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Getting the timing right

Discussion in 'Managed Funds & Index Funds' started by islandgirl, 24th Jan, 2007.

  1. islandgirl

    islandgirl Well-Known Member

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    Ok now that we are in 2007 would it be possible to get everyones feel for the market.

    I've researched heaps of funds and shortlisted those that meet my needs and pulled out all the relevant data to evaluate each on a level playing feel. What I see at the moment is that virtually all the funds I wish to invest in are at the top of their respective unit prices. Is a correction on the way and could it be soon?

    I guess on of the biggest potential problems is getting too wildly enthusiastic and buying big now and the price drops.

    Look forward to hearing your comments
     
  2. Nigel Ward

    Nigel Ward Team InvestEd

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    Perhaps you should drip feed your funds into the market over the course of 6-12 months?
     
  3. voigtstr

    voigtstr Well-Known Member

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    Nigel would you start off with funds that only need 1 or 2k to get in then, rather than others that require 40K+
    Regularly topping up the accounts monthly would average the dollar to unit amounts wouldnt it? So longer term dips in the unit price wouldnt worry so much.
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    If you look at historic charts for managed funds - the good ones are almost always at the top of the respective unit prices. That's kind of what you want.

    Depends on the nature of the market the fund invests in - if it is highly exposed to Australian shares and there is a severe market correction, the fund will drop in value.

    However, don't confuse the behaviour of managed funds with that of regular shares on the sharemarket - they react to different mechanisms (even if the underlying assets in a fund are the very same shares).

    What I mean is that the fund manager (depending on their investment strategy), should be able to add value beyond just investing in the sharemarket (and if they can't - why bother investing with them ... either invest in an index fund or directly in the shares themselves !!). If the market drops, that should be a buying opportunity for many funds, where they identify over-sold shares which they believe should outperform the market as they recover. NavraInvest's DCT is another variation on this - which doesn't so much identify over-sold shares as just trades the price volatility.

    If you are taking a long term view with your money (5 years+), I suggest you invest sooner rather than later ... make hay while the sun shines and all that. Unless you really think the market is going to drop significantly over the next few days - in which case I suggest you hold off for a while.

    If you look at the month-by-month performance of many of these funds, they tend to be up more than they are down ... so the longer you wait, the more you will generally end up paying for the units. Naturally this doesn't always hold true - but when taken over the longer term, the price you invest at now won't make terribly much difference.

    If you are looking to accumulate money for a specific purpose over the shorter term (eg an IP deposit) then perhaps a high interest savings account would be a better choice - just in case.

    It all comes down to your goals.

    Personally, I'm investing now. A lot.
     
  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I think it depends on how much money you have to invest.

    My preference is for wholesale funds (I have some that have a $25K minimum investment, some that have $100K minimum, and some that have $250K minimum). But that's because I have the equity available to invest in these types of funds.

    If you don't have that much and really want to get started - I don't see a problem with investing a smaller amount ($1K or so) and adding to it regularly. Especially if you haven't had much success saving money in the past - a regular investment plan is a great way to get started in my opinion.

    But you do need to think about your goals - why are you investing, what do you hope to get from that money, how much do you intend to make. It may be that you would be better off saving money in a high interest savings account for your purpose - investments can go backwards, leaving you with less than you started for a period of time ... there is risk involved, and you need to make sure you take that into account before investing.
     
  6. islandgirl

    islandgirl Well-Known Member

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    Thanks for your reply's. Yes I guess I was think more in line with share market. Your right though, I guess a good manage fund should steadily increase in price. I've selected funds accross various sectors so as to spread my risk. I guess I just have to go buying now!
     
  7. Tropo

    Tropo Well-Known Member

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    "I guess a good managed fund should steadily increase in price."

    In theory...

    "I've selected funds accross various sectors so as to spread my risk. I guess I just have to go buying now!"

    You will not decrease your risk if you invest in the different sectors of Stock Market.
    You diversify only IF you invest in different asset classes - not different sectors of the same class (eg.Stock Market).
    If market tanks (severe correction) various sectors will tank as well.

    Right now, I am not talking about severe correction, but only about market pull back, which is inevitable sooner or later in the current market condition.
    So, factor this possibility in your venture with different funds, and make sure that pull back (say +/- 400 points) is not going to make serious dent in your pocket. :p
     
  8. islandgirl

    islandgirl Well-Known Member

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    Sorry Troppo,
    I guess I should watch my terminology. I am spreading my investments around the various asset classes. I believe that we are due for a correction and investing accordingly. I admit is is hard when you have been putting in so much research and energy into learning and now want to jump in with both feet and get on with it. I intend to watch my selected pick of funds for the new 2-3 months. Some of them appear at their peak at the moment and are decling slightly so I just want to watch for a while to feel comfortable. I also want to buy some property soon but only when I find a deal that suits what I am looking for.

    Thanks all