Clueless Imbecile

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  1. Clueless Imbecile

    Credit deflation and the reflation cycle to come.

    Good evening all! I'm a bit worried about what's been said on here about stockmarket index tracker funds because I've still got a lot of my investable pot in a collection of trackers (mostly unit trusts and OEICs) that each cover a different region within global markets. I have tried to protect my wealth a little by investing (diversifying?) in some PM miners and a few (reflation?) stocks (Vodafone, Centrica, BT, SSE) and also a small amount of physical silver (stored in a vault, not at home). My strategy with the tracker funds was buy and long-term hold with dividends re-invested (accumulation units). I am about 20 years away from retirement. Obviously I can't predict the future but I think it's unlikely that I would need to sell my tracker funds Within the next 10 years (maybe 20 years). With the above in mind, I'm just wondering what people here think about trackers (as long term hold from now on)? If the great crash that we're talking about were to happen in the next few years, I would expect that tracker funds would fall in value accordingly (since they're designed to track the market). But... wouldn't we expect the stock markets (globally) to eventually recover and the tracker funds also recover? I imagine that trackers automatically trade (ie by software automation), but I guess that would be to periodically re-balance as the market-cap weightings of different stocks within the index fluctuate. I don't see why trackers should auto sell just because the market is falling as a whole? I think someone was talking about the risks of ETFs spiraling down in a falling market. Is that specifically ETFs (Exchange Traded Funds) or does the same risk apply to UTs (Unit Trusts) and OEICs (Open Ended Investment Companies)? There are subtle differences between ETFs (priced in real time like a stock) and UTs/OEICs (usually priced once per day and only orders placed before a cut-off time get executed at that day's price point). I have a lot of sympathy with the views expressed on here and a lot of respect for everyone who has taken the time to express their opinions. I have taken some action based on what I've learned here (the PM mining stocks and physical silver in a vault). However, at the same time I feel reluctant to completely abandon my buy-low-cost-tracker-funds-and-long-term-hold-with-dividends-reinvested strategy. I would be interested to hear peoples views on this. 1) Am I being foolish to think that I can simply hold my stock market index tracker funds long term (from now on for 10 years or more) and ride out the kind of crash that is being discussed on this thread? 2) Do people think that long standing principles such as (a) buy-and-long-term-hold of low cost index tracker funds, (b) pound-cost-averaging, (c) time-in-the-market-not-timing-the-market, are no longer applicable? My own answers to the above would be: 1) No I'm not being foolish. The markets may crash and my tracker fund holdings fall in value accordingly, but as long as I hold long enough for the market to recover and the tracker funds track that recovery, I should not lose out. Plus, while the market is down, the dividends should be getting re-invested to buy more shares whilst they are cheap. The effect of that should get amplified as the markets rise. 2) No. Those principles are still good. As you can see, I still believe in stockmarket index tracker funds. I do have a slight worry about what might happen if they become too popular (following the herd isn't always the best strategy), but even if trackers become the most popular investment going, I would guess that a lot of investors would not have the self-discipline to hold for the long term. Therefore, if I do hold for the long term, that could give me an edge. ...but that's just my opinion. Happy to hear other peoples opinions (even if you think I'm being a clueless imbecile, LOL!). Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  2. Clueless Imbecile

    Ways to earn extra money

    I suppose it depends on how much time I had to spend on it. I don't want to spend my precious leisure time working for a pittance. However, if I could make £10 per hour net (after tax and expenses), then I'd probably spend a few hours per week on it. I'm not talking about getting rich, just trying to find a way to make a few grand per year extra. If I could make £500 per month extra money I would be quite pleased with myself. If I could get paid for overtime at work I would probably put in a few hours per week (or maybe even at the weekend). Unfortunately though, in 20 years in the industry I've only ever had the opportunity to do paid overtime a handful of times. Paid overtime just doesn't seem to be a thing in IT. Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  3. Clueless Imbecile

    Ways to earn extra money

    I do business software development (pretty much always with a relational database backend) in C#, SQL Server and ASP.NET (although only just getting into the web frontend dev stuff). Affiliate marketing - is that where you have a website that has links to commercial websites, and if users of your website click on those links then the commercial website pays a comission if it leads to a sale? I once had my own website that was a sort of blog/diary about a hobby that I was interested in at the time. I wrote book reviews on my website and included links to those books on amazon (Amazon associates, if I remember correctly?). However, my website only got about one thousand views per month and I never made even a single penny from it. I think you need a lot of traffic to a website in order to make any money from it, probably hundreds of thousands (or even a few million) of page views per month, although that is just a guess). There will be very few hobbyist websites that receive that much traffic. I have thought about trying to write my own software product to sell. Years ago I used to think about developing a desktop Windows application, but I suppose nowadays it would probably need to be a web application or smartphone app. However, now, as then, the problem is coming up with an idea that I believe in. I know people who've done this and even though they were great developers who produced great software, I don't know if they made much money from it. Seems like starting a rock band; some people get rich from it but the vast majority don't. Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  4. Clueless Imbecile

