Fundsmith ISA sounded interesting – but Imperial Tobacco & Philip Morris, so I’m oot.

(I appreciate the advice is good in terms of the question posed by the OP though)

but it simply can’t continue upwards at the same rate it has been

S&P has averaged 9.9% annual growth (1965 to 2014), so a long term average annual gain of 10% for US stocks would be a good guess assuming it continues in the same way.

Berkshire Hathaway has achieved 19.4% compound annual growth over the same period!

Fundsmith ISA sounded interesting

It’s done well, but not that much better than US stocks in general eg lots of US funds have also ridden the recent rise post 2008 crash and seen big gains over the last 4-5 years.

S&P has average 9.9% (1965 to 2014), so a long term average annual gain of 10% for US stocks would be a good guess assuming it continues in the same way.

Berkshire Hathaway has achieved 19.4% compound annual growth over the same period!

But by definition this is the average. This would be achieved by a tracker of the whole index. Funds by definition are slective to try to outperform the index. Some dont do it but it would be reasonable to expect a good fund with a chosen number of stocks to perform >9.9% consistently

I’ve got a Club Lloyds account. I get 4% on my current account, up to £6k and I get 4% on a monthly saver which I can feed £400 max a month into and I have another savings account that gets 4% on higher amounts. I have to have £1500 a month going into my main account and 2 direct debits for them to waive the £5 monthly fee.

There are other accounts with slightly better rates and shares options but it’s ‘only’ £10k so not worth going to a huge amount of effort over and you want to retain access so I would also say get a decent bank account offering 4-5%. Or split it and put some into a more locked in system and keep what you think you will need access to in a bank.

Funds by definition are slective to try to outperform the index. Some dont do it but it would be reasonable to expect a good fund with a chosen number of stocks to perform >9.9% consistently

Yet, most managed funds don’t beat a passive tracker over any length of time. If it were that easy to always pick winners, the stock markets would always be full of winners as people would sell the losers and they’d drop out of the lists….

Axa Biotech which has shown good growth over the last year.

That is a classic bubble and you’ve missed the boat, if you’re going to punt on that then be prepared to lose!

Fundsmith…but it simply can’t continue upwards at the same rate it has been

Why?

It’s doubled in value over 4yrs, yet the companies in which it is invested probably generate true growth of about 10-12% p/a. While both figures are very good, at some point they have to converge.

Also… trackers always lag the indices due too the drag of fees, they’re a low cost investment and so they should be because they all, by definition, underperform. With a modicum of research it’s not difficult to pick the winners, as they’re the ones who don’t follow the herd and do things differently: Fundsmith, Woodford, Lindsell Train, Majedie. There are others.

4% up to £5K isn’t it.

I’ve got quite a selection…best performing one is Old Mutual UK Smaller Companies- did better in the early years than in recent times – still 106% in last 5 years though.

That is a classic bubble and you’ve missed the boat, if you’re going to punt on that then be prepared to lose!

Actually I took a punt on this some time ago and made a couple of £k over the last few months alone 🙂 I will continue with my stop loss system and we can review in 3 months.

It’s doubled in value over 4yrs, yet the companies in which it is invested probably generate true growth of about 10-12% p/a. While both figures are very good, at some point they have to converge.

I wasnt aware Fundsmith made public the full list of companies in the fund?

Also… trackers always lag the indices due too the drag of fees, they’re a low cost investment and so they should be because they all, by definition, underperform. With a modicum of research it’s not difficult to pick the winners, as they’re the ones who don’t follow the herd and do things differently: Fundsmith, Woodford, Lindsell Train, Majedie. There are others.

Those you mention aren’t trackers they are funds!! Trackers track the index and are cheap to buy as they are not managed funds. Those you mention are managed funds and as such you pay a premium pa for the fund manager to actively choose stocks.
Why do they always “underperform”? If the index is up they go up and if it goes down they go down. The index has risen steadily for decades and if you had taken dividends an investment 20 years ago would give you a significant amount of cash now (even after recessions during that period) do I need to show you a graph?

Gold.

Those you mention aren’t trackers they are funds

That’s what he saying right? Decent funds beat trackers, that’s my experience too. If I didn’t have much cash maybe I’d go with a tracker as lower risk but I like a bit of risk 🙂

Gold

He he, people used to say that on here a few years back, those that listened probably lost a bit:

Why do they always “underperform”?

If an index is up 10% a tracker will be up 9.9%, because it still charges fees. Compound that over several years and a tracker always – ALWAYS – underperforms its benchmark index. I’m simply pointing out that you don’t have to settle for this. You’re the one who needs to go look at some charts, surfer…

That’s what he saying right?

Maybe but thats not how its written.

If an index is up 10% a tracker will be up 9.9%, because it still charges fees. Compound that over several years and a tracker always – ALWAYS – underperforms its benchmark index. I’m simply pointing out that you don’t have to settle for this

Well this is really semantics. Every tracker or fund under performs given that you will incur dealing/platform/fund management charges. How do you buy any tracker/fund/stock without incurring a charge?

Whilst we are waiting to find out the above those interested in P2P lending may like to know that as of today:

P2P in ISA

Good time to buy oil bet its back up around $75 next winter
http://www.bbc.co.uk/news/business/market_data/commodities/143908/twelve_month.stm

http://www.investopedia.com/ask/answers/08/oil-as-investment.asp

What do you know that other’s don’t? Surely the ‘experts’ wouldn’t have sold so heavily if they thought it worth investing in. Of course you may be right but it’s a brave choice. Maybe gold is worth buying as fallen so much since the mini bubble? Not for my money.

Some is now in a cash ISA at HSBC – interest plus £120 a year return so not too bad 🙂

£9k sat doing nothing though 🙁

Also there are 6% regular savings

Remember those are actually 3% savings across the year…