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Credit deflation and the reflation cycle to come.


DurhamBorn

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3 hours ago, mh9000 said:

Hi all,

First post after lurking for some time and reading through everything in this thread.

Firstly thank you all for sharing this knowledge.

I think someone else made a thread "for newbies" on this topic on how to respond to the deflation/reflation roadmap/ideas discussed elsewhere but has gone a bit quiet.

A lot to take in for a relative novice investor - don't worry I'm not about to go and put everything into PM miners.

Just thinking what I can do in my situation as a 34 year old to best position myself for all this

No property and working in mechanical engineering (although not infrastructure based, more product development), looking to move around the north east/yorkshire area if I can find the right job but getting paid a better contract rate to live in the east midlands...for now, although I don't like the place. The bulk of my earnings is going into cash as a house deposit, small amount into a Lifestrategy 100 SIPP each month (£300) and some left over to potentially to take advantage of this information here.

Not wanting to make the thread about me or go and do something crazy based on forum advice - but any ideas on where to start in my situation in the light of this thread??

Thank you

Cash for a house would be number 1 for me.I see it like this,a house paid for (or nearly paid for) first then everything else.A paid for house means you can get back on your feet very quickly however bad it gets.Id also get myself some silver and silver miners.Say 10% of savings.If we do get high inflation youd be protected.If you dont and silver was cut in half you lose a bit of insurance cost.

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3 hours ago, mh9000 said:

Hi all,

First post after lurking for some time and reading through everything in this thread.

Firstly thank you all for sharing this knowledge.

I think someone else made a thread "for newbies" on this topic on how to respond to the deflation/reflation roadmap/ideas discussed elsewhere but has gone a bit quiet.

A lot to take in for a relative novice investor - don't worry I'm not about to go and put everything into PM miners.

Just thinking what I can do in my situation as a 34 year old to best position myself for all this

No property and working in mechanical engineering (although not infrastructure based, more product development), looking to move around the north east/yorkshire area if I can find the right job but getting paid a better contract rate to live in the east midlands...for now, although I don't like the place. The bulk of my earnings is going into cash as a house deposit, small amount into a Lifestrategy 100 SIPP each month (£300) and some left over to potentially to take advantage of this information here.

Not wanting to make the thread about me or go and do something crazy based on forum advice - but any ideas on where to start in my situation in the light of this thread??

Thank you

Seems like you're fairly well positioned if you believe we're heading as this thread hypothesises. With that said given your age you probably want to consider what your long term aims are and work backwards. Consider that most in this thread are a bunch of old gits (no offence xD), subsequently have different goals.

imo it'll be worth trying to understand  the different asset classes and what impact they will have on a portfolio. Also i recommend working through Lars kroijer's Building Your Own Financial Planning Spreadsheet video series on youtube to get a grasp on how asset allocations can impact a portfolio long term.

From there you will then know what to implement.

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5 hours ago, mh9000 said:

Hi all,

First post after lurking for some time and reading through everything in this thread.

Firstly thank you all for sharing this knowledge.

I think someone else made a thread "for newbies" on this topic on how to respond to the deflation/reflation roadmap/ideas discussed elsewhere but has gone a bit quiet.

A lot to take in for a relative novice investor - don't worry I'm not about to go and put everything into PM miners.

Just thinking what I can do in my situation as a 34 year old to best position myself for all this

No property and working in mechanical engineering (although not infrastructure based, more product development), looking to move around the north east/yorkshire area if I can find the right job but getting paid a better contract rate to live in the east midlands...for now, although I don't like the place. The bulk of my earnings is going into cash as a house deposit, small amount into a Lifestrategy 100 SIPP each month (£300) and some left over to potentially to take advantage of this information here.

Not wanting to make the thread about me or go and do something crazy based on forum advice - but any ideas on where to start in my situation in the light of this thread??

Thank you

Are you single?

Can you travel min-fri to midlands - van premier inn, and buy in ne yorks?

Arb house n wages.

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inteeresting chart via Daily shot aka sober look

The Eurozone: This fascinating chart compares the relative popularity of Italy’s populist parties with the 10-year Italian government bond spread.

image.png.b6b9dcd45defed6faae74442cb455ce0.png

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6 hours ago, subutai80 said:

Thanks @sancho panza

Any thoughts on the effects of the increased pension contributions might or might not have on the market?

Plus 1% increase employer contribution. 

https://www.bbc.co.uk/news/business-47269042

That wouldn't factor into my thinking.Share buy backs funded by CB taxpayer funded generosity is another matter.

