Share/Investment advice

[Doobs]

You seem to be building up a High Yield Portfolio (HYP), there are about a zillion posts on the motley fool http://boards.fool.co.uk/high-yield-hyp-practical-51676.aspxl http://boards.fool.co.uk/high-yield-share-strategies-51166.aspx on this after steven bland "invented" the idea a few years ago. Loads of bloggers have done the same for example http://monevator.com/a-new-high-yield-portfolio-for-2011/

Vanguard are like the pokerstars of fund management, no share holders so they are not out to grab every single penny from their clients. They tend to be passive not active which tikay doesn't like but if you read this to get the opposite opinion http://www.amazon.co.uk/Smarter-Investing-Simpler-Decisions-Results/dp/0273722077 then a Vanguard LifeStrategy fund prob 80% equity does seem like a very good idea to me. http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-lifestrategy-80-equity-accumulation

I spent way too much time in my past on the motley fool website.  Even though Stephen Bland didn't strictly invent high yield/value investing, there isn't much wrong with a strategy like this.

What Stephen Bland is very right on is people knowing their level of ignorance.  Most people lose a lot of money trading on the most spurious of reasons, just buy, hold and forget wins for most.

I'd certainly look at maxing your ISA every year.  It may not matter much now when you are a non tax payer, but in the long run, you don't want a big CGT bill when you need to sell.

I'd buy each share in reasonable chunks, so maybe looking at 3k in each, so after 2 years you have 6 or 7 shares in your ISA, by 4 years, you have a proper portfolio.

I wouldn't get carried away on Tesco, there is no harm in having half Tesco, half Sainsbury/Morrison.

I have money in banks, I have HSBC, Barclays, RBS and Lloyds.  HSBC are pretty much the safest bet, Barclays always seem a bit spivvy but are probably still safer than Lloyds and RBS.

You haven't got an oil company, something like Shell or BP should be good long run.

Utilities are fine, I wouldn't be rushing in and out just for the sake of a 5% drop.  Was trying to work it out in my head, but 5% doesn't seem a massive over-reaction to what Milliband has said.  Good luck to him putting that through though.

If I had any funds, I think you should be looking overseas, once you have a big chunk invested in your own shares, all you do by buying funds is guarantee losing 1% or 1.5% a year.   Most fund managers really aren't worth it.   

[millidonk]

Doobs, I see what you saying, although you are still not losing money on your initial investment with Premium Bonds, you are just not necessarily making the most.

The issues with the mortgage is that what do you do if your house price plummets and you wake up in negative equity? and what if you need access to the £30k immediately as I think Scotty said he wanted.

Good thing with Premium Bonds, available immediately, never lose value and CHANCE of scooping big. Bad thing is they are likely not to produce the biggest yield on your investment.

Glad to see you have some though. Such a degen.

[millidonk]

oh, my bad. I think he doesn't want immediate access. Risky for a poker player.. the rest of my points still stand though.

[Tal]

Worth taking the max of £30k in premium bonds. No way of losing the money, on avg perform just under isas (this is worked out by the avg prize money) but the main attraction is you have the chance to win a milli ball and with how you run...

Money saving expert has a calculator for this on the website.

As a personal aside, I was once told that vintage watches were a good investment. You could get a very nice Patek Phwatch illippe - say a classic and simple chronograph - for £25k and they would never lose their value (in as much as one can say Never in an investment situation...). Would be low yield, I expect, but the watch is already 60+ years old, so it has seen a fair few market ups and downs off.

Out of my price range, but something I personally would look into, were I to start racking up Herbiemob flags.

This whole area is far from my comfort zone/expertise and I expect property is the best investment in reality. Was just mooting an angle.

Jesus

Now THERE'S a good lifetime investment!

Sorry was busy this morning, so will provide a bit more detail on this.

I see a few big problems with chucking big sums at "investments" like the watch (though I could just substitute this with fine wine, works of art, impressive folly on his lordship's estate).

Scotty knows nothing about these items, so somebody who knows a lot about these items is going to sell him them.  This person will make his money by buying and selling such items, so he isn't ever going to let Scotty buy them at a rate that leaves Scotty much opportunity to make a killing.  The most likely result is he is sold the item at such a rate that the seller makes a healthy return on his investment in the watch.  The healthier this return is for the seller, the lower Scotty's return will be.

Scotty's new "investment" produces no income, but it will be worse than that.  When Scotty comes to renew his insurance, he now should reveal he has this very valuable vintage watch.  That isn't going to be cheap to insure, so rather than making money, we lose money every year.

When he sells, he still knows nothing about watches, so he ends up selling to somebody who needs to buy at such a price that he can make a healthy return on his investment.

This is all compounded by the possibility of making forced sales.  If I have money in the bank I can get it easily, if I have it in shares, I can get it easily, but might get punished a bit by selling at a bad time.  If I have one watch, then I can't sell it easily, may get punished by selling at a bad time, and may be forced to sell to the person who has the money to buy that watch right now.  All these things are not condusive to making a decent ROI from watches, fine art etc.

So in life, buy nice things if you like nice things, but don't buy them as investments.

I understand your point but, in my defence:

- the thread is essentially "I have some money and I'm looking for ideas and advice about what to do with it", so unless the response is "put it in X account at Y bank", there will always be reliance on the greater knowledge of others

- I did only post it as a point of mild interest, mainly from a personal perspective (Yes, I would also like a house full of Dalis and Caravaggios...); it wasn't intended to be a "you really should consider..." That really wouldn't be my place.

- I think the situation you describe about buying and selling is a little simplistic, although undoubtedly purely for illustration of a valid point. There is no reason why, with reasonably limited research, you couldn't find a 2010 Rhone, find out what it was worth on the market and learn what yield could be expected over the long haul. As such, you can buy at market price (let's assume the ability to negotiate and choose seller) which, given you would be selling at market price in due course, gives you a return on your investment.

If you know what you are doing in any sphere, you can make better decisions than other people and, thereby, make more money in competition. Hence why OP is looking for somewhere to put his mountains of wonga...

[Doobs]

Doobs, I see what you saying, although you are still not losing money on your initial investment with Premium Bonds, you are just not necessarily making the most.

The issues with the mortgage is that what do you do if your house price plummets and you wake up in negative equity? and what if you need access to the £30k immediately as I think Scotty said he wanted.

Good thing with Premium Bonds, available immediately, never lose value and CHANCE of scooping big. Bad thing is they are likely not to produce the biggest yield on your investment.

Glad to see you have some though. Such a degen.

Yeah, but you are losing money, you are losing £810 on average from just paying off the mortgage.  You'd expect to do worse if the comparison was investing in shares.  And though you say you don't lose money, inflation is going to get you for 3% or so too, so your 30k is going to be worth less when you take it out.  You'd be very fortunate to not lose money.

The chance of scooping big really is so small as to render it meaningless (45 billion to 1 is really really small).  

What I mostly do is try and pay the mortgage down and try and max the shares ISA.  Some years are easier than others.

Ryan shouldn't consider a pension yet because of his tax status.

[millidonk]

Getting mortgage down is probs a very good idea but you can get stung (as I did), pretty much lost £25k overnight. When house prices crash you are a sitting duck. It's not too bad if you don't plan to sell for a good 10 years as you can just ride it out or better yet rent it out like I did. Just don't want Scotty to think "yea, lump it on the mortgage and nothing can go wrong.."

Fwiw your 45billion to 1 is just for the jackpot.

Your chances of winning a prize are 26,000 / 1 and some of the other prizes are well worth winning.

August's prize breakdown:

Prize band   
   £1 million   1
    £100,000   3
    £50,000   6
    £25,000   11
    £10,000   30
    £5,000   58   
        £1,000   789
        £500     2,367
   £100   11,891
    £50   11,891
    £25   1,724,014

No harm in putting £25k on mortgage and £5k in premium bonds for easy access and a degen urge quelling.

[Doobs]

Getting mortgage down is probs a very good idea but you can get stung (as I did), pretty much lost £25k overnight. When house prices crash you are a sitting duck. It's not too bad if you don't plan to sell for a good 10 years as you can just ride it out or better yet rent it out like I did. Just don't want Scotty to think "yea, lump it on the mortgage and nothing can go wrong.."

Fwiw your 45billion to 1 is just for the jackpot.

Your chances of winning a prize are 26,000 / 1 and some of the other prizes are well worth winning.

August's prize breakdown:

Prize band   
   £1 million   1
    £100,000   3
    £50,000   6
    £25,000   11
    £10,000   30
    £5,000   58   
        £1,000   789
        £500     2,367
   £100   11,891
    £50   11,891
    £25   1,724,014

No harm in putting £25k on mortgage and £5k in premium bonds for easy access and a degen urge quelling.

Surely you lost £25k on your house value regardless of how much the mortgage was?  So paying off the mortgage makes no real difference?  You can't just hand back the keys and wipe out the debt if you have 25k in premium bonds or in an ISA.  Of course something can go wrong with buying houses, but Ryan is already passed that stage.

People saying nothing can go wrong with any investment are usually wrong.

On your premium bonds point, it is just less than a billion to 1 to win £10k+.  People are pretty bad at doing odds, but I'd suggest that you are more likely to die than get a 10k prize on your premium bonds, and you aren't at all likely to do that either.

But yes, you need rainy day money etc, so may as well be in premium bonds, which is kind of why I have 5k there.  Though if I was less lazy, I'd have it in accounts that gave me better interest.

When working out how much cash I have, I include bank accounts, poker accounts, gambling accounts and premium bonds.  I don't include shares, simply because I don't really want to be touching the ISAs unless really desparate.  Despite this, if really needed I can get money out of a shares ISA in about 3 working days, so it isn't that difficult.  But I can always be forced to sell at a bad time, which is the downside.

 

[Woodsey]

With the returns on premium bonds about half of what inflation is, you are basically losing money with them, pay off your mortgage instead.

I work for a pharma company, most of the big companies like AZ are struggling because of blockbuster drugs coming off patent and them not being replaced by new money spinners, there is also heavy downward pressure of drug prices by governments making it harder still. Even though I work in that sector I'm not sure I'd be investing lumps into it. The next big thing in medicine is stem cell research and gene therapy, over the next 20 years and beyond you are going to start to see cures or at least big remissions in some diseases because of this technology, they will be able to charge huge money for this. Even if it costs £50k to cure a patient of diabetes, this will be cost effective to do so, these new technologies will be huge. The companies developing these are the ones to look at, the problem is binking the right companies who win the race.

[doubleup]

Worth taking the max of £30k in premium bonds. No way of losing the money, on avg perform just under isas (this is worked out by the avg prize money) but the main attraction is you have the chance to win a milli ball and with how you run...

Money saving expert has a calculator for this on the website.

As a personal aside, I was once told that vintage watches were a good investment. You could get a very nice Patek Phillippe watch - say a classic and simple chronograph - for £25k and they would never lose their value (in as much as one can say Never in an investment situation...). Would be low yield, I expect, but the watch is already 60+ years old, so it has seen a fair few market ups and downs off.

Out of my price range, but something I personally would look into, were I to start racking up Herbiemob flags.

This whole area is far from my comfort zone/expertise and I expect property is the best investment in reality. Was just mooting an angle.

Jesus

Now THERE'S a good lifetime investment!

[Derbylad]

With the returns on premium bonds about half of what inflation is, you are basically losing money with them, pay off your mortgage instead.

