How would you invest £40,000ish?

Mr Jack · 29 Mar 2011 at 12:22

Duke said:
I'd put it into a managed fund.

Managed funds are utter rubbish. I honestly have no idea why they still exist.

The vast majority of managed funds will be outperformed by simply investing the money into the companies in the FTSE 100 in suitable ratios, or an indexed fund. And those that do outperform the FTSE 100 in one year don't go on to do so the next. All your doing is paying a fund manager to be make your money perform less well than the FTSE as a whole.

[TFU] Thegoon84 · 29 Mar 2011 at 12:27

My wife and I were actually left £70,000 by her father after he passed away.

We put £20,000 in to a 2 year bond, 2 ISA's. 10k in Instant savings account for some easy access funds for holidays, weekends away and all our 11month old daughter's stuff etc.... Paid off the car loan, Had a new kitchen and back garden landscaped. We also are in the process of getting an extenion on our house.
(Oh and i had a new computer http://forums.overclockers.co.uk/showthread.php?t=18175888 )

mistercrabb · 29 Mar 2011 at 12:33

Buy 40,000 £1 scratchcards.

BennyC · 29 Mar 2011 at 12:34

iDroid84 said:
Why do these threads turn up time and time again when the people posting the threads don't have that sort of money.

On the other hand, if people do win money then the thread could be "I have just won XXXX amount, what can I do with it" thread.

Does it really matter? the answers would be exactly the same. You might be surprised who on these forums has 5/6 figures to invest but doesn't want to come across as willy waving.

.Kencs · 29 Mar 2011 at 12:35

£50,000 would clear all my debts, and then split the rest between my 4 kids for when they are older...much better investment IMO so they have something for when they are older...

HEADRAT · 29 Mar 2011 at 12:35

I would invest it in a Porsche 997 CS2!

cm1179 · 29 Mar 2011 at 12:37

i'd wipe £30k off my mortgage and see the best parts of the world with the remaining £10k

Metalface Mark · 29 Mar 2011 at 12:38

Id spend it bringing over a romanian webcam girl over to make my girlfriend.

RabbiJacob · 29 Mar 2011 at 12:40

Make a donation to the government and help a poor MP with his/her expenses, you CAN make a difference!

TheDean · 29 Mar 2011 at 12:42

Mr Jack said:
Managed funds are utter rubbish. I honestly have no idea why they still exist.

The vast majority of managed funds will be outperformed by simply investing the money into the companies in the FTSE 100 in suitable ratios, or an indexed fund. And those that do outperform the FTSE 100 in one year don't go on to do so the next. All your doing is paying a fund manager to be make your money perform less well than the FTSE as a whole.

This is simply not true. I agree there are more funds that underperform than overperform, but there are a significant number (especially within Uk income funds) which consitently outperform

asim18 · 29 Mar 2011 at 13:05

Talbs13 said:
Casino - £40,000 All on Black.

This. I managed to turn £10 into £51 the other day on live online Poker. Imagine what could happen with £40,000! :eek:

.Kencs · 29 Mar 2011 at 13:09

asim18 said:
This. I managed to turn £10 into £51 the other day on live online Poker. Imagine what could happen with £40,000!

But then would would you do with £1,440,000?

Brookert · 29 Mar 2011 at 13:10

Talbs13 said:
Casino - £40,000 All on Black.

i lol'd. There are probably people on this planet who would do that.

nydryl · 29 Mar 2011 at 13:11

Deposit on a flat.

jamief · 29 Mar 2011 at 13:11

Mr Jack said:
Managed funds are utter rubbish. I honestly have no idea why they still exist.

Because a lot of lower costs ones (as I mentioned earlier, Vanguard) actually perform quite well on a consistent basis.

Mr Jack · 29 Mar 2011 at 13:57

TheDean said:
This is simply not true. I agree there are more funds that underperform than overperform, but there are a significant number (especially within Uk income funds) which consitently outperform

Some small number have outperformed the market, yes, but there's little reason to think that represents judgement rather than luck.

See here

SeatIbiza · 29 Mar 2011 at 14:39

Jez said:
I guess i would stick it into my mortgage account and life the high life with my £66/month in interest that i would save. wooo.

You only have a rate of 1.6ish%???

But i agree - off the mortgage.

Well £1200 off the CC first and then off the next highest debt = 4% mortgage...

Jez · 29 Mar 2011 at 14:44

SeatIbiza said:
You only have a rate of 1.6ish%???

Not far off. Tracker + recession

jamief · 29 Mar 2011 at 14:55

Mr Jack said:
Some small number have outperformed the market, yes, but there's little reason to think that represents judgement rather than luck.

See here

On the converse - there is little reason to think that it represents judgement rather than luck.

Managed funds (and ETFs) do offer a viable alternative to index trackers assuming that

a) They are low cost (low AMC/redemption)
b) They are well managed
c) You don't put your whole pension into one
d) etc

As with anything - doing research into the fund, and being prepared to change if it underperforms, can yield good results.

Mr Jack · 29 Mar 2011 at 15:01

jamief said:
On the converse - there is little reason to think that it represents judgement rather than luck.

Er... that's what I said? :confused:

If you meant to say "luck rather than judgement". That's not the case. If variation in returns from managed funds represents variation in luck (as appears to be largely the case given how badly past performance predicts future performance) then you would still expect a portion of funds to outperform the market just by dumb luck. The number of funds that do so is entirely consistent with such an interpretation.

And even if there is a small amount of judgement in managed funds, they have an inherent cost disadvantage compared to indexed funds that they need to overcome before they actually produce a better return anyway.