Having said that there are many factors driving markets and working out the primary drivers is always hard.There are also so many black swans as well eg Deutsche Bunk.

I answered your poiint on a technical basis.Weekly RSI current;ly showing as 56 so market no longer cheep cheep on that basis.

My shorter term trading is more technically based than my long term asset allocations.Going two years out I think we'll be at a bear market bottom where there'll be some good stocks going cheap.How we get there is another matter and this is where I find the DB roadmap idea useful.Perosnally,I think we'll meander down to two thirds off a la Hussman.This means lot of dips n rallies.Fang stocks will get blown up.Some stocks are already cheap.

 

Just my views and over the last year my short technically based trades have been far more effective than my medium long term calls(my tranche 1 PM miner purchases haven't done well.)So feel free to ignore my calls.The two thirds off poeak call is out there but I'm in very good company.

 

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On 15/02/2019 at 21:02, Clueless Imbecile said:

What to do... what to do...?

My PM mining stocks are as follows when I checked recently:

ENDEAVOUR SILVER C COM NPV  -26.02%

HARMONY GOLD MNG SPON ADR REP 1 ORD ZAR0.50  25.70%

NEW GOLD INC COM NPV  -57.35% (ouch!!)

SIBANYE GOLD LTD SPON ADR EACH REP 4 ORD SHS  46.21% (cool!!)

YAMANA GOLD INC COM NPV  -12.01%

I invested similar amounts in each stock. I haven't done the calculation but I guess it probably works out at a small loss.

It crossed my mind to sell the Sibanye (and maybe also the Harmony) to get a decent profit while I can, and hold the others in the hope that they recover. However... if there was to be a bull market in PMs & PM miners, then what if Sibanye and Harmony ended up rising the most (after I'd sold them)?

My current thinking is that I'll just hold for a while in the hope that a future bull market might lift at least one of the stocks enough to get me a decent profit overall.

What does the panel think? (I know it's not advice!)


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.

I sold my SBGL at a net 55% profit on Friday, slightly spooked by the latest NGD news, my holdings in which are now back down over 25% on my buy price (having briefly put their heads above water prior to the latest statement).

I have 4 other gold miner stocks, all of which are currently up by between 5% and 50%. I fully acknowledge that luck has played as big a part as research in my current positive position. I can afford to hold NGD, even if it goes to zero - it is my (joint) smallest position. Rightly or wrongly, I subscribe to the mantra of never selling at a loss. I may well liquidate one or two other positions soon, having learned my lesson from previous dramatic swings.

Psychologically, it is interesting to observe the effect of selling a stock, only to see it rise massively; this is much more challenging than holding a stock that continues to fall, in my view. The old adage of no-one going bust by taking a profit still carries much credence.

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32 minutes ago, sam1994 said:

Hi everyone,

I joined this forum because I am not a subscriber of the general UK opinion that everything must go up. Things are rotten. 

I am 25 years old and maxing out my SIPP and ISA (also get LISA topup every year). I put this money in to the Vanguard LS100 Acc fund. It is domestically overweight on the UK, but I figure that once people realise that Brexit is not the be all and end all, it will pay dividend. The impact of Brexit should also be priced in. 

My timescale is to invest for 35 years before pulling anything down. I want to preserve my spending power. 

I know nothing about PMs. Am I better off passively investing via ETFs or should I diversify? Currently I am buying a 1oz gold bullion once a year to build a collection, but I don't have much of a clue. 

Not emotional and happy to hold for long periods of time. I am also confused as to whether pound cost averaging is a good idea? Investors say no. Should I bung in my 60k(61k with LISA) every 6th April or should I be doing this over a period of 12 months? 

S

25 and saving 60k a year... jeez. You're doing ok regardless.

The question is what do you want to do with the money? Buy property? Preserve wealth? Make as much of a gain as possible?

A lot of people on this thread are looking to grow a deposit and/or pay off a mortgage, or go mortgage free.

Bullion vault or CoinInvest are pretty good for low cost PM investing, virtual and physical respectively. A lot of people on this forum also invest in silver miners (buy shares), if you read back through you will see a lot of suggestions.

There are also some ETFs for the miners - GBSP, GDX, GDXJ. You can buy these on some of the major broker websites.

DYOR, but reading back through this thread, despite the many tangents, should give you all the info you need.

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47 minutes ago, sancho panza said:

That wouldn't factor into my thinking.Share buy backs funded by CB taxpayer funded generosity is another matter.

