Forgot to add, if you hold shares, always set a stop/loss. I usually set a 10% stop/loss which I adjust upwards ad hoc if prices rise.
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Last edited by tswatch66; 30th March 2017 at 14:38.
I'm a bit wary of P2P, though I have used ZOPA in the past. As of now I think they are still unregulated by the FCA and they certainly have not been around long enough to have weathered a financial crisis. CAVEAT EMPTOR with these for me ATM.Originally Posted by bitfield
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Vanguard US Equity Index
Vanguard UK All share index
Vanguard UK short term investment grade Bonds
Or just opt for one of the Lifestrategy Funds to suit your own needs.
Times are quite interesting now. Market seems to be quite jittery at the moment, so I've stuck most of my money into some bond funds, after holding onto cash for quite a while after selling equities. Did miss out on the big equity rally since I sold early.
After some research the Hargreaves Lansdown Wealth 150+ are actually pretty decent, overall their performance is good and since they negotiate management fees with the funds you get quite a hefty percentage off which makes a big difference long term.
I agree that you should set a stop/loss and 10% is generally the norm. But there is a risk of getting stopped out and the share bouncing back before you can buy back in. Also, if a share is tanking big time on bad news, you have the added risk of the stop/loss kicking in and selling your shares at a much lower price than your 10% stop/loss limit. I prefer not to use stop/loss limits and use a dip as a buying opportunity.
I don't know anything about bonds, what are they and how do they work?
If you like me want some insulation from a downturn, some structured instruments like turbos may be worth considering. I haven't bought any yet but I am researching these ATM. Here's an excerpt from the adventurous investor, who sometimes takes a contrarian view. I'd be interested in any other opinions on these or other forms of downside protection.
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The ones I buy/sell are traded on the LSE in the ORB market, new issues are normally available from your platform of choice, Hargreaves Lansdowne, A J Bell (other platforms are available!). Basically you are lending the entity money with a fixed coupon paid to you yearly and the full bond face value returned to you at the end of the term. There is capital risk but probably less than P2P imho if you buy wisely. Oliver Butt's Bond of the week column on the Fixed Income Investor website is a good place to go to to learn more.
P.s. It's certainly not a racy investment but my aim is not to get any poorer at my stage. If you want excitement buy a Chinese based Aim stock but be prepared to wave goodbye to your cash potentially.
http://www.fixedincomeinvestor.co.uk/x/default.html
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Last edited by tswatch66; 2nd April 2017 at 14:06.
Is this basically a hedge?
Yes, but they top out (become worthless) if the market reaches a certain level so you're essentially betting on a downturn before the ftse reaches whatever value is set (depending on the derivative ). Effectively downturn insurance. Not convinced about this but I'm looking at ways to preserve capital in a downturn. Others have said buy gold, bonds etc.
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Back to bonds, I see the value rate of a bond (cost to purchase) can be higher than its original issue price.
If I were to buy into a bond that matures in 5 years time and I pay 120p for for each bond, but the issue price was 100p. When the bond matures would I get the issue price back (100p) or the price I paid (120p)?
100p in that instance.
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