Hello,
Does anyone have any index tracker funds?
1.If so what index does it track?
2.how long have you had it for?
3.How long will you keep it for?

I think I will get one as I am only 17 years old (and time sure does count with compound interest)
I can afford to pay £100 a month into it at the moment (I sure hope this increases)

Also I am well aware of the fact even a tenth of a percent in interest rates have

e.g if I invest 100 a month for 40 years at 11% interest I would recieve £739129
but at 15%
you would recieve £2304667

now I know that 15% is a higher ror than any FTSE or NIKKI average but they do exsist


discuss

Especially since index tracker funds usually make only small returns and are therefore ment for long term investment you should avoid any fund which is not denominated in your own currency due to long term forex risks.

in index trackers do you get the dividends still?

Goldman sachs were doing a tracker (for one year?) where you got 160% of the Up and only 100% of the down. This was taken at the value in Feb of 5000 and something.

The ftse of course has fallen since.

Long term it's a good idea, but as the saying goes don't put all you eggs in one basket or invest more than you could afford to loose - even if there's only a small risk think aout hte people that saw the markets allmost half not so long ago.

the rich investors are only rich from taking risks

Mike that would be a benift of the Uk joining the Euro less exchange rate charges on deals

Hello,
Does anyone have any index tracker funds?

Yes.

1.If so what index does it track?

FTSE All-Share Index

2.how long have you had it for?

Five years.

3.How long will you keep it for?

At least another twenty years.

I think I will get one as I am only 17 years old (and time sure does count with compound interest)
I can afford to pay £100 a month into it at the moment (I sure hope this increases)

Also I am well aware of the fact even a tenth of a percent in interest rates have

e.g if I invest 100 a month for 40 years at 11% interest I would recieve £739129
but at 15%
you would recieve £2304667

now I know that 15% is a higher ror than any FTSE or NIKKI average but they do exsist


discuss

OK, don't be sidetracked by "interest rates" - the growth you get from an index-tracking fund comes from the fact that you're continually buying units at the market rate, which should realise a profit over time.

For example, when I started paying into my ISA, units cost £2 each. They now cost £1.70 each (a 15% decrease) - however because I kept putting money in each month, including when they were almost as low as £1.10 a unit, I actually have 17% more in my fund than I've put in (equivalent to an AER of about 6.8%, which is more than most savings accounts you'll find, and that's in a stagnant market!).

The key, as with all savings vehicles, is time and patience. Grasshopper.

started a bit late then charlie

The key, as with all savings vehicles, is time and patience.

Indeed. I.e. if you invested in the FTSE five years ago you'd still be massively in the red. It can take 10 years before you ride above the cyclic waves.

http://ichart.finance.yahoo.com/z?s=%5EFTSE&t=5y&q=l&l=off&z=m&a=v&p=s

Indeed. I.e. if you invested in the FTSE five years ago you'd still be massively in the red. It can take 10 years before you ride above the cyclic waves.

http://ichart.finance.yahoo.com/z?s=%5EFTSE&t=5y&q=l&l=off&z=m&a=v&p=s

Er, no you wouldn't, not the way index trackers work. Say you invested £1,000 in a FTSE tracker fund on 1 Jan every year, it would work out something like this (assuming the numbers on the left are the current price in pence).

1 Jan 01 - £1,000 buys you 16 units (at approx. £62 a unit).
1 Jan 02 - £1,000 buys you 20 units (at approx. £51 a unit).
1 Jan 03 - £1,000 buys you 26 units (at approx. £38 a unit).
1 Jan 04 - £1,000 buys you 23 units (at approx. £44 a unit).
1 Jan 05 - £1,000 buys you 21 units (at approx. £48 a unit).

So, you'd have 106 units, which at the current unit price of £48 would be worth £5,088. Not a brilliant return, but not bad considering the index is down 23% on where you started!

(Of course all my calculations were a bit crude but the point still stands).

