How Safe are my investments

k.grogan

Hi all
I have investments with my bank which is based on UK Growth Fund, UK Equity Income Fund, Corporate Bond Fund and International Growth Fund, its doing well but Im wondering how safe it is, how far should I let it drop before changing it for lower risk arrangement.

dunstonh

Im wondering how safe it is

Those funds are different risk profiles. Without knowing the funds we cant say other than generically but you range from cautious through to medium high.

how far should I let it drop before changing it for lower risk arrangement.

Thats back to front.

I suggest you dump your bank and get a real adviser. Get them to explain investments and risk vs reward and what will happen with the investments. Clearly the bank sales rep hasnt explained things well enough to you.

Loughton_Monkey

As investors, we are all aware that equities (shares) are 'volatile' (risky too, but volatility is an inbuilt characteristic). An individual company share can go up 3% one day, and down 5% the next. With an individual share, there can come a point when 'best advice' is to sell, cut your losses, rescue what you can, and invest in something else.

Funds, however, very much minimise the 'risk' because they cover a very wide range of individual shares, but they remain very volatile. They certainly go up and down day by day. And they can go up and down by large amounts in monthly or annual 'waves'.

Most investors consider that this is the 'nature of the beast' and we tend to rely on the fact that (historically at least) funds will grow in the longer term and produce good results. Some better than others.

Now most of us adopt one of two strategies:

1. The 'Passive' strategy. This (simplistically speaking) involves buying into funds and basically letting them perform, in the knowledge that longer term they tend to grow well. Occasionally, the mix of funds might be 'rebalanced' or subject to occasional changes due to changing perceptions of likely growth areas.

2. The 'Active' strategy. Here, you will find investors - who understand the volatility - who try to sell when they believe their funds are at a 'high' and pump more in (or re-invest) when the market is at a 'low'. This can be a difficult, and risky strategy, but some have been successful at it.

Now you seem to be suggesting a rather 'interesting' and 'unique' strategy which seems to suggest selling your funds when they are at a 'low', and re-investing in lower volatility (or risk) funds that are almost 100% certain not to share in any market recovery.

I may be wrong, but I suspect most people on this forum will be unfamiliar with such a strategy and therefore unable or unwilling to advise how 'low' the funds need to go before you deny yourself the possibility of them ever recovering.

Perhaps you should review your strategy?

k.grogan

Loughton_Monkey wrote: »

As investors, we are all aware that equities (shares) are 'volatile' (risky too, but volatility is an inbuilt characteristic). An individual company share can go up 3% one day, and down 5% the next. With an individual share, there can come a point when 'best advice' is to sell, cut your losses, rescue what you can, and invest in something else.

Funds, however, very much minimise the 'risk' because they cover a very wide range of individual shares, but they remain very volatile. They certainly go up and down day by day. And they can go up and down by large amounts in monthly or annual 'waves'.

Most investors consider that this is the 'nature of the beast' and we tend to rely on the fact that (historically at least) funds will grow in the longer term and produce good results. Some better than others.

P.S I not in charge of money according to bank someone else is dealing with it I just sit and have a review every 6 months

Now most of us adopt one of two strategies:

1. The 'Passive' strategy. This (simplistically speaking) involves buying into funds and basically letting them perform, in the knowledge that longer term they tend to grow well. Occasionally, the mix of funds might be 'rebalanced' or subject to occasional changes due to changing perceptions of likely growth areas.

2. The 'Active' strategy. Here, you will find investors - who understand the volatility - who try to sell when they believe their funds are at a 'high' and pump more in (or re-invest) when the market is at a 'low'. This can be a difficult, and risky strategy, but some have been successful at it.

Now you seem to be suggesting a rather 'interesting' and 'unique' strategy which seems to suggest selling your funds when they are at a 'low', and re-investing in lower volatility (or risk) funds that are almost 100% certain not to share in any market recovery.

I may be wrong, but I suspect most people on this forum will be unfamiliar with such a strategy and therefore unable or unwilling to advise how 'low' the funds need to go before you deny yourself the possibility of them ever recovering.

Perhaps you should review your strategy?

I did a Sort of risk assessment before I started to invest to see if im Low risk- small amount of profit for hardly any loss
Medium- Balanced on both
High Risk-Big profit but possibly big loss
I was in the middle so the Bank Finance Advisor spread into Low-Medium, Medium and High-Medium at the time it was £25,000
Split into a £7,200 isa and a £17,800 in a investment at one point during the recession it dropped quite low and I was told of it goes any lower I will need to but more money. Luckly I didnt and now my isa is worth £10,049 and my big investment is worth £23,711 but with all the cuts stuff is will it safe or should I think of putting in high interest untill the economy is safe

jimjames

k.grogan wrote: »

how far should I let it drop before changing it for lower risk arrangement.

Selling when it drops is possibly the worst thing you can do, ideally what you want to be able to do it put more in when it drops.

Anyone who invested in the FTSE100 at the low point last year has nearly doubled their money.

Loughton_Monkey

k.grogan wrote: »

Split into a £7,200 isa and a £17,800 in a investment at one point during the recession it dropped quite low and I was told of it goes any lower I will need to but more money. Luckly I didnt and now my isa is worth £10,049 and my big investment is worth £23,711 but with all the cuts stuff is will it safe or should I think of putting in high interest untill the economy is safe

Sorry, but I don't fully understand your comments (marked in red).

