Greek Economy affecting savings?

Colin4May

Hi All.

I invested over £100,000 in April (as part of a redundancy package) on a medium risk portfolio, including ISAs and shares. I've been told that my investment after three months has gone down in value, because of the Greek Economy. Can this be true or are the people I have paid to invest my money just fobbing me off with a story?

I realise that any investment can have its value go up and down, but just hadn't realised how important the Greek bail-out is across the EU.

opinions4u

First of all you're 3 months in to a long term investment. Some days it will go down in value. Other days it will go up.

The Greek economy has the potential to require further EU and World Bank bailouts, which sucks money out of the UK and other economies. Additionally, there's the knock on effect to Ireland which has the potential to undermine RBS and Lloyds, who are major lenders. If they get stretched too far they reduce their UK lending which undermines the UK economy further.

My suggestion would to be to consider how long you are investing for and go with the ride for that period of time. Worrying too much about short term performance won't do you any good.

The alternative is to cash in now, accept the loss and stick your money in a savings account.

dunstonh

I've been told that my investment after three months has gone down in value, because of the Greek Economy.

Actually, you will probably find it has gone up again as the last week has been very good.

Can this be true or are the people I have paid to invest my money just fobbing me off with a story?

Yes it is true. Everything in the global economy will impact on investments which are affected by the global economy. For instance, the Japanese Tsunami saw worldwide markets drop and Japan itself drop by double digits in the short term. Yet Japan is now back in positive territory.

I realise that any investment can have its value go up and down, but just hadn't realised how important the Greek bail-out is across the EU.

Not "can" go down but "will" go down.

I have to say that I am not impressed as your understanding of investing. That isnt a slant against you but the firm that set up the investments. You need to understand the basics of what can and will happen. Your understanding is weak which probably means their advice was weak. At the moment you seem to be concerned over a short term issue (albeit one which will have longer term affects and hasnt been resolved yet) yet are saying you accept medium risk. Medium risk is typically loss potential of around 25% in a 12 month period. The recent decline was nowhere near that. How are you going to react when the next market crash/correction comes?

atush

I too think you are looking too short a term. Two, I agree you aren't being fobbed off.

But you could have asked (or your advisors could have suggested) that your 100K be 'phased' into the market instead of all being onvested at once. this can help with short term market volatility.

But many would be better off drip feeding their isas into the market from the begiing of the tax year 1/12 into the funds each month. Too many just slam in their full allowance last min in March/apr to beat the deadline. Which can cause volatility in some areas on its own.

Linton

3 months is far too short a time to mean anything. Over the period of your investment it will continually go up and down on political and economic events. This should not concern you because you are betting on the long term when Greece's current problems will be long forgotten.

To take a recent example. During the credit crunch UK share values dropped by nearly 50% on average. The average share price is now back to within 10% of what it was just before the fall, and taking gains from dividends into account is about the same.

Jegersmart

I would definitely check what you are invested in. I would also hope that the firm in question clearly understood your requirements with regards to whether accumulation or income units was preferred and what sort of freedom they had to move stuff around for your benefit. I certainly would be pretty !!!!ed if I was actively weatlh managed in 2008 and my WM didn't go defensive at least by the summer of 2008.

It also depends on your own level of knowledge or interest of course, personally I completely reallocated my holdings in March this year in my ISA account and am now 1.4% up (it has been down by 3% in the interim) , my pension is up 2.5% in the last week (for obvious reasons). It is possible that you would still be down in the last 3 months, but by how much? Fees?

Good luck!