# Crashing Investment



## Mers (11 Jan 2008)

Hi.  I invested €10k at the end of June with Irish Life in their Select fund (and received a €100 bonus for investing when I did).   It's a 5 year  term.  However, withdrawals etc allowed  with significant exit fees.  My problem is, that  although I understand investments can fall as well as rise, based on the advice from my financial  advisor, I was fairly  confident in its potential performance based  on  past performance (which I  know is not a  reliable  guide to future performance).   Since July, its value has dropped consistently.  Including exit fees of €450, if I close it now, my investment is only worth €8560.  The capital itself is only valued now at €9100 apx.  So it has dropped by 10%.  My inclination is to withdraw it now and cut my losses.  My advisor assures me that it's not time to panic yet.  But in my opinion, the global economic outlook is sufficiently bleak to lead me to believe that by the time it really is "time to panic", I'll have lost significantly more than €1600, with no-one to blame but myself.  Can anyone advise me what they think I should do please?  Withdraw it, and put it off my small enough mortgage, or leave it and hope for the best, or move it into something else?

Opinions would be really welcome.

Thanks for reading this
Mers


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## Sherman (11 Jan 2008)

5 years is the absolute minimum timeframe money should be left in the stock market, precisely for the reasons given in your post - markets are subject to (sometimes quite extreme) short-term fluctuations.  Over the medium-long term (7+ years) stock markets will normally beat every other asset class.  Joe Soap always loses money because he buys in at the top and panic sells at the bottom.  If you don't really need this money, my advice would be to ride it out for the 5 year term - who knows where the world economy will be in one month, let alone in 5 years?  Why sell now, incur exit penalties and crystallise your losses?


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## Labguy (11 Jan 2008)

This loss certainly isn't your own fault as you say.   Quite a lot of people have been badly stung in the last six moths and most much worse than yourself.

The general advice is correct that you should leave the money in for the long term - at least 5 years and preferably 10 years.
I do suggest that you question Irish Life closely on the annual fees they are charging you on this fund and I don't just mean management fees.  Don't be put off by confusing jargon - ask them directly how much in total did they take in the last year.   If it's high - over 2% it might be better to cut your losses and cash your funds in


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## Mers (11 Jan 2008)

Great point, thank you.  I'm getting particularly concerned in how much is potentially charged over the life of my PRSA.  At retirement age of 65, the latest projection is that my prsa would be potentially worth €387K, but after charges €317k, a grand total of €70k in charges....  Is this the norm?  And does anyone know whether you can simply choose to move your prsa to a different provider?  Will they all have similar charges?


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## Franko43 (11 Jan 2008)

Same thing happened to me - my advise - stay with it. Invested 6K stg in 2 European Growth funds in 2000. Within 6 mths my investment was down 50%. It remained like that for 4 YEARS. Once I broke even I pulled it out and took a piece of the mortgage. Should have let it sit...my first dip into Investments..I remember it well...LOL


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## ClubMan (11 Jan 2008)

Mers said:


> Great point, thank you.  I'm getting particularly concerned in how much is potentially charged over the life of my PRSA.  At retirement age of 65, the latest projection is that my prsa would be potentially worth €387K, but after charges €317k, a grand total of €70k in charges....  Is this the norm?


See below.


> And does anyone know whether you can simply choose to move your prsa to a different provider?


Yes - that's one of the key selling points of _PRSAs_. 


> Will they all have similar charges?


Charges vary. Standard _PRSAs _can charge a maximum of 1% annually and 5% on each contribution but you can get lower than that. For example:

The cheapest PRSA?

In relation to the original issue if you originally bought into an equity investment but are panicking after a few months then perhaps you bought or were sold an inappropriate product?


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## Stifster (11 Jan 2008)

Thank God the SSIA's didn't end this March!


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## ClubMan (11 Jan 2008)

Why? You would probably still be up. For example I just looked at the 5 year graph for EuroStoxx 50 and even with the recent volatility it's well up on 5 years ago. Also a 5 year graph of ISEQ suggests that it's 75% up in the same period.


