Do you invest in the stock market?

[SleepDreamThinkHuge]

I was reading in the last 50 years the stock market has returned around 9-10 percent returns every year on average.

Do you invest in things such as the S&P500? How long have you been investing for, how much do you put yearly and what returns have you seen so far?

I will have saved more money by 2023 and I was thinking either then or the year after to start putting a minimum of £1,000 every year for the next 30 years (until my early 60s) into something like the S&P500.

Assuming I can start off with £1,000 and invest £1,000 every year for the next 30 years with an average return of 9 percent a year that would give just under £162,000 which is not bad considering that £1,000 a year investment consistently is something that is achievable, and it will not break the bank. And I can do more if I can earn more money and get a better paid job in the future.

www.calculator.net/investment-calculator.html?ctype=endamount&ctargetamountv=1000000&cstartingprinciplev=1000&cyearsv=30&cinterestratev=9&ccompound=annually&ccontributeamountv=1000&cadditionat1=beginning&ciadditionat1=annually&printit=0&x=113&y=19

On average... so some years can be a lot more and other years a lot less. That volatility is fine if you are investing for the long term, as each time it goes down your £1000 buy will buy more units in the fund. Where there can be a problem is when you want to access the money, as the market may be down at that point, so not a good time to sell.

I don't do S&P500... I don't live in the United States. I want more global exposure than those 507 companies, so I use a fund which has companies of various sizes around the globe.
Have a look at funds that track MSCI World, or funds like Vanguard FTSE Global All Cap, or Vanguard Lifestrategy or BlackRock MyMap.

Apple Inc represents around 7.3% of the S&P500. £73 of your £1000 would be buying shares in Apple. Did you buy the latest iPhone, or even know that they have released a new model? Apple has done well over recent decades but will that continue? There are likely other contenders coming up the ranks who will make it in to the S&P500 over the next few decades. Fund which have more companies in than the S&P500 may already include those up and coming companies, so buy buying those funds you get in to those companies at a low price.

Consider how much diversification you are happy with. I prefer buying small parts of 6000+ companies, rather than just the top 500 US companies.

Agree with pp- I wouldn’t just invest in the US market.

Good explainer here of the benefits of geographic diversity ttps://www.optimizedportfolio.com/bogleheads-4-fund-portfolio/

It’s easy to do- something like Vanguard Lifestrategy is a cheap and easy way to hold a diversified portfolio. This little quiz is helpful for choosing a fund that matches your approach to risk investor.vanguard.com/tools-calculators/investor-questionnaire

Do you already use your ISA allowance? You can invest up to £20k a year and all returns will be tax free.

I have a lot invested in the S&P500. You don’t have to live in the US. It’s performed well for me. I also have money in multiple other diversified funds. I don’t tend to invest in the UK because our economy is tanking.

I pay the maximum each month (~£350) into my lifetime ISA and the government tops it up by 25%. It can only be used to purchase a first home or for your retirement. I would highly recommend you opening one. You need to be under 40 years old.

I also pay about £250/month into my stocks and shares ISA and pay money sporadically into my SIPP.

All of these products are with Hargreaves Lansdown but you could do the same at a lower cost with Vanguard.

Yes, but I chose Vanguard global all cap in preference to S&P or Lifestrategy.

Right now is a very good time to invest in the market if you don’t need access to your money for 1-3 years

Only index funds

On behalf of our family, I invested £72k in late 1995. Always into equity moving around between growth and defensive depending on where I think the short term (5-7 years) macro economic cycle is going. Net of capital gains tax and income tax it is £927k today. We will take two thirds of the money out of equity this year for purely family reasons not our view on equities at all.

There have been some hairy times, but some good times too and some good stocks along the way. Anything can change.

Bloody hell, that’s an amazing return. What was your best performing investment?

That is an easy one - Microsoft.

Quite a few funds - Herald Investment Trust and Findlay Park US. Plus some 'gambles' when people have been chasing stock, but I get out early. Virgin Galactic was an interesting one late 2020 for a small amount.

Why Microsoft specifically @Chatillon ?

I invest max in s&s ISA, pretty diverse global portfolio but always avoid individual stock choices as it feels a bit more like ‘gambling’ to me. I’m generally pretty cautious though and have missed out on big gains in the past due to that.

Everybody uses its products. It is also a quality growth stock - always seems to find its way into the growth markets. Despite the rise I think it will continue to do well, especially with its cloud service range under Azure. It will do well with its games also. It seems like a proper grown up company with some critical mass. Plus lots of well respected fund managers will have a decent holding in it. That says something.

Thank you, interesting perspective, was just curious given the hike they’ve seen already this year

I've been investing in my sip for 10 years, I've done very well. I hold s&p500, a global low cost tracker, ftse 100 and a few investment trusts that I've liked the look of and bought when they've been trading at a discount to their underlying asset value.

Yes- mix of trackers, managed funds and some bonds and in a mix of currencies to maximise diversification. I buy trackers for the DC for their ISAs as low fees. I don't buy individual names as DH and I both subject to trading restrictions for work which make it basically impossible. Also tbh I don't really have the time/interest to stay on top of it.