Investing in the stockmarket and Risk

[stargazer]

Hi all

I have heard the experts say put your money in the stockmarket it returns on average of 12% OVER THE LONG TERM.

Are they talking about managed funds?

Chosing blue chip stocks like buy and hold? (these can go down also)

Other comments i have heard is invest into a managed fund for income and capital growth......

I have not heard too much in regards to the risk with these types of set ups.

Now if you are going to plough your retirment money into a managed fund to get income and it performs like they did not so long ago you would be eating bitter herbs for a while.

So the question where would a person put there money to receive an sustainable income with the minimum of risk.

Cheers
SG

 

[krisbarry]

Thats when you need to choose your fund wisely.

While most funds returned a negative result say in 2001 or 2002, the fund I am in now, but not at that time was producing results of positive 20%+.

Back in 2003 (43.36%)
Back in 2001 (23.85%)
Back in 1999 (21.89%)

Source: Colonial First State products: Rollover & Superannuation Fund
Australian Shares - Geared option

 

[ghotib]

Hi all

I have heard the experts say put your money in the stockmarket it returns on average of 12% OVER THE LONG TERM.

Are they talking about managed funds?

Chosing blue chip stocks like buy and hold? (these can go down also)

Other comments i have heard is invest into a managed fund for income and capital growth......

I have not heard too much in regards to the risk with these types of set ups.

Now if you are going to plough your retirment money into a managed fund to get income and it performs like they did not so long ago you would be eating bitter herbs for a while.

So the question where would a person put there money to receive an sustainable income with the minimum of risk.

Cheers
SG

Hi Stargazer,

I think the only answer to this is a very boring "It depends".

Depends which expert is talking. Depends on your definition of long term - a galactic year might be a *little* long for most of us to wait. Depends what you consider a sustainable income. Depends what you regard as the minimum of risk. Depends on what risks are important to you. Depends on the amount you intend to invest. Depends on whether you have other assets to draw on. Depends on when you will be depending on your investment income to live.&c &c &c...

FWIW, my first test for a possible investment is "Can I afford to lose this money?" That's the one that prevents me from putting all eggs into the same basket, no matter how good the balloon looks

After that, I think that the growth vs income distinction is pretty meaningless when it comes to investment for retirement. If a company pays a high dividend but doesn't make enough profit to cover the dividend and to fund its further development, then the company is losing value and its shareholders will, sooner or later, lose capital. If a company is returning strong profits on shareholder equity and management is using the profits to develop further profit opportunity, then the company is gaining value and the shareholders have the opportunity to sell some of their holding while protecting their capital.

In relation to managed funds, I'd find out as much as you can about each fund's investment guidelines and practices as well as their historical performance. I'd also suggest that you have a look at the listed investment companies, which might tend to give their investors more detailed information about where their money is going and why. The more information you have, the more questions you can ask.

This seems very vague. Hope it's some help.

Ghoti