losing money on tracker isa

martychief

I'm new to this so hope i'm doing this right
I have a legal & general tracker isa and it's going south
is it best to hold on till better times or swap to something a bit safer
Has anyone advice:eek:

cheerfulcat

Hi, and welcome to MSE,

Was this intended as a long-term investment? Do you still contribute to it? Will you be needing the money at any time with in the next 5 years or so? Will you be able to sleep at night if the investment falls another 50% ( I'm not saying that it will, but it's always a possibility )?

dunstonh

I have a legal & general tracker isa and it's going south

As would be expected at the moment.

is it best to hold on till better times or swap to something a bit safer

Stock market investments are done for terms in excess of 5 years. The reason for that is in any 5 year period you would expect at least one major period of decline. Often there are two or three fairly big drops although statements may not always show these as they can recover somewhat between statement dates.

Hopefully you either only put a small amount in the tracker or you have spread the investments around so you dont have 100% exposure if its a larger amount.

However, this is not a major drop so far. We are teetering around the 20% mark at the moment but the tech stocks (and other things) decline at the start of the millenium saw the FTSE drop nearly 45%.

IanWorthington

Some time ago it was predicted that markets would fall by 30%, so we may have some way to go yet. I fact within living memory there have been market collapses of more than that, 70%, iirc.

In the long term though, if your tracker is broad, you'll be fine. I am though looking at mixing a buy and hold strategy with one based on 20/50 week SMA signals which, in the long term *may* improve returns. (Though it may not: Take responsibility; do your own research.)

i

earlgrey_3

As Dunstonh has pointed out, the FTSE All share fell continuously from Dec 1999 for over 3 years until it had almost halved in value by 2003. It took almost 7 years before it got back to Dec 1999 levels.

Now over 8 years later the index is again 18% lower than it was in 1999 and if you add in the effects of inflation a whole lot worse than that. Money stuck in a savings account would be around 50% up.

In Japan stocks have never recovered to the levels of almost 20 years ago and are still at around just one third of their levels then. At one point they'd lost 80% of their value. If you believe the most ardent doomsters we could even see similar to that here.

There's a big difference between investment and savings that some are only just beginning to understand despite the legally required warnings. When they say the value of your investment can go down, you'd better believe it.

So it's your call. Just as with any investment, if you think the downside risk is greater than upside then the answer is to sell.

The problem with ISAs is the inflexibility. There aren't many funds that aren't heading south at the moment. If you withdraw your money, you lose your allowance for good. If you keep the cash in the ISA the manager will mug you with a lousy rate of interest. Depending on how much you have in the ISA, you could look at something like Blackrock Absolute Alpha which has continued to give positive returns apart from in the last week or so.

If you hold your ISA directly with L&G it would make sense to move it to a discount broker such as Hargreaves Lansdown where you can switch funds easily.

nrsql

Depends on what you think is going to happen to the fund and how confident you are.
If it's going to go down further it's better to move the money somewhere else.
If you don't have anywhere you think is better then leave it where it is.

It's all about where you think is the best place for your money now. Ignore what's happened in the past - that's gone and there's nothing you can do about it.