Having said that there are many factors driving markets and working out the primary drivers is always hard.There are also so many black swans as well eg Deutsche Bunk.

I answered your poiint on a technical basis.Weekly RSI current;ly showing as 56 so market no longer cheep cheep on that basis.

My shorter term trading is more technically based than my long term asset allocations.Going two years out I think we'll be at a bear market bottom where there'll be some good stocks going cheap.How we get there is another matter and this is where I find the DB roadmap idea useful.Perosnally,I think we'll meander down to two thirds off a la Hussman.This means lot of dips n rallies.Fang stocks will get blown up.Some stocks are already cheap.

 

Just my views and over the last year my short technically based trades have been far more effective than my medium long term calls(my tranche 1 PM miner purchases haven't done well.)So feel free to ignore my calls.The two thirds off poeak call is out there but I'm in very good company.

 

I think whats interesting SP is our road map showed PE ratios starting the next cycle around 6 to 8.That call looked crazy two years ago,yet now many UK value shares are trading on PEs in that range,or very close.Of course they will likely see one more jump down in profits before inflation starts to improve their earnings,but laddering into them from here on is what im doing.Growth shares will be smashed when people wake up to the fact that all growth is going into inflation areas of the economy.People think Amazon have price power when they have zero.The only thing going up for them will be the rates couriers charge them to deliver their orders and the costs of setting up their own network to try to bypass that.I think 70% down in the S+P is likely,in the FTSE i think 25% from where we are now is likely,and many stocks here wont be far off their lows already.

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11 minutes ago, DurhamBorn said:

I think whats interesting SP is our road map showed PE ratios starting the next cycle around 6 to 8.That call looked crazy two years ago,yet now many UK value shares are trading on PEs in that range,or very close.Of course they will likely see one more jump down in profits before inflation starts to improve their earnings,but laddering into them from here on is what im doing.Growth shares will be smashed when people wake up to the fact that all growth is going into inflation areas of the economy.People think Amazon have price power when they have zero.The only thing going up for them will be the rates couriers charge them to deliver their orders and the costs of setting up their own network to try to bypass that.I think 70% down in the S+P is likely,in the FTSE i think 25% from where we are now is likely,and many stocks here wont be far off their lows already.

My peronal bear market bottoms from a trading perspective would be FTSE to 4500,CAC/DAX 3000,S&P 900.

I'm not using any rocket science here but long term reisistance lines.

What I find fascinating is looking behind the headline numbers for the big story in terms of market caps.One I'll put my head above the parapet for is that Vodafoen( we hold a few but not as many as we wiull ultimately) will lead the next surge and will take the 100 with it.

I agree on Amazon-the opposition will gear up-and I think a lot of the more low margin sellers will dsappear.I also think Facebook/Netflix both going sub $50t,that Apple will see some huge-and I mean huge stock declines sub $30 (currently $170).

Just my views.

 

From Aug 18

https://www.bloomberg.com/news/articles/2018-08-09/s-p-500-s-dependence-on-fang-stocks-grows-as-record-nears-chart

The FANG stocks and their peers largely explain why the S&P 500 Index is flirting with records again. Facebook Inc., Amazon.com Inc., Netflix Inc. and Google’s parent, Alphabet Inc., combined with Microsoft Corp. and Apple Inc. to account for 38 percent of the S&P 500’s gain from a Feb. 8 low to Wednesday, according to data compiled by Bloomberg. These stocks collectively produced 19 percent of the index’s gain in the six months before its latest record, set Jan. 26. Wednesday’s close was 0.5 percent below the January high.

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28 minutes ago, sam1994 said:

 

Am I absolutely effed if I pour my cash in to a global ETF tracker?  The problem is I want a relatively set it and forget it solution. I'm happy to take risks however.

 

Also check out the investment section to this forum, esp. 201ps thread, and check out Harley's posts on financial risk management case hardening ... worth thinking about what you want the money for and when you'll want it, and working backwards from there.

Some PMs as part of a portfolio allocation (most people say 10-20%) can be seen as a hedge against major losses in equities (which the vanguard LS100 is obviously). It's all on these boards somewhere.

33 minutes ago, sam1994 said:

I would not expect a labourer to be laying bricks until he's 60 odd either. 

We must know different brickies...

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9 hours ago, sam1994 said:

Hi everyone,

I joined this forum because I am not a subscriber of the general UK opinion that everything must go up. Things are rotten. 

