Yes thanks for confirming, I m just working my way down the list of investment trusts dividend heroes, IE, the longest period of ever increasing divs. Cty are the leader with c 50 years. To spread the risk I ve gone with merchants and temple bar.
They really are a buy and hold investment, never going to set the world alight, nor tank in value. All pay quarterly divs which I just reinvest.
nor tank in value.
Don't be too sure about that. I've got a few cty that I've had for 30 years, probably more. A month ago they were trading at £5.85, today they're around £5.30. Of course, Trump's Middle East escapade has affected everything similarly
Ok thanks, i ve been buying on the dips. Last year on trumps tariff threat I bought at 4 quid, 5% yield. The constituents are pretty defensive, banks, tobacco, defence. As always do your own research tho
Worth looking at Law Debenture too. It has an actual professional services business as a subsidiary which not only provides very steady income but is also undoubtedly undervalued in the balance sheet (it isn’t quoted) which means the true NAV is higher than the published one. But i see the yield is under 4%
Cheers law debenture is on my radar, it was covered in a recent ic podcast. 3.2% yield at today's close. Just another inv trust adv is their inflation hedge as divis have historically risen. I also like the transparency of nav and retained earnings.
This is probably a silly question but I need a bit of a sanity check as I'm mildly concerned I've missed something but I don't know what.
I've an old civil service pension which isn't worth much but I'm just leaving as some payout is better than no pay out. My main pension is a Scottish Teacher pension, again leaving as is.
I did some marking and usually you can opt out of pension payments and take the money. The last time that wasn't an option so I have £40 sitting in a pension pot that I'll not be adding to greatly if at all and I'll forget about it in 11 years time when it will be worth 1p a month, at best.
What's to stop me just taking it out? Even if I mark again I'll not tick the pension pay in box.
I think technically you can only take a tenner tax free and the rest would be taxable. And in taking it (early, I assume) your future contributions will be limited to sth like £10k a year.
I'm also not sure about process, 25% of your pot is tax free so you have entitlement to more than £10 because of the equivalent value of your other pensions but you have to do something so your 25% is not fixed now, and continues to grow as your teacher's pension does. Partial crystallisation or something.
tbh for £40 I wouldn't even go through the hassle
And in taking it (early, I assume) your future contributions will be limited to sth like £10k a year.
Nah small pots rule innit...
Ah yes, of course! None of mine are small pots so I'd forgotten that exemption.
Still only be getting £10 plus £30 taxed. Might even be admin to pay, and then you end up paying them to get your money 😉
If you leave it a few years, and Donald doesn't **** it entirely, then with the wonders of cpd interest you might have a whole £60 or so. That would be my advice, time in vs timing and all that 😉
Hardly controversial, markets have always been cyclical.
It would be more newsworthy if she had said 'there won't be a downward cycle and the unsustainable market gains will keep going'.
It's the public statement that's unusual.
https://www.bbc.co.uk/news/articles/cp3p5l0nyevo
The warnings seem to be getting louder. I'm not sure anyone can, or will, do anything to reduce the likelihood of a crash though.
Being at the start of the tax year i'm considering a small increase in my (small) monthly AVCs purchase. With the markets being down a little on the back of the middle East uncertainties I thought a few hundred quid extra in to the pension for a few months might be a good thing. Now I'm not so sure. Might just leave the monthly contributions where they are.
You have to make your own decisions, but I’d suggest looking at your asset allocation and diversifying if necessary.
Adjacent to the recent discussions on this thread so I'm posting here rather than starting another. Can you critique my working out on this idea
General advice, indeed mine usually is Rule 1 - 'time in rather than timing' and I absolutely agree for my pensions that I won't be accessing for some time yet, and which have implications if I was to start to access now.
What are other options - Premium bonds?
I didn't understand most of what you said above this sentence. Guessing the future of investments when volatility is possible is difficult.
Money stored in premium bonds is guaranteed to give you the same money back in the future with no guaranteed wins but losses against inflation and potential interest payments if invested elsewhere.
I don't mind my cash premium bonds. It seems to net me some lucky wins and sometime's it doesn't. Which is ok at the moment whilst I'm working.