    Ways to earn extra money

    Hi Frank. Regarding VCTs; I remember hearing about them years ago when I was contracting, but never really looked into them. I know they are tax efficient, but aren't they quite risky? It's all very well being tax efficient but only if the investment makes a decent profit. I remember a phrase from back then (90's / 2000), which was something like: "Don't let the tax tail wag the investment dog!". What percentage of VTCs available end up making a decent profit and what percentage ends up making a loss? Do they invest in (presumably several?) startup companies shares? Is there a good place to learn more about VCTs (website, book)? Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  5. Clueless Imbecile

    Ways to earn extra money

    Just to be clear... I'm already doing the FIRE thing (reduced my outgoings as much as I reasonably can, investing in low-cost stockmarket index-tracker funds with dividends reinvested). Seems like the guys who achieve FIRE are generally earning six figure salaries over a period of ten years or more. I'm only on a low five figure salary, which means the "retire early" part doesn't really work for me. The idea of the thread is how to earn "extra" money, not change careers or go contracting (already tried that - see above). Another idea I had was: 2) advertise a "PC doctor" type service going around the local area helping people with PC/Windows type problems. That would be suited to my IT skills. However, I don't really want to become known in the area for doing that sort of thing. I'm quite a private person and don't want to pestered about IT stuff when I go down the pub! Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  6. Clueless Imbecile

    Ways to earn extra money

    Thanks for the replies. Contracting - Tried it in the late 90's. Got 2 and a half years on a decent rate. Then the dot com bubble burst and I was out of work for 2 and a half years. I still occasionally think about contracting again, but I think you have to be willing to travel almost anywhere in the country (which I'm not willing to) and there is too much risk of being out of work. Also, I've heard that rates haven't really changed since the year 2000. Then there is IR35 and the dividend tax. It only really pays if you can keep in work for say, 47 weeks per year on a decent rate. Too much hassle & risk for not enough extra money in my opinion. The minute I have to work away from home my living costs would go up significantly, eating into any extra money I might make. Pensions - For a lower rate taxpayer like me it is debatable whether pensions are any better than ISAs. Remember, pensions may have tax relief on the way in (contributions), but the pension income is taxed on the way out (drawing the pension income in retirement). Plus I'm 20 years from retirment. That's a lot of time for the government to change the rules in a way that might disadvantage me. I'm sure I read only the other day that the lifetime allowance and annual allowance have been reduced something like 6 times in the last 8 years? This thread is really intended to be about how to make extra money in evenings/weekends, rather than investment options (which are probably best covered in a separate thread). I'm in the north west. Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  7. Clueless Imbecile

    Ways to earn extra money

    Hi All. I work full-time as a software developer. I earn what many would consider a good salary (although I'm still a lower-rate tax payer). I even live cheaply at my parents house. I'm saving a decent amount each year, but since I don't own a house I feel constant anxiety about being left behind by house price inflation. I originally thought I would retire at 60, but after the way things have been over the last 18 years that idea has gone out of the window. I just feel like I'm not gaining wealth at a fast enough rate. The low interest rates on savings accounts don't help. I do invest in the stock market but I think even that has probably only made me about 5.5 percent average annual return, and I worry about the potential for a stock market crash since the bull market has been going on for quite a while now. I am therefore trying to think about how I could increase my income, which gave me the idea to start this thread. I thought we could make a list of ideas of ways to make money. I'll start the thread off with an idea that occurred to me recently... 1) Playing poker online. I've no idea whether or not it is possible (or likely) to make money playing online poker. I guess there is also the risk of losing money. I have heard of people claiming to make money from it. Does anyone have any experience of this? Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  8. Clueless Imbecile

    Credit deflation and the reflation cycle to come.

