now before they evaporate?

Cash is king at this juncture; question is, "which currency to hold?" If Deflation does show up , Cash will be the next Pope.

[LivinLOS]

I would be buying a Krugerand a month..

[pedro01]

Here's something I dug up on trackers...

Remember - this is just for the equity portion of your portfolio

Why Trackers Beat Managed Funds

Why do managed funds do so poorly as a group? The first thing is to realise that, taken together, managed funds can't outperform the index. Why? Taken as a group, they are the market (and therefore the index). You can't outperform yourself. It's the bit like the fact that most drivers think they are better than average. It's just not possible.

Trackers do better than most managed funds primarily because their charges tend to be a lot lower. They don't employ expensive fund managers that make numerous buy and sell decisions that in the end merely cancel each other out. Trackers typically have no initial charge and an annual management charge of 1% or less. Managed funds on the other hand have initial charges of up to 5% and annual charges of around 1.5%. On top of that they also tend to buy and sell more shares each year, so they incur more in the way of dealing charges too. Now these amounts may not sound like a lot but over 5 years or more, these charges start to add up and it means that managed funds lag trackers by a considerable amount.

Say you put £1,000 into a managed fund and £1,000 into a tracker, and before charges they both grow at 11% a year -- not a bad performance at all! However, the combination of initial charges and annual charges takes the managed fund's return down to 8.5% a year, while the index tracker charges no initial fee and 1% a year, taking its return down to 10% a year.

After 10 years your managed fund would be worth £2,261 but your tracker would be worth £2,594. Over 20 years the managed fund would grow to £5,112 and the tracker would return £6,728. So your extra 1.5% a year return means that your final sum after 20 years would be 24% higher.

[Blake7]

Hmmmm.

So pedro, a tracker sounds just the ticket. Should I do invest online? Any companies you recommend?

As for my Uk property - When I was 23 I left the Uk for 7 years and when I came back all house prices had shot up and I ended up staying at my mums for a while before I could rent and then buy. Not clever. I therefore have a psychological reason to keep my Uk property... makes me feel more secure. In the long term it should still be a fairly safe bet and I dont really know what I would do with the money if I did sell up.

[brianbrain]

Blake,

Property market in UK has already turned..........Why not secure that by taking profits now before they evaporate?

<{POST_SNAPBACK}>

Depends on where you are talking about, doesn't it? Sure he could sell now and realise the capital gain but that could lock him out of the UK property market if things don't turn as you predict. Think I'll keep my house and steady rental income for now.

[Harmonica]

Blake,

Property market in UK has already turned..........Why not secure that by taking profits now before they evaporate?

Depends on where you are talking about, doesn't it? Sure he could sell now and realise the capital gain but that could lock him out of the UK property market if things don't turn as you predict. Think I'll keep my house and steady rental income for now.

Sounds familiar -- like I'll hang on to this hot stock that I've been holding on to for years because it's been paying a dividend of 5%; yeah, that's a good dividend but while this little trickle is coming in, the original CAPITAL is getting whacked to the tune of 20% in 4 months and counting!!!!! Front-door and back-door -- both need watching! Regards