I am 25 years old and maxing out my SIPP and ISA (also get LISA topup every year). I put this money in to the Vanguard LS100 Acc fund. It is domestically overweight on the UK, but I figure that once people realise that Brexit is not the be all and end all, it will pay dividend. The impact of Brexit should also be priced in. 

My timescale is to invest for 35 years before pulling anything down. I want to preserve my spending power. 

I know nothing about PMs. Am I better off passively investing via ETFs or should I diversify? Currently I am buying a 1oz gold bullion once a year to build a collection, but I don't have much of a clue. 

Not emotional and happy to hold for long periods of time. I am also confused as to whether pound cost averaging is a good idea? Investors say no. Should I bung in my 60k(61k with LISA) every 6th April or should I be doing this over a period of 12 months? 

S

Bloody hell, wish I was this `switched on` financially when I was 25!...

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10 hours ago, sam1994 said:

I know nothing about PMs. Am I better off passively investing via ETFs or should I diversify? Currently I am buying a 1oz gold bullion once a year to build a collection, but I don't have much of a clue. 

Not emotional and happy to hold for long periods of time. I am also confused as to whether pound cost averaging is a good idea? Investors say no. Should I bung in my 60k(61k with LISA) every 6th April or should I be doing this over a period of 12 months? 

S

humblebrag# :D

That's the million dollar question right  there. Considering the amount of money you're dealing with and your age the first thing I would consider is fees. You're overpaying (not by much but will add up) going with lifestrategy especially with the home bias. A FTSE all-share index can be picked up for 0.02% and lifestrategy has something like 25% UK weighting. A FTSE All-World fund will start from 0.15%. Considering you're dumping in 60k once a year you could annually rebalance your own portfolio.

If you haven't already check out Lars Kroijer's videos/book on whether you want to go passive

What I would consider is expanding your portfolio to include other asset classes. REITs/Property, PM's (phyiscal for SHTF and ETfs ease), commodities, HYP, collectibles etc.

Yes more often or not time in the market wins out over cost averaging, however, the latter helps smooth out the ride. Personally I spread out/rebalance quarterly also allows me to buy more if there is a drop. How will you cope being in 100% equities should there be a 50% fall?

Live your life a little too if you're not already

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UnconventionalWisdom
10 hours ago, sam1994 said:

Hi everyone,

I joined this forum because I am not a subscriber of the general UK opinion that everything must go up. Things are rotten. 

I am 25 years old and maxing out my SIPP and ISA (also get LISA topup every year). I put this money in to the Vanguard LS100 Acc fund. It is domestically overweight on the UK, but I figure that once people realise that Brexit is not the be all and end all, it will pay dividend. The impact of Brexit should also be priced in. 

My timescale is to invest for 35 years before pulling anything down. I want to preserve my spending power. 

I know nothing about PMs. Am I better off passively investing via ETFs or should I diversify? Currently I am buying a 1oz gold bullion once a year to build a collection, but I don't have much of a clue. 

Not emotional and happy to hold for long periods of time. I am also confused as to whether pound cost averaging is a good idea? Investors say no. Should I bung in my 60k(61k with LISA) every 6th April or should I be doing this over a period of 12 months? 

S

You seem so clued up with your career and understanding investment early. It's impressive... Wish I had started earlier-just under 10 years older than you and have spent the past few years trying to make sense of it all. 

A load of posters here emigrated from HPC, wish I could afford one is a great poster there who helped me. Here's his eBook which I reccomend as a starting point. It's a good introduction.

https://www.amazon.co.uk/dp/B01N6FT93S/ref=cm_sw_r_wa_apa_9PQRAbAM4Y2BA

This thread and the main posters here have helped me no end but there is still a lot to learn. 

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1 hour ago, MrXxx said:

Bloody hell, wish I was this `switched on` financially when I was 25!...

I bought my first shares with my milk round money when i was 14 and had paid my first house off by 24.My 2nd great love was women (apart from spending anything on them of coursexD)At 19 i met a guy at work who was 50 and retiring at 53,he taught my about long term planning and how to keep emotion to the minimum.Then i met my friend the macro strategist when i was 23ish and he really opened my eyes to a secret world.What i do notice now is young people dont understand finance at all.They really are lambs to the slaughter.The government have pretty much got them all where they want them.A place where they are greedy for "things" and think savings are £500 and debt is just a number.I dont blame them,the complete lack of advice from parents who have seen property do so well is a big part of the problem.

Iv said it many times,but the markets always wait until they can hurt the most people possible,and then they do.In the UK people base their wealth on houses and benefits,both will be trounced by inflation.

