When is the best time to invest?


#1

Originally published at: http://whichinvestmenttrust.com/when-is-the-best-time-to-invest/
The UK equity bull market, that started when QE was announced in March 2009, is now well over 6 years old which is a long time by historical standards. That makes some investors nervous about committing new funds to the market and others have gone as far as to liquidate existing positions and go into…


#2

QE is distorting the whole of the investment world be it bonds, shares or property. When it unwinds and how it unwinds I don’t know but I fear it will be highly disruptive, perhaps even making 2008 looking like a walk in the park.

most of my money is invested however because I can’t predict the next crash but what I can do is invest in income paying shares, funds, investment trusts and property and that’s what I’ve done.


#3

If I was getting nearish to my retirement, say within 5-10 years I’d be really nervous investing in the stock market and I’d probably go for cash instead.

At my younger age I’m fairly ok with being almost fully invested but still a bit worried I’ll get caught out in one almighty crash.

With the stock markets being so high it’s not an easy time to pick good investments but I reckon being a wee bit cautious is a good idea; so maybe Personal Assets and GARS from Standard Life.


#4

If you can afford to remain invested then it’s wise to do so though I agree with the authors premise about the value of dividends in stock market investing.

Good article @robert_davies


#5

Many worry about the effect of the European referendum on the stock market, especially because of the effect it had upon business investment in Scotland in the run up to their referendum, but I read an interesting blog piece a few weeks ago that highlighted how much of the FTSE 100 index has nothing to do with the UK economy at all. I can’t remember the percentage of underlying earnings that is derived from overseas for the index but it was well over half.

The FTSE 250 is more UK focused although even there many companies in this index make their money, or a large proportion of it from overseas.

The FTSE 100 hasn’t done as well as the 250 so maybe there is greater value there and a greater ability to withstand any wobble that might come from the referendum next year or the year after.

I do really agree with @robert_davies’ thesis on the compounding power of dividends and of keeping invested. If you’re out of the market you lose the income you would have made in the interim. If you can stand the short term gyrations keep invested is my view.


#6

FTSE 100 mega companies are a little bit cheaper, but some for a reason such as they’re a bank or an oil company. Having said that, I kinda like Shell because its a bit more insulated than the pure oil companies and the price of oil is likely to stay low for ever.

I also agree with @robert_davies about remaining invested unless you need access to your money. Tis dividends that ratchet up your wealth. The chart I’ve attached has been used on this site a number of times before but it always bowls me over just how much more you make by reinvesting your dividends. If you’ve never seen it before prepare to be astonished…

Or there is an easier to read PDF halfway down the page here.


#7

That chart is pretty shocking @citygirl To think that £100 could grow to £153k blows my mind, all be it over a very long timescale.

What makes it more amazing is that its just a very of the market so like what you could expect a tracker fund to deliver.

I’m actually surprised that a building society account, a proxy for cash of course could return as much as £5K, that’s the [power of inflation no doubt.


#8

That is amazing, incredible in fact!

Do you work for Scottish Widows? I was wondering if I could use this graph? I am a teacher and it would be useful to use with the kids.


#9

That Scottish Widows chart is astonishing, no other way to describe it.

It is so trust that dividends make up so much of the return of the market and it’s also why you should stay invested when a crash occurs. Also, most investors who get out are too scared to come back to the market until it’s gone up again and they’ve missed most of the rise and the dividends they would have earned whilst they were waiting.