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## frank73 (13 Jan 2008)

Hi Mers,
totally sympathize with you as I'm in the same boat. In fact, i was browsing around the net looking for ideas/advice when i came across this excellent website. In august this year I had some spare cash and thought that instead of letting it languish in my current account, went to BOI and (rather hastily it has to be said) invested 20K in their smart funds- 10K in the 'trilogy 2' and 10K in the 'innovator'. It all seemed rosy obviously with returns approaching double figures being bandied about( 'unofficially' of course-that pesky financial regulator!!). Anyhow, the bottom line is my original 20K is now worth around 19K, the Innovator holding its value just above the 10K, but the Trilogy 2 dropped like a stone to just below 9K. I'm now in the same situation whereas I'm thinking of just cutting (and 'crystallizing') my losses as, to me (a relative financial novice it has to be said) we all appear to be sliding toward a recession, given reports in the media, etc. To be fair, I was told it would be a minimum 5 to 7 year investment, and I'm not in dire need of the cash right now, so maybe i should just take the finger off the panic button? I'm concerned the way things are going, it could well get worse before it gets better....


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## markowitzman (13 Jan 2008)

a 10% drop in one year is not that significant.
Stocks can deviate much more so than this.
I would pay little if any attention to the media in regard to investment decisions.
Hold for term........I assume this was your initial plan? so why deviate if after one year you are down 10%?


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## frank73 (13 Jan 2008)

Thanks markowitzman
I've actually been browsing the site (brilliant)since this morning when I posted that, and have quickly realised that I've overreacted somewhat, being a first time investor, etc. My plan was indeed to hold for the term so i imagine that there is no point being a nervous nellie after just a couple of months. It has to be said though, that it's been a bit of a bad start and the ability to access the fund online is a curse as well as a blessing as it just encourages over analysis by myself. From looking at other threads I've also realised that i'm actually pretty fortunate thus far...


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## Zoran (13 Jan 2008)

I agree with all posts.

No panic and keep it that way.

The only thing of my concern are these:
1. You should choose funds without entry/exit fees
2. You should choose passively managed indexed funds (they can be also bond funds and REIT's) with the minimal charges
3. You should have the proper portfolio of many funds to satisfy your risk appetite and time to invest

The problem is that cheapest passively managed indexed funds are 0.75%.
Even outside the pension you cannot buy cheaply ETF's that are similar to these funds.

All in all you should not choose funds that are with exit/entry charges and high management fees.
They should track some index (e.g. emerging market or US small value or whatever) passively.

In the US such charges are around 0.2% where you have even funds with 0.1% charges. 
I hope one day that will happen to Ireland and these brokerage or pension provider charges will go down.


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## Mers (13 Jan 2008)

Hi to the last 3 who posted replies to my question.  Thanks a lot.  I think you're probably right.  Btw, it is an absolute curse being able to access the results online.  I've been trying my best not to look more than once a week or so.  You can drive yourself demented!  What's worse is I listen to Newstalk most days from apx 7am and the good old 7.25am slot on business and the markets does nothing to put a rosy glow on my morning!
I'm meeting with my financial advisor tomorrow, who's going to explain to me why I shouldn't pull out until the 5 year term is up.  He keeps talking about "showing me something on the internet" which should apparently put my mind at ease.  My question is, what is his vested interest in keeping me in?  I mean, the fees are the fees.  I'm pee'd off that he didn't patently explain to me in clear terms about the exit fees.  It was only when I looked at the paperwork that I received "after" I'd signed on the dotted line that it mentioned them.   Anyhoo,  what does he gain by me staying, or more to the point, what does he lose?  
Zoran, I am afraid that as a novice investor with practically no knowledge of the markets, I have no idea what you are explaining in your thread, but you sound exceptionally knowledgeable and I thank you for your advice.  If there's any of it that you can put in any simpler terms for me before 2pm Monday, I'd find it useful, so that I'd be better armed for a discussion with my FA.  Thanks to everyone who's posting on this.  I'm finding it very helpful.


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## markowitzman (13 Jan 2008)

> The problem is that cheapest passively managed indexed funds are 0.75%.
> Even outside the pension you cannot buy cheaply ETF's that are similar to these funds.


You can buy ETFs for a $10 commission with countless online brokers both in US and in Euroland (internaxx etc). Why would one buy a fund that is passive and give the fund manager 0.75% just to do the same thing as buy an ETF?


