should I sell our shares?

[drxerox]

We have been left a chunk of money (£500,000) which we put in a managed portfolio with HSBC. Obviously it's gone down, and I'm worried about it dropping further. We've paid off our mortgage, the children have left home, so we've got no pressing needs. I'm tempted to take half out of the portfolio and invest it , well, where? Buy to let perhaps? The bank (obviously) recommend that we sit it out. I'd be grateful for any thoughts

[warthog]

gold. physical, not an etf or futures. go and buy a gold bar.

[HonestlyBanking]

Crazy advice to put all of your money into a single asset that pays no dividend, needs insuring and is easy to steal!

If you sell you just crystallise your loss. Can understand why you want to. If you are going to do anything spread it about and look hard at your costs. HSBC are probably charging you a fortune. The quoted charge is not what it is actually costing you, it's far more.

Take your time to read up and don't do anything hasty. Remember sell high, buy low. Your idea is the wrong way round. By all means move to another managed portfolio service who may be better and charge you less.

[warthog]

true, honestly. but i get massive profits off selling gold that completely wipe the floor with any interest rate or dividends that you might get off a share portfolio, which as drxerox points out, has lost lots of money!!

if she had bought a gold bar a year ago at £9600, to buy it today would cost £17400. show me another asset that you think competes.

and i'll also point out that it's not the price of gold that has gone up, it's that the value of money has gone down with all this quantitative easing, inflation and low interest rates. to keep cash is a crazy idea too.

the point is to diversify, yes. and one thing you can diversify into is buying gold. NOT more exposure to the stock market! you don't have to insure it. stick it in a safety deposit box in the bank and hope to high heaven that the bank doesn't go under.

[HonestlyBanking]

The trend is your friend and gold is a bubble that will burst. We don't know when. That's not to say that you can't make money in speculation and many of us have, (this is how to make big returns and loses). If you had bought gold in 1980 your investment would have fallen by almost 50% in 2 years. Also you need to add in inflation and the risk adjusted returns. i.e. just how much risk are you taking to get that return.

Whether there is really an economic reason that sustains long gold highs, only time will tell. I would hate for the tide to go out and for people to be left stranded.

Remember people have used the 'one way bet' argument time and again. IT boom (Warren Buffet avoided it), Gold, Property, etc etc. Everything that goes up will come down, just make sure you are lucky in your timing. George Soros admits he got lucky with his bet against sterling. Physical gold also suffers from a liquidity problem when times are tough.

Gold is an alternative asset to diversify into, but not the only one. The religious fervour of gold believers and the marketing machine behind it is amazing. There is no shortage of gold, just restricted supply.

Us common sense. As granny says, don't put all your eggs in one basket and don't confuse speculation with investment!

Good luck!

HB

[warthog]

ok so what other investment would you recommend? because so far you haven't recommended anything except buy low, sell high and don't do anything hasty. no shit sherlock

when gold etf's can be settled with futures and futures with etf's, and there is no requirement for the underlying gold to be held it's a house of cards. that's a good reason to buy physical gold.

like you say, buy low, sell high. but what is low and what is high is where the skill is.

[HonestlyBanking]

This is not the place for specific investment recommendations. Such advice is regulated rightly or wrongly!

You can get physically backed ETFs, but beware of their stock lending programmes.

If we could tell when we were at the high or the low.....now that would be a thing! As the sage of Omaha says "be fearful when others are greedy and greedy when others are fearful". That might give us all a clue.

Good luck!

HB

[warthog]

haha quite right!

exactly - there is far more paper gold out than real gold out there. scary stuff.

[CogitoErgoSometimes]

I would say 'sit it out'. If you don't need the cash at the moment, it doesn't make sense to sell when the market is a bit flat. If you can hang onto it... even if it's for a few years rather than months... and the companies you're invested with are sound, then you might see things pick up.

The alternative of taking something out and investing it elsewhere has its own problems. Cash deposits are not keeping pace with inflation. Bonds are only slightly better. And if you go the unit trust or investment trust route then you're right back where you started with the stock-market. If you fancied starting a Buy To Let business that might be an interesting project and earn you an income at the same time if you get it right. I always think that, even in the bad times, the right property will pay off in the long-run. But nothing's really 'safe' if you're looking for a bit return on your capital.