Retirement for me will be in 15 years time! 😭😉
I reckon you can live comfortably on £10,000 per year, so you've got what, like 40 years saved up? Do it, you're here once
Work less, play more.
This (exact figure TBD) pretty much. Except you don't even need to treat it like cash, just average ETF/tracker returns would leave you with roughly double that and enough left to re-invest and grow the principal (and thus the amount your draw down) with inflation.
Lately ive been trying to decide if this is enough to jack it all in? Although 1/2 of me thinks whilst its possible to earn good money then I should continue to do so, but at what point do you decide enough is enough.
My OH has worked a 3 day week since mid-40's. We've no kids so the only big fixed expense are the mortgage (and council tax, utilities, etc). I'm still working 5 days just because there's no way I want to still be working when she fully retires as there's an age gap!
I don't have a completely defined plan, but my career has been fairly cyclical with periods of wage growth followed by redundancies and struggling so I'm working on the assumption that choices will ultimately be made for me. That will either be winding down gradually, working 4/3/2 days a week, or if the mortgage becomes a less significant expense then there's always the option to 'retire' during the downturns and work full time when the work is there.
Adjacent to the recent discussions on this thread so I'm posting here rather than starting another. Can you critique my working out on this idea
Etc
Imho your point, and the working behind it, is perfect. BUT the word "IF" appears a lot. And there's the rub.
You don't know what the market will do the next few years nobody does.
If you retreat from the market and it drops then you're quids in. If it doesn't then you're...
Oh look. The word "if" again!
For what it's worth, I transferred a chunk into a different pension provider a couple of months ago when 'everyone' was convinced the market was deffo about to tank. It's gone up by 6% in a few months so clearly I was wrong and it's lucky that I didn't pull it out to cash.
Derailing this a bit. I am working, get a 12 month contract renewal each April so keep signing up. When it ends, I will stop as have no desire to keep working. Have friends who stopped, and who all had great plans. They are all at me to retire as it is great. But now they all seem to be adopting the same lifestyle: do very little, do nothing that they planned, and they all seem to avoid anything even remotely risky or adventurous. Kind of suspect not having a wage, and living on reduced incomes may be to blame? One of them moved to Beirut during the war, and not do long ago had a girlfriend in Ukraine, so it can't be about risk avoidance.
Yes, lots of ifs in the statement for sure but markets do cycle, it's been a long time since it last corrected and 'experts' say it's due and we're overheated on AI, etc So not so much an if - that would suggest there's a chance of it never correcting and that's just not true. It's a when and that when is coming closer
The rest about ISA being tax free, etc, that's all correct?
Of course it's a "when" and not an "if". It always has been, and it always will be.
However most market gains are made on a few days. If you are not in the market on those days then you miss out on most of the gains. Timing the market means that you are more likely to miss those good days than not.
The way to deal with market drops and corrections is to have a long term strategy and asset allocation with a rebalancing strategy that accounts for your risk tolerance rather than listening to "experts" making noise about noise.
What are other options - Premium bonds?
Given our averaged out premium bonds wins over two yrs, we decided we'd probably be better off investing in cash savings & paying tax (at lower rate) on earnings anything above £1000 interest.
Also considering withdrawing £15k of investments into cash given all the talk of a "correction"
Find myself agreeing with everything @Kramer and @thegeneralist are saying here.
I accept that part of the fun of investing is that you're going to see a fall every now and again. You should see (well hope, because if not then we're all ****ed!) that that's actually a short term situation regardless of how painful it feels at the time. You are in this for the long term.
Whenever we do see a fall, I'll also get to comfort myself about the massive tax savings I've already made by investing in pensions, which would be more than enough to offset any falls.
However most market gains are made on a few days. If you are not in the market on those days then you miss out on most of the gains.
Sorry, I'm either not explaining well, or people aren't reading and jumping to their own conclusions.
I'm not talking about a single stock activity, anything like that where 'fun of investing' comes in. I'm talking about an investment policy that has been in place for 35 years now, through the good and bad. But, a downturn is coming.