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## Sherman (14 Jan 2008)

Mers said:


> My question is, what is his vested interest in keeping me in? I mean, the fees are the fees. I'm pee'd off that he didn't patently explain to me in clear terms about the exit fees.


 
He would probably suffer a clawback of any commission made if you exited the fund within a certain timeframe e.g. 2 yrs.

There's no point in worrying about cheaper funds etc. at this stage - your early exit penalties would probably more than wipe out any potential savings you could make by switching to a lower-cost fund.  Just keep it in mind for future investments.

Regarding checking your account online constantly, I check my online investment accounts and pension fund once a year, no more - I keep a general eye on the markets, but I'm committed to investing regularly over a long period, so there's really no point in checking it every week - as you say, you'd drive yourself mad that way.


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## MichaelDes (14 Jan 2008)

markowitzman said:


> You can buy ETFs for a $10 commission with countless online brokers both in US and in Euroland (internaxx etc). Why would one buy a fund that is passive and give the fund manager 0.75% just to do the same thing as buy an ETF?


 
I'm going to be a TROLL and say _*cash the investment and take the loss of €1100 at this stage*_. You can use the €1100 loss and convert it to a €220 carry over against any future capital gain tax situation [can be carried forward for a number of years].

If you had a car with a gear box problem, would you get it fixed immediately at a cost of €1000 or would you wait 2 to 3 years for the problem you know will exacerbate, at a cost of €3000 plus for a full replacement. This analogy IMO, is the crossroads you are presently at. That is in the first instance of exiting now and consolidating or waiting 2 years for your investment to reach the floor before returning to +ive growth. Let’s look at the outlook for 2008.

1. The UK and US governments are basically bankrupt. However bad the US is, the UK is in a worse predicament. For instance in Q4 2007 it has a £20bn current account deficit or 5.7% of GDP.

2. According to Goldman Sachs, America has now had its second month of 0% growth, or in other words has entered into recession. When America coughs all other markets get a cold.

3. Consumers are maxed out on credit. Look at Marks and Spencer’s trading statement on Wednesday leading to a 19% tumble in sales. If the UK's largest retailer, which also is the darling of the city, says things are going to be tough till mid 2009, then they certainly are going to be. Consumer credit is a worldwide problem. Mortgage equity withdrawal in the states accounted for 8% of expenditure and 5% in the UK - this has all but dried up. More retailers will issue profit warning and face tough conditions.

4. The last 10 years has never seen so much money printing. The ensuing inflation that many economies are experiencing is as a result of this, which is also coupled to higher commodity prices now only feeding through to RPI and CPI. Inflation is a disease and markets fear it, greatly. With flat to negative growth in the UK over the next 24 months the UK could experience a worse disease called deflation.

5. Only less than 10% of the credit crunch has come to market so far. What was seen initially as a local American housing problem has spread into all markets and is spreading quickly into other classes such as, credit card, mortgages, commercial and personal loans etc. In the States for instance the adjustable lending rate is still at 6.6% despite a 1% drop in the last 6 months. The markets say no to the central bank, same happening in London with the London inter bank rates [LIBOR] being stubbornly higher than central bank rates. As a result corporate deals are falling through left, right and centre and this greatly affects corporate ability to grow.

6. Finally in eight out of the last 10 years the movement in the first days trading foreshadowed the years move. The FTSE lost 2% during the week, The Euro Stoxx 3.2% and the Dow 4.2%, the worst start since the great depression. Even Morgan Stanley a vested interest, predicts the UK economy to slip 16%. Typically all markets will react the same way, apart from the Far East & Africa, as these are on a different dynamic.

The above list is not exhaustive, but is not good reading. Therefore I would cash out. Wait 18 to 24 months for the floor then buy in again at bargain basement values. The uplift on your €8900 will achieve profitability much faster. In the meantime consolidate and invest in a high interest 5% account, it will grow to €9441 net of tax after 18mths [You still retain €220 capital loss against any future gains above the 9.4k].

Anybody with a different version that is bullish please enlighten me, I stand to be corrected. For now though, encash and sit back and watch the [broken link removed].