Looking at your figures, your funds seem to have grown.

Nobody can really tell what will happen in the short term (say for the rest of 2011). Very few people are predicting a 'big crash'. Some are predicting quite a rocky ride this year. Ups and downs. Others are suggesting that with inflation rising, but bank rate staying low, equities (funds) are more likely than cash to keep pace with inflation.

We know very little about you or your overall financial position, and so please understand that no-one is in a position to recommend what you do. A lot depends upon what you are investing for.

If you are investing quite long-term, then to attempt 'going in' and 'coming out' of funds is risky in itself and requires a lot of knowledge and/or confidence. Many of us leave it there and 'ride' the ups and downs.

If you are investing for something coming up shortly (within 12 months) and therefore need the money at a certain time in the near future, then being invested in funds was probably a bad idea.

k.grogan

Loughton_Monkey wrote: »

Sorry, but I don't fully understand your comments (marked in red).

Looking at your figures, your funds seem to have grown.

Nobody can really tell what will happen in the short term (say for the rest of 2011). Very few people are predicting a 'big crash'. Some are predicting quite a rocky ride this year. Ups and downs. Others are suggesting that with inflation rising, but bank rate staying low, equities (funds) are more likely than cash to keep pace with inflation.

We know very little about you or your overall financial position, and so please understand that no-one is in a position to recommend what you do. A lot depends upon what you are investing for.

If you are investing quite long-term, then to attempt 'going in' and 'coming out' of funds is risky in itself and requires a lot of knowledge and/or confidence. Many of us leave it there and 'ride' the ups and downs.

If you are investing for something coming up shortly (within 12 months) and therefore need the money at a certain time in the near future, then being invested in funds was probably a bad idea.

Basically when I was 18 I got a large compensation which after speaking to my bank of what I wanted do with it because I was young I didnt really want spend all at once and lose it all so we agreed on £7200 in a isa investor and £17800 in a investment 6 months down the line the bank phoned me asking to see ASAP and told me that my investment were dropping and if they continue I would but more money in them luckly I never and for the last 2-3 yrs then been going up steadily. But I have my mum asking could I lose it all, it got me thinking about how should let got down again due to the current economy or will I be fine.

ChrisEvanson

I think there is a bit of misunderstanding going on here....

What I think the op is saying is that their investment has done well but should they pull out if it starts to fall, being as there is a lot of doom and gloom and talk of a possible crash.

I have money in a stocks and shares ISA I started in March 2009. I sensed things were recovering and timed it well, but as it performs better the unit price rises so fewer units per £1 are being bought now than 2009. It is true if it drops my new money will buy more units, BUT the existing units will lose value. If it backtracked to March 2009 levels I would have less money in than I paid in and would have lost all the gains.

Far too many people think they can make money in investments and shares thinking if they fall they can buy more cheaply anyway, but the best advice is obviously to take out the gains and then buy in at the bottom, rather than leave the gains to devalue first.

Obviously timing is everything and hindsight is a wonderful thing, but if a stock market crash started to play out I'd take my gains, hold onto them, then buy back in later.

k.grogan

ChrisEvanson wrote: »

I think there is a bit of misunderstanding going on here....

What I think the op is saying is that their investment has done well but should they pull out if it starts to fall, being as there is a lot of doom and gloom and talk of a possible crash.

I have money in a stocks and shares ISA I started in March 2009. I sensed things were recovering and timed it well, but as it performs better the unit price rises so fewer units per £1 are being bought now than 2009. It is true if it drops my new money will buy more units, BUT the existing units will lose value. If it backtracked to March 2009 levels I would have less money in than I paid in and would have lost all the gains.

Far too many people think they can make money in investments and shares thinking if they fall they can buy more cheaply anyway, but the best advice is obviously to take out the gains and then buy in at the bottom, rather than leave the gains to devalue first.

Obviously timing is everything and hindsight is a wonderful thing, but if a stock market crash started to play out I'd take my gains, hold onto them, then buy back in later.

Thats cleared it up my orginal plan was once my large investment made £10,000 profit to but that in High risk investment but I have never thought about if I lost £10,000

dunstonh

Far too many people think they can make money in investments and shares thinking if they fall they can buy more cheaply anyway, but the best advice is obviously to take out the gains and then buy in at the bottom, rather than leave the gains to devalue first.

Its also a fools way to make money as typically you cant time the market like that. To have any chance of success you need to be hands on, know what you are doing and keep on top of it weekly or even daily in some areas for some people.

For the inexperienced investor it can be totally the wrong thing to do.

Jonbvn

ChrisEvanson wrote: »

Far too many people think they can make money in investments and shares thinking if they fall they can buy more cheaply anyway, but the best advice is obviously to take out the gains and then buy in at the bottom, rather than leave the gains to devalue first.

Could you let me have next Satuday's lottery numbers please?

Sorry, but nobody is able to predict/time the market as you state. Even trying to do it will lose you far more money than you gain. I would suggest you google some stats about how being out of the market during only a few of the best days will massively reduce your overall return.