I don't have to predict exactly when, I can withdraw to 'cash' now and get a guaranteed 4.75% on it, maybe 5.25% based on moving it to my offset mortgage depending what mortgage rates do (again, the 'experts' predict increases through 26 and 27). Which won't be a huge penalty against what it's returning now, and insulates me against losing a chunk of it. I have to withdraw it at some point because the mortgage term is coming to an end (albeit several years away) so just like a pension moving to safer investments close to maturity I can do that. But then with the facility to be able to put back into a tax efficient ISA when the downturn comes. That's not historically an on the spot or even a few days decision, the fastest one in recent history was Covid where the recovery was 1.1 months and typically they last months.
https://www.investopedia.com/a-history-of-bear-markets-4582652
Also considering withdrawing £15k of investments into cash given all the talk of a "correction"
as above, I can effectively get £25k of liquid cash that returns (saves, really) somewhere around 5% tax free by holding in the offset for the time being.
But then if I had £25k available in the offset, and if market did correct, what would stop me spending £20k of it on a S&S ISA and breaking Rule 1 again to make the recovery gains.
As already covered, nothing except:
- You don't know when the correction will be
- You won't know whether the correction has "happened" or "is happening" until months ( or even years) afterwards. How will you know whether we've reached the bottom of a medium correction or are only half way through a big correction*?
I think that's OK with ISA, that gains are not taxable, that's the point isn't it? Of course if the rules changed then things change but am I missing anything here?
Agreed, gains not taxed
* And yes I'm perfectly aware there are strict numerical definitions of correction and big correction, but I can't be arsed looking them up
don't have to predict exactly when, I can withdraw to 'cash' now and get a guaranteed 4.75% on it, maybe 5.25% based on moving it to my offset mortgage depending what mortgage rates do (again, the 'experts' predict increases through 26 and 27). Which won't be a huge penalty against what it's returning now, and insulates me against losing a chunk of it. I have to withdraw it at some point because the mortgage term is coming to an end (albeit several years away) so just like a pension moving to safer investments close to maturity I can do that. But then with the facility to be able to put back into a tax efficient ISA when the downturn comes. That's not historically an on the spot or even a few days decision, the fastest one in recent history was Covid where the recovery was 1.1
We've already covered this Imho. Yes you'd get 5.25% per annum, but you may miss out on much higher returns in the ( frankly ridiculous) stock market. As I said above, I was in your point of view back in March and went partly to cash. I've probably earned the equivalent of 4% PA on that, but the £60k I transferred to Vanguard fund in a SIPP has returned equivalent of 18% in that time.
I'm not talking about a single stock activity,
Neither is Kramer
Yes, lots of ifs in the statement for sure but markets do cycle, it's been a long time since it last corrected and 'experts' say it's due and we're overheated on AI, etc So not so much an if - that would suggest there's a chance of it never correcting and that's just not true. It's a when and that when is coming closer
The rest about ISA being tax free, etc, that's all correct?
Yea, you're right, but you'd also have been right if you'd said that last year, and then both the FTSE100 and S&P500 have gone up 25-30% in the last 12 months, so with hindsight you would be wrong. So if you'd ignored your own advice 12 months ago and there was a 25% market correction today then you'd be no worse off.
And if you wait for it to correct, then what? One person's "buy the dip" is another's "catch a falling knife". timing the bottom is just as difficult as timing the top.
Personally, Trump, Ukraine, Greenland, Venezuela, Iran, Boeing planes falling out of the sky, the rise of Reform, Taiwan, all those should be massive shocks to the system, but the fact that Trump can come back from a trip to China and his only announcement is seemingly that he has some rose seeds to replant his concrete rose garden and in return might stop arms sales to Taiwan and the market remain pretty much flat, would indicate the market is actually pretty stable.
There's an interesting aspect to share prices at the moment, in that a huge amount of the value (especially in the S&P500) is held by retail investors via ETF's. They don't care about profits and dividends of individual companies, I probably couldn't even name 10% of them. They're just piling in their savings every month. Which makes it harder for a crash to happen. I don't think anyone really knows when/how/if that trend stops. My inexpert opinion is it's like house prices, there will be a generational boom of this sort of thing, then plateau as people run out of new money to plough into the system, and the people at the top either retire and start to sell those assets or die.