    Hi DurhamBorn. Thanks for your comments on this fascinating thread. My investment strategy still relies mostly on index-tracker funds spread across global markets. However, having been inspired by this thread, I have invested a modest amount in some individual stocks, in the hope of hedging against the kind of scenario that you describe on this thread. So far, I've invested in the following: BT GROUP VODAFONE GROUP CENTRICA YAMANA GOLD INC COM NPV SIBANYE GOLD LTD SPON ADR EACH REP 4 ORD SHS HARMONY GOLD MNG SPON ADR REP 1 ORD ZAR0.50 NEW GOLD INC COM NPV ENDEAVOUR SILVER C COM NPV I think I've got room to invest in a few more stocks. I was trying to think of what other sectors/companies might benefit from the scenario you describe. Maybe a travel company? I thought you mentioned Stagecoach somewhere earlier in the thread, but its share price seemed to have risen a lot since then. Also, I feel quite tempted by Lloyds, due to its current relatively low share price, although I doubt it really fits in with the infrastructure/depreciation scenario. Then again, generally speaking, banks seem to usually do OK, perhaps due to having such strong lobbying power/influence over governments/policy. What is your current view of the banks and how they might fare over the next 10 years? Considering the above, what other stocks do you think I should consider? Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  9. Clueless Imbecile

    Credit deflation and the reflation cycle to come.

    Hi DurhamBorn. Thanks for your comments on this fascinating thread. Just wondering what you think will happen to house prices (in the UK) over the next, say, 10 years, in particular: (1) How low do you think prices will fall, in percentage terms, relative to today's prices? (2) When do you think prices will reach the bottom? (3) Once prices have reached the bottom, do you think they would then begin to rise or would they instead stagnate for a few years? My dilemma is whether or not to sell some of my index-tracker units and hold cash in a savings account in the hope of buying a house cheaper. However, I guess the cash would be getting eroded by inflation. Unless a price crash happened in the next 2 or 3 years I might be better off keeping my existing index-tracker holdings and simply putting any new savings (e.g. from my salary) into a savings account (whereas previously I would have used them to buy more index-tracker units). I know nobody can be certain about stuff like this. Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  10. Clueless Imbecile

    Credit deflation and the reflation cycle to come.

    That is what I'm afraid of. If I keep a lot of my savings in cash, hoping to be able to buy a cheap house after a price crash, then whilst I'm waiting for the crash my savings are earning a pitance in interest. On the other hand, if I keep a lot of my savings in stockmarket index-tracker funds, then it could be that if house prices did crash then the stockmarket might also crash, leaving me with having to take a loss on my stockmarket trackers in order to raise money to use to buy a house. It's difficult to know what my best option is. Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  11. Clueless Imbecile

    Credit deflation and the reflation cycle to come.

    Thanks to all who've posted their opinions on here. Fascinating thread! I'm in a right dilemma at the moment... I'm in my forties, been saving & investing in stockmarket index trackers for a while. Living cheaply at my parents' house (yeah, I know, sad at my age!). No idea when I'll want/need to buy a house. I don't fancy BTL because I don't want hassles with managing it. I don't fancy living on my own nor taking in a lodger. I don't fancy leaving a house empty. It just doesn't suit me to buy a house right now, although that might change in future. My options seem to be: (1) maintain an asset mix such as: 60% index trackers 10% stock picks (gold/silver miners, telco's, and other stuff that might benefit from reflation) 10% IBTL 5% PMs (mostly silver) 15% cash (2) Go all in on index trackers, and simply plan to rent for the rest of my life once I'm no longer able to live at my parents' house. Maybe a big enough tracker(s) fund could generate income to pay my rent? For example: 95% index trackers 5% cash (to cover emergencies such as needing to get my car fixed/replaced) (3) Scale back my investments and hold more cash in the hope of buying a house cheaper in the event of a crash (suffer crap returns on cash in the meantime). For example: 50% index trackers 50% cash What to do?! Currently I'm leaning towards option (1), but am a bit nervous about going against what I've read in books (Don't try to time the market, Passive beats most acitve, stock picking is a mug's game, etc). Those who are anticipating a boom in the share price of gold & silver miners, do you think this will happen before or after a house price crash? Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.
  12. Clueless Imbecile

    Credit deflation and the reflation cycle to come.

    This afternoon I came very close to buying some shares in a gold mining company that is listed on the NYSE. However, before I could actually click the button to buy, the website told me that I would need to complete form W-8BEN (apparently a US government form relating to overseas investors who invest in US companies). I wasn't expecting that, and so I chose not to proceed with the purchase of the shares. I thought I'd better do some research into W-8BEN first. Does anyone know that the implications of completing form W-8BEN are (particularly any downsides)? I doubt it would cause me any problems but am just a little anxious about the prospect of having to potentially deal with the US authorities (IRS?) in addition to HMRC. One government tax authority is enough! Cheers, Clueless Imbecile Disclaimer: I am not an expert. Anything I post here is just my opinions, which may not be factually correct. My posts are intended purely for the purpose of debate and are not to be taken as advice. If you act on any of the above then you do so entirely at your own risk. I do not accept any liability.