Finally on two small points (i)Next time ETF rather than managed fund. You are paying over the odds for something that is easy to organise on line without as much commissions. (ii) If I thought the markets were just blipping, then I would agree just to ride it out like other posters suggestions but markets are reacting way more than this.


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## kellyiom (14 Jan 2008)

a good contrary opinion worth chucking into the mix, MichaelDes. Shows really what a subjective business investing really is doesn't it. I would quibble however about the gearbox analogy as your car won't spontaneously recover due to other unpredicted events..


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## MichaelDes (14 Jan 2008)

kellyiom said:


> a good contrary opinion worth chucking I would quibble however about the gearbox analogy as your car won't spontaneously recover due to other unpredicted events..


 
Thanks Kellyoim. What about a small hole in the roof of a house? In time it will develop and cause further problems and costs. House unlike cars are typically long term appreciating assets? But I think you got the point I was trying to make.


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## Zoran (14 Jan 2008)

markowitzman said:


> You can buy ETFs for a $10 commission with countless online brokers both in US and in Euroland (internaxx etc). Why would one buy a fund that is passive and give the fund manager 0.75% just to do the same thing as buy an ETF?



Thanks Markowitzman,

I am doing that in my tax managed account. I have a Schwab account for a long time and keeping the portfolio of passively managed Vanguard ETF's. The small problem with this is it is all $ 
Do not forget that ETF's are also with management fees, so my whole portfolio is with 0.2% fees that are inside ETF's.

Also it depends are funds or ETF's better based on ETF fees as some ETF's are also with even 1% fees.

But I have my pension invested the only feasible way in Ireland through the pension provider (as I am still small to have SSAP or some other way).
If I have more then 100k I will probably open an account with Vanguard Ireland as their fund fees are a joke to others.

I have no choice then to opt for 0.75% that is the cheapest.

Where your pension is and how much are your management fees?


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## ClubMan (14 Jan 2008)

Zoran said:


> I am doing that in my tax managed account.


Sorry - what is a "tax managed account"? I


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## Zoran (14 Jan 2008)

MichaelDes said:


> I'm going to be a TROLL and say _*cash the investment and take the loss of €1100 at this stage*_. You can use the €1100 loss and convert it to a €220 carry over against any future capital gain tax situation [can be carried forward for a number of years].
> 
> If you had a car with a gear box problem, would you get it fixed immediately at a cost of €1000 or would you wait 2 to 3 years for the problem you know will exacerbate, at a cost of €3000 plus for a full replacement.


 

I agree with this if the fund selected was the mistake at the first place.
When looking the prospect of select fund it points it has up to 80% of consensus fund in it. Such fund again has 19% Irish equity and 11% UK equity. That is too much risk for me as Ireland is not even 1% of the world economy. Too less diversification from my perspective.

For me this fund if alone without other funds to support it is the mistake.
It is also mistake to have any loaded fund (e.g. with entry/exit fees).

I have my company pension scheme with Irish Life but I explicitly wanted no entry/exit loads so I got it.
I am invested in only passively managed indexed funds with Irish Life with management fees of 0.75% and no entry/exit fees.
At least that is the best I could get in Ireland.




MichaelDes said:


> 2. According to Goldman Sachs, America has now had its second month of 0% growth, or in other words has entered into recession. When America coughs all other markets get a cold.


 
If they know what is good for people then they will not make the loss at the first place. 
What happened to their hedge funds if they are so smart?
What is their (market maker) interest in all of this?

I will personally like to see the bear market now as I am still in early phase of accumulation so my money will grow faster after the bear.

But do no believe anybody knows when the bear market is starting.
Do you know is it started?
When it is ending as after the bear market you have the fastest growth and buys?



MichaelDes said:


> The above list is not exhaustive, but is not good reading. Therefore I would cash out. Wait 18 to 24 months for the floor then buy in again at bargain basement values. The uplift on your €8900 will achieve profitability much faster. In the meantime consolidate and invest in a high interest 5% account, it will grow to €9441 net of tax after 18mths [You still retain €220 capital loss against any future gains above the 9.4k].


 
Why 18-24 months?
Are you saying that the bear market is in average that long?
What academic/book/knowledge support you have for such thinking?



