20k long term investment - where?

H

Happy Girl

Registered User
Messages
793
Have 20k to invest over the long term 10+yrs. Have been lookin at gold for the past six months waiting for it to fall (according to Schiff May was de month) but just appears to be rising all the time and really dont want to buy in at such a high level. What recommendations would ye financial wizards consider with such a timeframe & such an amount? Any ideas much appreciated.
 
That's a very good question Happy Girl....Which asset class is going to make the most money over the next 10 years?...Of course nobody really knows the answer to this question and I would just ignore everyone who claims to.

However, we do know that over a 10 year+ time period historically the best place to have been invested relative to other assets has consistently been to buy and hold a diversified portfolio of global stocks and the best way to achieve this is through an index fund.

Take the S&P 500 where we have data over the period Jan 1926 to April 2009 over rolling 10 year periods the average annual return was 10.94%pa

The best average annual return over rolling 10 year periods was 21.43%pa
The worst average annual return over rolling 10 year periods was -4.95%pa

This is the key factor that so many investors miss time and time again. In order to have a higher expected return, you have to be exposed to more investment risk -this means that there will be inevitably times when over periods of 10 years, the returns from even a globally diversified portfolio of stocks will be negative. If this risk was absent, why would investors expect to be paid 10%pa??

For a global perspective:

Since Jan 1970 (as far back as we have data) the MSCI World Index has averaged an annual return of 11.72%pa over rolling 10 year periods.

If you wanted more risk and the potential for an even higher return, you might invest part of your capital in Emerging Markets or buy more small companies or companies that are "value" stocks by some accounting measure.

But don't just take my word for it, here listen to Warren Buffett:

http://money.cnn.com/video/news/2009/05/07/news.buffett.050709.cnnmoney/
 
Hi,

You can invest in stocks. The stock market is commonly and erroneously considered to be the most risky place to invest money. While it is true that stock prices vary in the short term, and sometimes widely, if you look at the long-term rate of return of the stock market versus other investment vehicles, the stock market has consistently and handily outperformed all of the other previously described investment streams.
 
You must log in or register to reply here.
Back
Top