 

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UnconventionalWisdom
21 minutes ago, DurhamBorn said:

What i do notice now is young people dont understand finance at all.They really are lambs to the slaughter.The government have pretty much got them all where they want them

I do wonder whether this has been a long term plan that has been amazingly implemented. My parents and the adults in my life growing up couldn't help me with finance advice. Was going to buy a flat in the south east and everyone was like do it, can only go up in value. I had reservations and it was my aunt (an ex nun who was travelling all over the country and eventually quit before the final commitment) who was like, "don't tie yourself down to a job/area, especially when you don't think it's a good idea to buy a tiny flat". 

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Any thoughts on commodity securities ETFs? The price of food is going to go up, bit macabre but finding a way - other than Saskatchewan potash - to profit from it seems sensible.

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i suspect a lot of the "middle class" grew up with no money themselves and they go from getting by to suddenly finding themselves with access to credit and HPI/equity and all of a sudden they feel wealthy. No one to pass any advice or guidance down and they're the adults so they know best.

Have you spoken to your parents or adults around you about simple things in regards to personal finance? Few understand inflation. They don't want to create generational wealth and will hold onto all their money until they're dead rather than passing money down sooner so family can leverage it. Then the siblings spend years fighting and squablling over what's left giving most to the lawyers xD

Obviously not all are like this the but the cycle just keeps repeating. This is why plebs will always be plebs!

5 minutes ago, Calcutta said:

Any thoughts on commodity securities ETFs? The price of food is going to go up, bit macabre but finding a way - other than Saskatchewan potash - to profit from it seems sensible.

I don't think adding a commodities etf to a diversified portfolio, especially if one is following mordern portfolio theroy is a bad idea at all. If you're looking to trade and profit from it in the short term that's a different matter all together

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1 hour ago, UnconventionalWisdom said:

I do wonder whether this has been a long term plan that has been amazingly implemented. My parents and the adults in my life growing up couldn't help me with finance advice. Was going to buy a flat in the south east and everyone was like do it, can only go up in value. I had reservations and it was my aunt (an ex nun who was travelling all over the country and eventually quit before the final commitment) who was like, "don't tie yourself down to a job/area, especially when you don't think it's a good idea to buy a tiny flat". 

I think there is planning in it yes.I think its more to do with government understanding 20%/30% of the population are unemployable in the modern age and another 20% cant earn anywhere near whats needed.The only way the government can pay for these is by keeping those who do work hard working.The best way to do that is trap in long term housing debt.People hate losing their homes,its in our DNA and we will do everything to stop that.That means 35 years of debt minimum now.The government also needs to stop people growing capital outside of a pension,or at least to any scale needed.Thats why you see very little about building dividend portfolios etc from government or investing in equity.The only equity they mention is housing,and thats the easiest equity to eliminate if needed.

My friend put it in simple terms.The people who own the grouse moors need to stop the low IQ people stealing their wealth.To do that they tax the middle to give them generous benefits.The added bonus is that tax goes into benefits,through the "poor" and ends up with the grouse moor owners.Its a perfect system for keeping the "poor" in their little lives,taking away middle class wealth and moving it to the said asset owners.The middle class then blame the "poor".

The middle class have built up wealth in housing mostly this cycle (1979 until 2018) and that is where the most wealth will be stripped away.In 10 years nobody will see their house as their pension,and leveraged BTL wont exist for anyone with ideas of one to five properties.

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It's also true that most young people don't earn very much, even late 20s, early 30s. I have friends in finance and the city and they make six figure salaries, but even so with tax, student loan repayments, London living expenses, rent etc they struggle to put huge amounts away. And these people are at the absolute top of the earnings scale nationally.

Other high paid job would be in tech - developer especially can be incredibly well paid.

Unless you can live at home rent free it's difficult to get much going in terms of savings in your 20s these days for all but the highest earners. Rent / expenses are a killer.

Another reason house prices will fall imo. Who will they be sold to? Your average 20s person has low salary and low savings. Even middle class people these days. Middle class kids couldn't afford to buy their parents houses and can't pay the IHT on their parents houses!

Get mortgage free, pass it on as a gift and hope you live 7 years...

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2 minutes ago, sam1994 said:

For platforms I'm using ii for SIPP; AJ Bell for LISA and iWeb for my ISA. These give me the lowest fees possible. I know that I can build my own portfolio and have seen a guide on how to do that. I will have to look at other asset classes soon, because if I assume a modest 5-6% gain, I'll be hitting the lifetime allowance based on my contributions. 