MichaelDes said:


> Anybody with a different version that is bullish please enlighten me, I stand to be corrected. For now though, encash and sit back and watch the [broken link removed].


 
I am neither bulish or bearish but academic work is telling that active money management is not working that well long term. Market timing is not winning game even for professional fund managers.
That is why this post as Irish Life fund (actively managed) was tracking best top Irish active managers and it still loose the money.
If you had the nicely diversified passively managed indexed funds portfolio (with some bond or REIT exposure depends on your age of course) you will not loose such money in that period.



MichaelDes said:


> Finally on two small points (i)Next time ETF rather than managed fund. You are paying over the odds for something that is easy to organise on line without as much commissions. (ii) If I thought the markets were just blipping, then I would agree just to ride it out like other posters suggestions but markets are reacting way more than this.



Passively managed indexed ETF's are the same/similar as passively managed indexed funds. 
Both ETF's and funds can track their respective indexes and are usually charged small management charges.
In Ireland you can buy expensive funds (even passive indexed funds are 0.75% cheapest) or opt through some (usually US) broker to buy ETF for $10.
My ETF's I have in tax managed account are 0.2% charges in average with that initial $60 to buy it out.


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## Zoran (14 Jan 2008)

ClubMan said:


> Sorry - what is a "tax managed account"? I




Ah, sorry for such word. Reading too much US forums and books 

It is the money you have outside the pension so you need to bear in mind about CGT and other issues arises from it.


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## MichaelDes (14 Jan 2008)

Zoran said:


> If Goldman Sachs know what is good for people then they will not make the loss at the first place. What happened to their hedge funds if they are so smart? What is their (market maker) interest in all of this?


 
It is the same as every other hedge fund who are now licking their wounds caused by their own financial follies, which every month has an even worse scenario toting up. Their follies remind me of the Spectrum licence sale of 3G in the UK, so many Telco’s through over enthusiasm ended up with some real bad deals that could not be offloaded. Most hedge fund MD's got the sack and handisome payoffs in the millions - somethings in banking etc never change regardless of the sublimety.

Was it Sach's that resorted to borrowing 11% from the Saudi's to protect its position? If a large institution can not get legitimate funding without punitive rates what hope is there for corporate Europe and America? Consolidate, other than a small to medium weighting in commodities or Far East stoxx.





Zoran said:


> But do no believe anybody knows when the bear market is starting.Do you know is it started? When it is ending as after the bear market you have the fastest growth and buys?Why 18-24 months?





Zoran said:


> Are you saying that the bear market is in average that long? What academic/book/knowledge support you have for such thinking?


 

Forget academia, 18 months etc could be the floor but it is hard to gauge. Just watch graph trends and papers etc. Choosing when to buy is subjective. We are in a bear market downturn and that is objective. Until the worm turns, I would sit tight.




Zoran said:


> Passively managed indexed ETF's are the same/similar as passively managed indexed funds.


 
ETF's or trackers is my only consideration. That is a subjective consideration too. There are 1000's of choices within either.


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## Zoran (14 Jan 2008)

Mers said:


> Hi to the last 3 who posted replies to my question.  Thanks a lot.  I think you're probably right.  Btw, it is an absolute curse being able to access the results online.  I've been trying my best not to look more than once a week or so.  You can drive yourself demented!  What's worse is I listen to Newstalk most days from apx 7am and the good old 7.25am slot on business and the markets does nothing to put a rosy glow on my morning!
> I'm meeting with my financial advisor tomorrow, who's going to explain to me why I shouldn't pull out until the 5 year term is up.  He keeps talking about "showing me something on the internet" which should apparently put my mind at ease.  My question is, what is his vested interest in keeping me in?  I mean, the fees are the fees.  I'm pee'd off that he didn't patently explain to me in clear terms about the exit fees.  It was only when I looked at the paperwork that I received "after" I'd signed on the dotted line that it mentioned them.   Anyhoo,  what does he gain by me staying, or more to the point, what does he lose?
> Zoran, I am afraid that as a novice investor with practically no knowledge of the markets, I have no idea what you are explaining in your thread, but you sound exceptionally knowledgeable and I thank you for your advice.  If there's any of it that you can put in any simpler terms for me before 2pm Monday, I'd find it useful, so that I'd be better armed for a discussion with my FA.  Thanks to everyone who's posting on this.  I'm finding it very helpful.



