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Thread: How to invest and when advice please

  1. #1
    LouiseToronies
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    Default How to invest and when advice please

    Hi everyone can someone please advise me if I have some money to invest would it be best to keep it for a few years and if so where could I put it to help it grow or would you advise to invest right now with the current economy going ok. Forgive me I have just arrived from Canada so am still not sure on how things work here but I just don't want to sit on my money and let it go stale. Thank you, Louise xx

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    Hi Louise-

    I don't know if anyone following the board is a financial advisor (I'm certainly not one) so I'm not sure if we can directly answer your question. Besides, I'd be a little leery about accepting investment advice from a group strangers on the internet...

    I'd suggest you seek the advice of an investment advisor or professional broker. I don't know what firms are in the UK off the top of my head but I'm sure there are many. Talk to more than one and ask them about how they are paid and what (if any) charges they might include for investing your money. My broker is with Morgan Stanley in the US (he was also a fraternity brother, so it was an easy choice for me).

    You should have an investing goal. If you plan to use the money in a few years then you obviously want to preserve the principal, so they might advise you to purchase more conservative funds or stocks that will retain their value. If you are willing to gamble more there are more aggressive investments that can have a wider swing in returns (and also potentially in losses).

    An investment advisor will be happy to educate you on the principles of investing, but you should learn as much about it as you can before you walk into their office. Do some research on the internet. Buy an "Investments for Dummies" book. Don't be afraid to ask questions. The better educated you are the better investor you will be.

    Good luck,

    Pita

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    Pita said something very important there. "...happy to educate you...". Only invest in something you understand. If you meet with an advisor and they tell you "Put your money here" without explaining why then I wouldn't do it. If they take the time to show you what they recommend and they show you the past performance of the fund then they are teaching you. Once you learn, you don't have to master it just get a good idea, then you should feel a lot more comfortable with where your money is going and have a reasonable expectation of how it could perform.

  4. #4
    LouiseToronies
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    Thank you soo much Pita and Chris, well I am still new at looking into this but all this advice helps. I know I can afford to keep it locked away for a few years so I want to invest well and not waste this time!

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    With you being in the UK it is hard to give you specific suggestions as if you were in the USA where I am more familiar with the options that would be available. Still there is going to be a lot of similarity. Generally if someone was investing for the long haul stocks would be the way to go. Perhaps a mutual fund or ETF. There can be periods of low returns or even losses for a particular time but over the long haul the stock market has returned just about 10% a year which is hard to beat. However since you are more investing short term there would be a chance that the value would decrease and if there is a major upheaval of some kind, decrease significantly. One other option is bonds. I would suggest avoiding bonds. The return is low and if interest rates start to decline the value of the bonds will decline proportionally. However if you could find a bond fund that focuses on short term bonds (5 years of less) and there are some that might be a good choice. It is not going to be a big return however but there will be a relatively safe return. Here Money markets would probably be my top choice. Some here such as GE Capital and Ally (sp?) are around a 1% return which isn't bad for safe money. You should have something similar available.

    If you use a financial adviser and with out knowing what the regulations are there try to use a fee based adviser. Here there are two types, fee and no fee. The bad part is the fee adviser will charge you for his time. The no fee one doesn't. He makes his money with a commission on what he sells you. The bad part is he has more to gain by selling you something he makes a lot of money on than something you make a lot of money on. A for fee adviser gets no commission and has nothing to gain by selling you a bad product and there are a lot of bad products out there.

    If you go with a mutual fund or ETF most people would look at past performance. That often doesn't mean a lot and there is little tie in to future performance. Instead pay close attention to management fees. History has shown that the ones with the lowest management fees provide the best returns over the years.

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    I'd be hesitant with investing in stocks and mutual funds right now. In my uneducated blue collar opinion, the markets (North American at least) have been going strong for a long time. Again, this is just my opinion.

    If you only apply one rule, let it be this:
    No investment is better than a bad investment.
    Brad Miedema
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    Good point Brad, The market being at all time highs concerns me sometimes. Of course i thought the same thing last year and I think I thought the same thing the year before. On the other hand the average P/E is much lower than it has been at other tops and some segments of the market are quite reasonable. Corporate profits seem to be weakening some and the fed is likely to raise rates which could affect the market to a degree, the situation in oil could throw the economy into a tailspin and of course there is always risk of a major event that sends the market into a downward spiral so there is some risk.

    On the other hand the economy seems pretty stable, more jobs are coming back to the USA from China, we can export oil instead of importing it, the unemployment rate is the best it has been in some time, the lower gas prices are putting more money into the pocket of the average American and things seem pretty stable.

    I do agree with you, if I wanted to park some money for a fixed, relatively short term and not risk having less than I started with the stock market is most likely not the preferred choice. There is risk of loss with the stock market as well as the possibility of a bigger return than other options might offer.

    My top recommendation would either be a money market fund (I use G.E. Capital with a 1.05 interest rate) or a short term bond fund which could return 2% or so a year without much downside risk (there is some) Some short term bond funds may have a bit higher return but also may carry a bit more risk.

  8. #8
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    The stock market, but I think you have to be a U.S. resident to invest in NASDAQ or NYSE. Not sure though, I haven't looked into overseas investing.

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    I actually liquidated all of my mutual funds early this year in an effort to reduce debt and fix a long standing mistake of an investment loan with the worst possible timing. Within 2 months of taking on the loan (mid to late 2007) the markets hit rock bottom and my collateral was worth 40% of the value of the loan. Thankfully the loan was not called and I was able to ride out a 125%+ gain (from bottom) and make about $100 (virtually nothing but I didn't have to eat a real loss) after loan payments and inflation.

    I had actually thought of buying into oil futures, but with more untapped oil fields being announced (Britain and NWT, Canada) I can't foresee a massive increase in price. Physical silver, on the other hand, may be a solid long term hedge - I just need to figure out how to put it in a tax free account (Canadian version of the Roth IRA if I'm not mistaken).
    Brad Miedema
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    Quote Originally Posted by Owen View Post
    The stock market, but I think you have to be a U.S. resident to invest in NASDAQ or NYSE. Not sure though, I haven't looked into overseas investing.
    That could be true. I have never had a reason to look at investing options for citizens in other parts of the world. If stocks were the way to go there is a London Stock exchange and I think it is likely that there are lots of mutual fund or ETF types of choices available there. Since the ETF's and Mutual funds here can buy stocks in any part of the world (there are funds that specialize in stocks of most any country or area available here in the USA.) There are also foreign stocks that can be bought on our exhcanges. They are called ADR's (American Depository Receipts) I have owned a lot of ADR's including Spanish banks, Chinese tech firms, oil companies, and lots more.

    I am also sure there are ways to invest similar to our Money Market accounts or savings accounts. That is probably the safest way to go.

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