Is AI overheated? Hard to say, currently everyone seems to be making fairly real money out of it. Maybe it'll crash. Maybe technology will inflate it's way out of the bubble, not sure if that's the correct terminology, I mean according to Moores law at some point NVIDIA, AMD, and Intel will release a generation of chips that are cheaper and more powerful and then the cost of building the datacenters and doing the computation drops. More powerful AI might offset that, but only if there's more problems (that are cost effective) for it to solve.
I'm not talking about a single stock activity,
Neither is Kramer
Correct.
There's an interesting aspect to share prices at the moment, in that a huge amount of the value (especially in the S&P500) is held by retail investors via ETF's.
Indeed.
After reading "Smarter Investing" I'm actually tilted away from market cap and towards real estate, emerging markets, value and smaller companies for diversity reasons.
The really scary thing about the S&P tracker fund investing is that at least some of it is leveraged, which means that when the correction comes, it is likely to be amplified.
so just like a pension moving to safer investments close to maturity I can do that
That isn't what you're doing. Pensions moving to safer investments closer to pension age is a predetermined strategy to guard against sequence of returns risk. You're reacting to current information to try and time the market, which is different.
so just like a pension moving to safer investments close to maturity I can do that
Also, to ad to Kramer's point, AIUI (IANAFinancialAdvisor) that was done traditionally because you turned 60, told your boss to FO, and cashed in your pension pot for an annuity. So you needed to maximize (of safeguard) it's value on one very specific day.
If your plan is to retire and live off the funds in an ISA or drawdown your pension whilst leaving it invested, then there isn't any reason to be shifting it away from whatever you've been doing with it since you started work and saving into it. In that case it's not cash that you have divide by the number of years left, it's an investment that you still want it to be accruing value and paying you an income in 20 years time. The shift towards safe assets doesn't then need to occur until the last decade or boom/bust cycle.
I'd argue I'm derisking my investment and creating an option for the future rather than making any firm decision, but thanks for all your inputs
Is AI overheated? Hard to say, currently everyone seems to be making fairly real money out of it.
Blimey. That's not what I expected to read. I'm not at all close it to but got the impression that there was almost no real world ROI on AI yet.
Obviously the Amazon/Anthropic/NVidia circlejerk is pushing up their paper profits immensely but that's surely just a scam of one company loaning another company money to buy their products isn't it.
Is AI actually making any money outside the cabal?
Their share owners are making good paper profits for sure, and unless your pensions and trackers are specifically directed away from those companies, that means all of us are
Is AI actually making any money outside the cabal?
I guess on the consumer (I'm including corporate users in that) side whether it actually makes money or not is irrelevant, it's how many licenses to your LLM you can sell or how many adverts you can run alongside it.
On the industrial side, similar but different it's not whether your drug discovery / protein folding / weather system simulating / visual effect generating AI makes money, it's whether those people are buying your GPU's or computing power in a data center.
For the moment people seem happy to throw money into it.
To me the question seems more what will outpace the other, will computing power increase and make AI cheap (or production ramps up, or competitors enter the market) as happens with most computing. In which case the bubble just deflates or stagnates. Or will the computing demands of AI increase as fast as hardware can be developed to run it and the limiting factor is just how much people are prepared to pay for it and can justify uses for it.
Their share owners are making good paper profits for sure, and unless your pensions and trackers are specifically directed away from those companies, that means all of us are
Agreed, but that's not what was being discussed. Someone posted:
everyone seems to be making fairly real money
Which I read as being different thing. Hence my question on whether anyone is actually making money from AI rather than just the bubble of speculation around AI.
whether anyone is actually making money from AI rather than just the bubble of speculation around AI
No. If they were you’d be hearing a lot about it.
Derailing this a bit. I am working, get a 12 month contract renewal each April so keep signing up. When it ends, I will stop as have no desire to keep working. Have friends who stopped, and who all had great plans. They are all at me to retire as it is great. But now they all seem to be adopting the same lifestyle: do very little, do nothing that they planned, and they all seem to avoid anything even remotely risky or adventurous. Kind of suspect not having a wage, and living on reduced incomes may be to blame? One of them moved to Beirut during the war, and not do long ago had a girlfriend in Ukraine, so it can't be about risk avoidance.