Er, no you wouldn't, not the way index trackers work. Say you invested £1,000 in a FTSE tracker fund on 1 Jan every year, it would work out something like this (assuming the numbers on the left are the current price in pence).

1 Jan 01 - £1,000 buys you 16 units (at approx. £62 a unit).
1 Jan 02 - £1,000 buys you 20 units (at approx. £51 a unit).
1 Jan 03 - £1,000 buys you 26 units (at approx. £38 a unit).
1 Jan 04 - £1,000 buys you 23 units (at approx. £44 a unit).
1 Jan 05 - £1,000 buys you 21 units (at approx. £48 a unit).

So, you'd have 106 units, which at the current unit price of £48 would be worth £5,088. Not a brilliant return, but not bad considering the index is down 23% on where you started!

(Of course all my calculations were a bit crude but the point still stands).

A total return of £88 (1.76%) over five years isn't exactly great though! even just sticking that money in the bank would have made you about £600 in interest.

You've basically lost a load of money on your 2001 and 2002 investments and made a bit on 2003 and 2004.

I think Mike was talking about if you had put all £5000 in at once five years ago in which case you could have bought 80 units at £62 which would now be worth £3840, a loss of 22.6%.

The strange thing about tracker funds is that their existance actually affects the price of the shares they track. For example if a company gets 'promoted' to the FTSE100 then all funds that track that index will have to buy shares in that company to keep the fund in line with the index. Other things being equal this should then ensure that the price of those shares goes up, the opposite for firms leaving a particular index.

A total return of £88 (1.76%) over five years isn't exactly great though! even just sticking that money in the bank would have made you about £600 in interest.


Yes, but if you only intended to invest in a tracker for five years you'd need your bumps felt anyway! As people have said, they're for long-term investment not short-term gain - I was just pointing out that even in a dire-looking situation like the one Mike's highlighted, our hypothetical investor is still slightly in the black. I've kept patiently paying in to my tracker for the last five years when all around me were panicking and getting out of the stock market - I've already made a return equivalent to a good savings account, and that's after one of the worst five-year periods in history...

Im not optomistic really about the stoc market. I think the current level is what it should be, I see no reason for it to rise further. Good thing about the ftse is in bad times it's fairly safe compared to some others, as it's quite diverse.

Wrong thread

oh sorry misread this thread.

Im not optomistic really about the stoc market. I think the current level is what it should be, I see no reason for it to rise further. Good thing about the ftse is in bad times it's fairly safe compared to some others, as it's quite diverse.

Its been going up gradually for the last 100 years, don't see any reason why it will stop now.

i don't thik in the next year or two that it should rise that much more just because looking at the P/E values they are possibly still above historical averages (I'll admit I'm sort of basing this on figures from a while ago).

During hte dot com boom they ignored actual profit making - which is why there was such a huge crash.

I be with CharlieP on this one

Still happily paying into my ISA - I've calculated that it's given me a 6.7% AER return over 13 years, which isn't too poxy.

Still happily paying into my ISA - I've calculated that it's given me a 6.7% AER return over 13 years, which isn't too interesting.

Fixed.

More interesting than yet another jerseyboi thread.

I think I got a fiver from my ISA last year. Not that I had a lot in it but still. From my savings I got £1.35.

Still happily paying into my ISA - I've calculated that it's given me a 6.7% AER return over 13 years, which isn't too poxy.

my portfolio of shares has gone up almost 300% on average in the past year! the worst performer, terrace hill has only gone up 60%:lol:

i don't thik in the next year or two that it should rise that much more just because looking at the P/E values they are possibly still above historical averages (I'll admit I'm sort of basing this on figures from a while ago).

During hte dot com boom they ignored actual profit making - which is why there was such a huge crash.

Well that day the ftse 100 closed at 4800 pts, a year later in 2006 it was 6000, a year later in 2007 it was 6450, in 2008 it was 5950, but by 2009 it was 3990 pts. The market carried on longer than I expected, but also fell further than I expected (probably because it had continued so long and so much higher.

Basically the market should have listened to me and we would have avoided the credit crunch :yes: