Advice on stock investing with a 15 year time horizon

pockets

Hi,


I have a sum on money coming to me and would like to begin to build some sort of saving base for my kid's university education in 15 years time.

I am willing to take a punt that shares are now a good bet over such a time horizon. Does any one have advice on how to invest say Eur 20k for such a long term horizon:

- Buy into some sort of managed fund, if so which one(s)
- Individual stocks, if so which ones or which sectors

I understand that I should spread the investment over time to avoid short term fluctuations & that I should convert to cash at the later years of the investment for the same reason.


Thanks,

Pockets

silverharp

you could do worse then Rabo funds, the fees are low compared to some and they have a good selection of funds

pockets

Thanks silverharp, I agree that Tabo's fees look good.

I guess my question is more, what type of investments:

- Irish or non-Irish shares
- Banks
- If so where (big US ones seem to be the ones who will come out of this mess in good shape)
- Asia
- China


etc.

anyone thoughts on this for a 15 year horizon would be appreciated

radioactiveman

Hi pockets
You could try an index linked fund like the eurostoxx 50 which gives you the top 50 companies in europe and you don't have to worry about any individual ones going bust. The problem with an amount like 20k is that buying and selling a lot of individual stocks could really eat into it due to commissions and taxes.
Also you could go for a high dividend yielding fund. If the dividend is say 5 or 6 % vs. 3% and it is reinvested automatically for you then the compounding of this over 15 years can be significant. If you google 'dividend select' ETFs or funds you should get a few of these, I know Deutsche Bank do them but there are loads of companies. There are a lot of european online brokers where you can hold shares with no annual management fee or at least with very competitive commission rates compared to buying through a bank here, which can be extortionate!

silverharp

15 years is along time and I'm not sure that one inv estment will work over 15 years, as someone said to me recently "we are all traders now" , buy and hold is dead, for instance anyone who bought and held the Dow in the 90's is still losing money

Remember this bear market isnt over it has a minimum of another 6 months to go, so I would not be going long any conventional investment now
if you went down the Rabo route put 10%-15% in their gold stock fund, it will hedge the other parts of the portfolio over time, it worked in the 1930's which will have some resonance with the period ahead

Time Magazine

silverharp wrote: »

for instance anyone who bought and held the Dow in the 90's is still losing money

The latter half of the 90s will go down in history as one of the biggest bubbles ever.

Pockets, welcome to the board. Glad to see you've read up on this and are being so sensible about it . Just to point out though: don't be under the impression anything here constitutes "advice", treat it as you would pub-talk. With 20k, it's probably worth your while getting professional advice after having a good think about your options.

That said, I think you're on the right path. If you're looking at 15 years there may well be good value at the moment. As silverharp said, this crap isn't over yet so you most likely have at least a couple of months to consider what to do. Nobody can accurately predict whether Asia/Europe/US/gold/silver/Volkswagen/Vauxhall will grow more in the next 15 years. Generally speaking though, if you diversify well enough, you can be fairly certain of earning a tidy return. Sure, looking back after 15 years putting a greater % into X instead of Y might have yielded a higher return, but the opposite could also be true. At that sort of horizon, your guess is almost as good as anyone's.

The one thing I would mention is that you don't necessarily have to cash out on the day of your kid's Leaving Cert's results. As has been shown pretty evidently over the past couple of years, it could well be worth your while doing it a year before. Look at the return every 6 months in the few years before your son/daughter turns 18 and consider if you are happy accepting that return. Don't necessarily refuse to sell Bank of Ireland at €17 because you think they might reach €20, but be open to accepting the return at €17.

daveirl

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silverharp

daveirl wrote: »

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Jesus, these days and investment in the S&P is looking pretty speculative ;-)

I'm not sure if ETF's are the best vehicle for long term investments (but am open to correction), they are great trading vehicles and I use them myself but there is internal slippage in them, they dont track an index over time 100%
I do agree with your averaging in strategy though


And just to say to the OP, it might be difficult to get good impartial advise for a modest fee and in % terms it would take a chunk out of the original 20K capital.

daveirl

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