I work for a pharma company, most of the big companies like AZ are struggling because of blockbuster drugs coming off patent and them not being replaced by new money spinners, there is also heavy downward pressure of drug prices by governments making it harder still. Even though I work in that sector I'm not sure I'd be investing lumps into it. The next big thing in medicine is stem cell research and gene therapy, over the next 20 years and beyond you are going to start to see cures or at least big remissions in some diseases because of this technology, they will be able to charge huge money for this. Even if it costs £50k to cure a patient of diabetes, this will be cost effective to do so, these new technologies will be huge. The companies developing these are the ones to look at, the problem is binking the right companies who win the race.

Hmmm someone beat me to this...
To essentially second what's been said here, I also work for a large pharma company.
When investing in pharma companies you need to look primarily at their R&D pipeline and the longevity of the patents of any of their 'blockbuster' drugs... Those that bring in the majority of the revenue for the company.
Happy to talk over pm if you want to learn anymore 

[Doobs]

With the returns on premium bonds about half of what inflation is, you are basically losing money with them, pay off your mortgage instead.

I work for a pharma company, most of the big companies like AZ are struggling because of blockbuster drugs coming off patent and them not being replaced by new money spinners, there is also heavy downward pressure of drug prices by governments making it harder still. Even though I work in that sector I'm not sure I'd be investing lumps into it. The next big thing in medicine is stem cell research and gene therapy, over the next 20 years and beyond you are going to start to see cures or at least big remissions in some diseases because of this technology, they will be able to charge huge money for this. Even if it costs £50k to cure a patient of diabetes, this will be cost effective to do so, these new technologies will be huge. The companies developing these are the ones to look at, the problem is binking the right companies who win the race.

Hmmm someone beat me to this...
To essentially second what's been said here, I also work for a large pharma company.
When investing in pharma companies you need to look primarily at their R&D pipeline and the longevity of the patents of any of their 'blockbuster' drugs... Those that bring in the majority of the revenue for the company.
Happy to talk over pm if you want to learn anymore 

Not sure this is at all true, people who work for companies aren't always the best judges of their companies investment potential.  I could find a whole host of reasons not to invest in any of the shares I own, and I still invest.

I first invested in GSK maybe 10 years ago, and there were the same issues raised about the lack of blockbusters in the pipeline and Government trying to force down the prices of drugs then. 

I think I paid about 1100p a share.  10 years on, they are 1598p a share and pay me an income of 74p a year.  Even if GSK do reach a stop, you still get that 5% or so yield to stop you getting too grumpy.

As I said earlier.

What Stephen Bland is very right on is people knowing their level of ignorance.  Most people lose a lot of money trading on the most spurious of reasons, just buy, hold and forget wins for most.

[Woodsey]

With the returns on premium bonds about half of what inflation is, you are basically losing money with them, pay off your mortgage instead.

I work for a pharma company, most of the big companies like AZ are struggling because of blockbuster drugs coming off patent and them not being replaced by new money spinners, there is also heavy downward pressure of drug prices by governments making it harder still. Even though I work in that sector I'm not sure I'd be investing lumps into it. The next big thing in medicine is stem cell research and gene therapy, over the next 20 years and beyond you are going to start to see cures or at least big remissions in some diseases because of this technology, they will be able to charge huge money for this. Even if it costs £50k to cure a patient of diabetes, this will be cost effective to do so, these new technologies will be huge. The companies developing these are the ones to look at, the problem is binking the right companies who win the race.

Hmmm someone beat me to this...
To essentially second what's been said here, I also work for a large pharma company.
When investing in pharma companies you need to look primarily at their R&D pipeline and the longevity of the patents of any of their 'blockbuster' drugs... Those that bring in the majority of the revenue for the company.
Happy to talk over pm if you want to learn anymore 

Not sure this is at all true, people who work for companies aren't always the best judges of their companies investment potential.  I could find a whole host of reasons not to invest in any of the shares I own, and I still invest.

