Sorry, I hope you don't mind me digging this one out again!
simoan wrote:I don't really see the point of bonds unless you're retired and need the certainty of income. So what are you trying to achieve by holding bonds? My understanding is that both of you are working and some way from "celebrating" your 50th birthdays? So why do you need the income?
Well, first off, you'll probably be pleased to hear that we did sell off 2k of our bonds a couple of months ago. They were undated ones, probably a mistake on our part... Anyway, amazingly with the accrued interest and coupon received, we only lost about £8 in value. Then we used the reclaimed capital to go toward acquiring more shares (Renishaw and Victrex IIRC).
But what I wanted to ask you is what do you do when the UK equity markets are looking expensive? Do you still not consider bonds, which could, maybe earn some useful interest while the yields on shares are lower? Or just stay in cash? Or not try to "time the market", and continue buying equity but try to be more cautious? etc. etc.
The reason I'm thinking such things, and why I wanted to pose the question to you (and anyone else), is because it's now been just over a year that me and Mel have been investing, and so we've witnessed some, admittedly quite small in historic terms, market movements. From March 2018 to May 2018, the FTSE100 moved from about 7000 to 7800ish, then slowly descended to about 6500ish in December. From that point on it is slowly rising again. Over this time period our investing went like this, basically we were fairly gung-ho from March to September, and with only Mel's ISA and a fair lump of cash savings to burn, we had almost run out of the ISA allowance by September. We then watched from September to November most of the shares we'd bought in this admittedly gung-ho fashion gradually fall in value.
It wasn't until November that I got news of a decent bonus and decided (since the FTSEs were looking very cheap, by M&M standards!) to open a separate ISA in my name. And I basically piled in from then until February, when I started to slow down, mainly since I like to have some "rainy day" cash.
So now, as the FTSEs is rising again quite a few of the shares we bought "in the dip" e.g. DGE, GAW, SPX, BXVP are looking very pricey. So each month i.e. after pay day, it looks harder to buy really good firms at reasonable prices. Yes, I appreciate that does "stand to reason". So since I'm trying to a little more shrewd than our gung-ho first year, I'm wondering on the sensible course of action for investing if the market continues to rise.
Sorry to waffle on a bit. Interested on what your actions are "when equity gets pricier".