Mers,

If this is your only fund then it is not good enough diversification.
19% of stocks from consensus fund that is part of select fund looks too much.
I am not sure I got it correctly from the prospect but that is poor diversification as Ireland is such small market in the world perspective.

Dependant on the risk academic research is suggesting buy&hold strategy with yearly rebalance to keep percentages tight and investments into passively managed indexed funds (you have a few indexed funds with Irish Life I am using in my portfolio).
The percentages of these funds in your portfolio together with bond fund and maybe some tiny percentage of REIT's (property fund - that I am not sure they have - I have seen some crazy expensive Fidelity property fund that I remember so not sure).

E.g. I myself have this proportion (and that is not good for everybody) especially that I did not buy 10-20% of bond funds due to my age.

With Irish Life I have these positions (not your recommendation but you can see what diversification means). I am a bit more Europe averse as you can see:
Ex Indexed European Eq Ser P - 40%
Exempt Nth American Equity Ind - 35%
Exempt Japanese Equity Indexed - 10%
Exempt Pacific Equity Indexed - 15%

I did not opt for Fidelity funds as they are all actively managed and with huge charges. Fidelity passively managed funds with Vanguard passively managed funds are one of the best in the world but we have no choice to opt for them but rather having crazy expensive (1.5% or so) Fidelity funds.

As you can see I am missing bonds, some percentage in emerging markets and eventually some small percentage of REIT's (property fund - 5-10% max)
I do not like property fund that is invested in 1 country or 2 countries like this one from Irish Life but it does not mean it is bad as they are with negative correlation to some other holdings.

Do not take my words or anybody else's just like that.
Check it out yourself, research a bit as without the knowledge and your real situation, age, time dimension and so on nobody will give you good advice.

I hope at least a few points to ask your adviser.

Best of luck.


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## MichaelDes (14 Jan 2008)

Zoran said:


> With Irish Life I have these positions (not your recommendation but you can see what diversification means). I am a bit more Europe averse as you can see:
> Ex Indexed European Eq Ser P - 40%
> Exempt Nth American Equity Ind - 35%
> Exempt Japanese Equity Indexed - 10%
> Exempt Pacific Equity Indexed - 15%


 
Your portfolio is likely in my opinion to be negative for the short term although this is subjective. Irish Life has free switching, would you not avail of this option of safer funds for some categories until +ive sentiment and economic data returns to these markets? Btw I do like Japan though, especially as the Topix yield is the same as bonds, each time the trigger occurred in the past, spikes emerged of 25% to 40% [based on last 15 years - 4 times]. Japan has been as false starter in the past and 2007 was very disappointing at -10% growth. Growth in 2008 should correct this though. Sorry – I do not mean to be Trollish, just basing observations on data. But each to their own, s/markets out perform other classes but timing too, in this, is essential to me.


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## Zoran (14 Jan 2008)

MichaelDes said:


> Was it Sach's that resorted to borrowing 11% from the Saudi's to protect its position? If a large institution can not get legitimate funding without punitive rates what hope is there for corporate Europe and America? Consolidate, other than a small to medium weighting in commodities or Far East stoxx.
> 
> Forget academia, 18 months etc could be the floor but it is hard to gauge. Just watch graph trends and papers etc. Choosing when to buy is subjective. We are in a bear market downturn and that is objective. Until the worm turns, I would sit tight.



I am not saying that market is in greatest time ever but I have no clue when the bear market starting or ending. When to enter and where to not.
If so many professionals does not know to market time how do you know.

So when you will get back in the game?
When prices go up 2%, 10% or 20%?
Are you going to miss best days of the new bull?
How do you know when it is bottom?

Research on market timing and actively managed funds doing market timing is that they under-perform long term buy&hold of market through cheap passive indexed funds.
What you are saying is that you are smarter then professional active managers and that you will beat the market (be better then some benchmarking index) on the long run (to say 10, 20 years or more that you need for pension)?

The only certain thing in the market is that the value is created over the long time period as the stock market is going up last 400 years.
Try to market time it and you are entering the trading game where best pros will be better of then you.



MichaelDes said:


> ETF's or trackers is my only consideration. That is a subjective consideration too. There are 1000's of choices within either.



There is no so many cheap real passive indexed ETF's out there. Look for costs less then 0.5% and look only passively managed ETF's.
I will exclude market timing ETF's that you will buy and seel as per will and feeling from media.

Just forget market timers as they all screw up at the end.
They will anyway get their management fees and big fat salaries so I will not worry about them but rather about your hard earned money.
To not mention the time you need to spend (if you have it at all) apart from your job to do market timing that academics proved wrong for the individual investors.

In Ireland it is still monopoly and it is hard to get cheap passive trackers (indexed funds) and/or to buy cheap passive indexed ETF's in euro (you can in $) and that is a shame.


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## Zoran (14 Jan 2008)

MichaelDes said:


> Your portfolio is likely in my opinion to be negative for the short term although this is subjective. Irish Life has free switching, would you not avail of this option of safer funds for some categories until +ive sentiment and economic data returns to these markets? Btw I do like Japan though, especially as the Topix yield is the same as bonds, each time the trigger occurred in the past, spikes emerged of 25% to 40% [based on last 15 years - 4 times]. Japan has been as false starter in the past and 2007 was very disappointing at -10% growth. Growth in 2008 should correct this though. Sorry – I do not mean to be Trollish, just basing observations on data. But each to their own, s/markets out perform other classes but timing too, in this, is essential to me.



Thanks for the suggestions.

I know it is not perfect but I at least put out what I have.
This was my first pick when I open my company scheme with the Irish Life and I know it is far from ideal.
I should have 10-20% in bonds due to my age.

Also just could not buy any fund with >1% charge, that was just not ethical.

Just one point, I am not market timer but rather buy&hold for a long time with rebalancing to reduce the risk every year (e.g. if Japan is up more then the others then I will move money around to have the same percentages).
I have no clue how to market time the market (do not forget that I have read 50 books, do myself market timing, stock picking and so on and get to the conclusion it is too much time and I have no valid long term strategy).
Also by reading a lot of proper books and academic studies it was obvious that market timing is no win in the long run for the individual investor especially (due to all studies are based on active manager pros who did not beat the market - e.g. S&P 500 or any benchmark index they followed).


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## Zoran (14 Jan 2008)

Zoran said:


> Mers,
> 
> If this is your only fund then it is not good enough diversification.
> 19% of stocks from consensus fund that is part of select fund looks too much.



Wanted to say 19% of consensus fund is in Irish stocks and that is just to much for tiny Irish economy in the world perspective.

In simple words it is too much risk.


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## Jim1000 (8 Apr 2008)

you can get 100% allocation on some PRSA with low charges annual. I went through LABrokers check out .
Note that a broker sitting in Eagle Star Head Office could not beat this !

I would say sit on your investment for now unless you have some great alternative for it.

Remember in the high tax rate you are saving 41% anyway.

re all the credit crunch comments above I think investing in the globally big companies with good dividends, easy to understand products (eg NOT CDOs and long successful histories is the way forward, think of the name's your granny knows (school of Warren Buffet)


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## docker (8 Apr 2008)

Hey Mers, if you do not need the money for the next 5 - 7 years and if it is not the end of the world to take some loss than you should keep the faith. I had an Equity SSIA and the value was down aprox 15 - 20 % in the first two years. However by the fifth year it was valued quite a bit above what I would have earned with a deposit SSIA. In most cases you will get a reasonable return over this period.

I think you should put more though into your PRSA. €70K charges on a €370K POTENTIAL fund value seem excessive. Although in my case it was aprox €250k in charges in a fund POTENTIALLY valued €700k. This was with BOI...I couldn't believe the 5% charge per contirbution plus 1% annual total fund charge came to so much. I cancelled this straight away!!!


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## roland (8 Apr 2008)

Jim1000 said:


> you can get 100% allocation on some PRSA with low charges annual. I went through LABrokers.  Note that a broker sitting in Eagle Star Head Office could not beat this !


 
I wouldn't be too surprised by that - ring up the booking office in most hotels and they will quote you a rate much higher than you can get through a hotel 'broker' website.


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## roland (8 Apr 2008)

docker said:


> €70K charges on a €370K POTENTIAL fund value seem excessive. Although in my case it was aprox €250k in charges in a fund POTENTIALLY valued €700k.


 
How much do you think is a reasonable charge for someone to manage your money, keep you informed, answer your queries and carry out all the administration on that over a period of 20+ years?


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## docker (8 Apr 2008)

> roland said:
> 
> 
> > How much do you think is a reasonable charge for someone to manage your money, keep you informed, answer your queries and carry out all the administration on that over a period of 20+ years?


 
I certinaly do not think taking a cut of 20% (70K / 370K in Mars case) to 35% (250K / 700K) of my personal pension savings in charges is reasonable. Particuallarly for simply "keeping me informed, answer your queries and carry out all the administration" !! 

Like I said Mers I advise you look else where to try reduce your charges.

I woud be prepared to pay higher charges if the pension provider could demonstrate they will achieve higher overall returns through their investment stratagies. However it's unlikely that they can demonstrate this...


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## roland (9 Apr 2008)

docker said:


> I certinaly do not think taking a cut of 20% (70K / 370K in Mars case) to 35% (250K / 700K) of my personal pension savings in charges is reasonable. Particuallarly for simply "keeping me informed, answer your queries and carry out all the administration" !!
> 
> Like I said Mers I advise you look else where to try reduce your charges.
> 
> I woud be prepared to pay higher charges if the pension provider could demonstrate they will achieve higher overall returns through their investment stratagies. However it's unlikely that they can demonstrate this...


 
Of course you should look for the best charges, but my point is that  adding up all the (potential) charges on any investment over a 20 year+ timeframe is bound to look like a large figure.  So, quoting one large figure is not helpful in making these decisions - 'taking 70k from me' is the sort of thing that scares people from investing at all.  If you added up all the money you spend on maintaining your house over a 20 year timeframe it would probably also look like a very scary figure.  You talk about 'taking a cut' of 20% but you don't give any sense of the timeframe over which this is taken.  For example, 1% per annum over 20 years comes to 20%.  So your 'taking a cut of 20%' is now the same as 'taking 1% per annum for 20 years'.  So timeframe is also very important.  You need to get these figures into perspective.  I would also suggest you won't find any manager who can demonstrate now that they will achieve higher overall returns.


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## docker (9 Apr 2008)

roland said:


> Of course you should look for the best charges, but my point is that adding up all the (potential) charges on any investment over a 20 year+ timeframe is bound to look like a large figure. So, quoting one large figure is not helpful in making these decisions - 'taking 70k from me' is the sort of thing that scares people from investing at all. If you added up all the money you spend on maintaining your house over a 20 year timeframe it would probably also look like a very scary figure. You talk about 'taking a cut' of 20% but you don't give any sense of the timeframe over which this is taken. For example, 1% per annum over 20 years comes to 20%. So your 'taking a cut of 20%' is now the same as 'taking 1% per annum for 20 years'. So timeframe is also very important. You need to get these figures into perspective. I would also suggest you won't find any manager who can demonstrate now that they will achieve higher overall returns.


 
I'm not trying to scare anyone! However I think 35% on my pension in charges, 250K on 700K fund, frankly is scary! Its obviously very important to highligh the impact of charges on your pension. Different pension providers charges can vary greatly...therefor the value of your fund will vary greatly from a result of these charges.

Also you are very wrong with your "1% per annum over 20 years comes to 20%" it does not work this way. If a fund was to charge 2% over 50 years you would not be left with nothing. Even with the additional 5% contribution charge some providers also charge! 5 yr example on investing €100 per year with 1% charges and assuming 1% growth.
Yr1 100, charge 1
Yr2 200, charge 2
Yr3 300, charge 3
Yr4 400, charge 4
Yr5 500, charge 5, total value 500, total charges 1+2+3+4+5 = 15 of €500 = 3% total in charges over 5 years ( not 5% ).

Also most providers "assume" growth of aprox 6% per annum. Therefore their % charges of your total fund should be less as part of their charges are fixed (the per contribution charge) even if your fund is growly at this rate.

For me the 35% charge which was over 40 years seemed excessive..so I cancelled it straight away. However I do value a pension and do have one, just not at these charges.


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