Looks like I have some reading to do. 

S

If you're buying Lifestrategy at AJ Bell, that will start costing you more with your next LISA deposit, you will probably want to move to ETFs. AJ are quite expensive with fund platform fees as they're uncapped. ETFs and shares are capped at £30 per annum from memory. I have no idea on iwebs pricing structure. Funds are no more expensive at II which is good so you have plenty of choice between ETF's and funds!

You could easily match lifestrategy quite closely just by buying an All-World ETF such as HMWO or SWDA and a FTSE equivlant and weight accordingly.  You would half your OCF/TER too.

I recommend JustETF to help you on chosing the ETF's (if you want to go that route) and with balancing. Although Morningstar can be helpful with their x-ray feature to ensure you're not over/underweight in any region. You can make it as easy or complicated as you like depending on how much you want to personlise your portfolio.

From an equities perspective an All-World should be sufficent and then it's just a case of adding in a REIT, Gold ETF etc etc. If you do want to be overweight in a region such as the UK add in a UK ETF and weight accordingly.

Alternatively you can completely compose your own with individual regional ETFs but then you have to consider the overall trading costs (although brokers regular trading can mitigate) and whether you're smarter than the markets.

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28 minutes ago, Hardhat said:

It's also true that most young people don't earn very much, even late 20s, early 30s. I have friends in finance and the city and they make six figure salaries, but even so with tax, student loan repayments, London living expenses, rent etc they struggle to put huge amounts away. And these people are at the absolute top of the earnings scale nationally.

Other high paid job would be in tech - developer especially can be incredibly well paid.

Unless you can live at home rent free it's difficult to get much going in terms of savings in your 20s these days for all but the highest earners. Rent / expenses are a killer.

Another reason house prices will fall imo. Who will they be sold to? Your average 20s person has low salary and low savings. Even middle class people these days. Middle class kids couldn't afford to buy their parents houses and can't pay the IHT on their parents houses!

Get mortgage free, pass it on as a gift and hope you live 7 years...

Trusts are your friend for this,and pensions.

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3 hours ago, DurhamBorn said:

I bought my first shares with my milk round money when i was 14 and had paid my first house off by 24.My 2nd great love was women (apart from spending anything on them of coursexD)At 19 i met a guy at work who was 50 and retiring at 53,he taught my about long term planning and how to keep emotion to the minimum.Then i met my friend the macro strategist when i was 23ish and he really opened my eyes to a secret world.What i do notice now is young people dont understand finance at all.They really are lambs to the slaughter.The government have pretty much got them all where they want them.A place where they are greedy for "things" and think savings are £500 and debt is just a number.I dont blame them,the complete lack of advice from parents who have seen property do so well is a big part of the problem.

Iv said it many times,but the markets always wait until they can hurt the most people possible,and then they do.In the UK people base their wealth on houses and benefits,both will be trounced by inflation.

 

Neither young or old understand finance.

There's a soon to be tested 'Oh you wont lose with property' bit of magical thinking.

They dont need to understand  finance as a whole.

They *do* need to grasp how compounding interest works, both ways. The rest of finance is just detail.

 

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3 minutes ago, spygirl said:

Neither young or old understand finance.

There's a soon to be tested 'Oh you wont lose with property' bit of magical thinking.

They dont need to understand  finance as a whole.

They *do* need to grasp how compounding interest works, both ways. The rest of finance is just detail.

 

Yes,compound interest and risk Spy.I always found it easy in simple terms.Pay my house off my mates needed to earn £8k a year more than i did to have the same standard of living.Older car same,less flash holiday same, etc etc.I showed a young lad at work once that if he bought his cans of coke in a multi pack instead of two each day out of the machine at work he could retire 4 years earlier,or pay his house off x years earlier.He was shocked,but to be fair to him he followed the advice.Some people have never been shown,and i think tax credits have made it worse as parents havent had to struggle for a long time with the magic money tree.

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1 hour ago, Hardhat said:

Another reason house prices will fall imo. Who will they be sold to? Your average 20s person has low salary and low savings. Even middle class people these days. Middle class kids couldn't afford to buy their parents houses and can't pay the IHT on their parents houses!

This is such an important point and so many people miss it when you start questioning the HPI forever brigade. Unless you are happy living there forever, some day you'll have to find someone else to buy you out of it. 3/400k for a leasehold flat in Lewisham suddenly doesn't look like such a smart bet with those glasses on.

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