TBH,it’s possible people do exciting things to counteract the boredom of a working life,once that’s removed then perhaps the desire wanes.
Some people just get more boring when they get older 🙂
TBH I’ve not done as much as I’d like due to weather but TBH I’m glad I took the car rather than the quad to pick up my old passport today, hopefully I’ll take the quad up the mountain route and thru the rambla to the coast (a nice bit off on rod off-road quad biking)over the weekend now we’ve got better weather.
I do think there is also reduced income, Mrs DoD and moi are taking it steady although a few quad parts have materialised.
Some people do find it hard after years of working for a living getting used to actually spending it,there’s always a worry that they won’t have enough,but tbh you’ll never have enough as there’s always some shiny bike porn to buy 🙂
I mean anthropic has annual recurring revenues of 30bn - that's real money... people paying them. I work in AI at a large corporate, the amount of investment is substantial - there is no part of our tech stack or our suppliers tech stacks that is not going to or currently is consuming large amounts of tokens. Our engineers are all using ai coding tools to do real work - even if AI only ever turned out to be revolutionise how software is created then that is going to make a lot of money.
That's not to say that stocks might be overvalued, but AI doesn't appear to be all hype on the ground.
if AI only ever turned out to be revolutionise how software is created then that is going to make a lot of money
So far coding is the killer app for AI but the problem is that the size of this market is far smaller than the current investment in AI infrastructure.
if AI only ever turned out to be revolutionise how software is created then that is going to make a lot of money
So far coding is the killer app for AI but the problem is that the size of this market is far smaller than the current investment in AI infrastructure.
Well yes, but as you say "so far", and the bet is very much that the addressable market will expand to encompass software to complete knowledge work etc. We'll all get to see who loses the bet I suppose!
TBH,it’s possible people do exciting things to counteract the boredom of a working life,once that’s removed then perhaps the desire wanes.
Some people just get more boring when they get older
There might be something to that first point. When 50+ hours of your week are fairly shit, you need a more intense hit of not shit to balance things out and keep the average shit level to something bearable. If all of your week is pretty agreeable, the average shit level is ok without having to do anything extreme.
The second point is clearly true.
if AI only ever turned out to be revolutionise how software is created then that is going to make a lot of money
So far coding is the killer app for AI but the problem is that the size of this market is far smaller than the current investment in AI infrastructure.
But as you said "if AI only ever turned out to be revolutionise how software is created then that is going to make a lot of money". If coding is all AI ever turned to revolutionise as you hope then big tech will lose a LOT of money.
The next killer app for AI is expected to be business process outsourcing, if big tech captured 100% of that market and 100% of code generation then that is still a long way short of the sums being spent on infrastructure.
AI will eventually find its way into virtually everything. That it's only in a couple of applications now and we can't say with certainty what's next doesn't mean it won't find its way. Compare to the ubiquitous chip / integrated circuit, the inventors and early investors had no way to predict the massive uptake and the huge variety of devices that have only come about because of the ability to package circuits onto tiny silicone wafer.
The real issue is that in today's connected society 'everyone's' aware of the rise of AI and the markets are so connected they can overheat as we see based purely on the potential. When the IC was invented (1959, had to google it) I'm pretty sure no-one was clamouring to buy shares and create start ups to make them. I don't honestly see AI any different really to those big innovations, and its not whether it'll become the size expected, it's whether it'll do it fast enough to please the markets.
Is AI actually making any money outside the cabal?
Ok, I'm sorry. I was worried about tangenting when I posted that, but didn't think it would take over the whole thread. My favourite thread, where people talk of the fabled sun kissed uplands where work stress doesn't exist and we get to ride our bikes and have fun every single day.
I'm sorry. Let those who GaS about the hell that is AI assemble here to discuss its awesomeness:
https://singletrackworld.com/forum/off-topic/int-ai-brilliant-and-thoroughly-making-loads-of-money/