I first invested in GSK maybe 10 years ago, and there were the same issues raised about the lack of blockbusters in the pipeline and Government trying to force down the prices of drugs then. 

I think I paid about 1100p a share.  10 years on, they are 1598p a share and pay me an income of 74p a year.  Even if GSK do reach a stop, you still get that 5% or so yield to stop you getting too grumpy.

As I said earlier.

What Stephen Bland is very right on is people knowing their level of ignorance.  Most people lose a lot of money trading on the most spurious of reasons, just buy, hold and forget wins for most.

Well I'm not talking about the company I work for as you cannot buy shares in them, I'm talking about the industry as a whole. Medicine is so far advanced now that the cupboard is not exactly bursting going forward, the sales of most of the top companies have declined slightly in recent years because of this. I am privy to info than people outside the industry can't won't see unless they make a special effort. Anyway up to you what advice you take on board, but there are better areas to invest than pharma companies currently imo unless there are specific reasons to invest in a particular company.

[Doobs]

With the returns on premium bonds about half of what inflation is, you are basically losing money with them, pay off your mortgage instead.

I work for a pharma company, most of the big companies like AZ are struggling because of blockbuster drugs coming off patent and them not being replaced by new money spinners, there is also heavy downward pressure of drug prices by governments making it harder still. Even though I work in that sector I'm not sure I'd be investing lumps into it. The next big thing in medicine is stem cell research and gene therapy, over the next 20 years and beyond you are going to start to see cures or at least big remissions in some diseases because of this technology, they will be able to charge huge money for this. Even if it costs £50k to cure a patient of diabetes, this will be cost effective to do so, these new technologies will be huge. The companies developing these are the ones to look at, the problem is binking the right companies who win the race.

Hmmm someone beat me to this...
To essentially second what's been said here, I also work for a large pharma company.
When investing in pharma companies you need to look primarily at their R&D pipeline and the longevity of the patents of any of their 'blockbuster' drugs... Those that bring in the majority of the revenue for the company.
Happy to talk over pm if you want to learn anymore 

Not sure this is at all true, people who work for companies aren't always the best judges of their companies investment potential.  I could find a whole host of reasons not to invest in any of the shares I own, and I still invest.

I first invested in GSK maybe 10 years ago, and there were the same issues raised about the lack of blockbusters in the pipeline and Government trying to force down the prices of drugs then. 

I think I paid about 1100p a share.  10 years on, they are 1598p a share and pay me an income of 74p a year.  Even if GSK do reach a stop, you still get that 5% or so yield to stop you getting too grumpy.

As I said earlier.

What Stephen Bland is very right on is people knowing their level of ignorance.  Most people lose a lot of money trading on the most spurious of reasons, just buy, hold and forget wins for most.

Well I'm not talking about the company I work for as you cannot buy shares in them, I'm talking about the industry as a whole. Medicine is so far advanced now that the cupboard is not exactly bursting going forward, the sales of most of the top companies have declined slightly in recent years because of this. I am privy to info than people outside the industry can't won't see unless they make a special effort. Anyway up to you what advice you take on board, but there are better areas to invest than pharma companies currently imo unless there are specific reasons to invest in a particular company.

Turnover is fairly flat.

ROI from my holding about 9% a year.
Forward p/e 13
Expected dividend yield 5%+

The company isn't priced for massive growth, it is priced to give "mugs" like me my 9%.

[scotty77]

Thanks guys. A lot to think over! Will be looking more in depth when I have time but please keep thoughts, ideas coming. Really appreciate it and I'm sure some if my peers who are railing have prob learnt a thing of 2 as well.

[redarmi]

The problem is that the share price isn't determined by the views and opinions of people from outside the industry though.  It is determined by supply and demand which is, to a very great extent, led by the opinions of analysts who are effectively inside the industry and speak every day to the CEO's and CFO's of the pharma companies and do make that special effort to analyse those things that appear hidden to the lay observer.