Recent increase in my fund value

stevet2607

I invested £90k in investment funds last July when the FTSE100 was arounf 5900. My timing was lousy and 4 months later I was 10% down and regretting my investment choice. I vowed that when the market improved I would sell as the volitality of the market was not for me. However, the funds have improved considerably in the last month and I could probably sell now with zero loss. As I write the FTSE is over 5900 today

Now I'm having second thoughts and wonder if I should keep the funds and accept the ups and downs of the market. Would anyone like to comment? I'm not understanding why the FTSE and the funds have increased when there doesnt seem to be any good economic news. My original plan was to expect 3-4% annual growth. Does anyone think this is still possible

sorcerer

If you think a 10% loss was too much for you to handle then I think you should sell it, because it will happen again in the future. You should invest with the longer term in mind, 5-10 years at least.

Masomnia

When you invest like that you should be looking at 5 - 10 year time scales and not worry about 6 monthly changes. Has your reasoning for investing in the FTSE changed since then?

The FTSE100 is a fairly high risk thing, you should expect ups and downs like that; if you can't take a 10% dip without worrying then a FTSE tracker/FTSE based fund probably isn't for you.

Things are looking brighter in America and there's more optimism surrounding the Eurozone than there has been in the past 6 months, which is why I expect the market is higher.

Jegersmart

You don't really say what you are invested in.....? What were you expecting?

Linton

stevet2607 wrote: »

....My original plan was to expect 3-4% annual growth. Does anyone think this is still possible

You could easily average 3-4% or more annual growth, but only over the long term. Some years you could be down 20% or more, some up 20% or more. Depends what you invest in.

If you dont like the fluctuations but want some investment in the stockmarket you could try one of the cautious balanced funds which invest in a range of different things and try to avoid some of the wilder variability. But of course you pay with probably lower long term returns.

dunstonh

I vowed that when the market improved I would sell as the volitality of the market was not for me.

Why not change the investments to use less volatile ones.

Also, volatility will always exist. It is the nature of investing. You can to some extent reduce volatility but it will be there during bad and good periods.

I'm not understanding why the FTSE and the funds have increased when there doesnt seem to be any good economic news.

There has been good economic news. Also, remember that markets generally price in known events and its the unknown that creates the shocks. The good news is that the bad news is not as bad as they thought. Plus, values are low historically and the US has been posting better than expected data.

My original plan was to expect 3-4% annual growth. Does anyone think this is still possible

Assuming 100% equity in one sector (which is bad investing but what you are indicating you have done) you appear to have invested over your risk profile. Your expectation for that level of risk seems low as well. However, you havent actually said how you have invested. So, we wont be able to comment.

The FTSE can lose 45% of its money in a big crash (not frequent but can happen - 2 in the last 30 years but both in the last 15). More common sized crashes that WILL happen periodically are 25%. They are always going to happen and you know they are coming sooner or later. So, if you cannot handle that then you should not invest. The fact they usually bounce back within 6-18 months is irrelevant and also not guaranteed. If you panic at the smallest of drops then what are you going to do on one of the larger ones?

westy22

If you are sitting on a zero loss today having invested a lump sum in July 11 then your chosen funds have done quite well. The FTSE100 and the US have had good a good run so far this year and the back end of last year - smaller companies, emerging markets and Europe have done less well and are recovering more slowly.

Of course, nobody knows what tomorrow will bring!

jamesd

There has been economic news suggesting recovery starting in the US, like good employment figures, and indications of a soft landing in China. Also gradual signs of improvement in the European situation, though with lots of uncertainty still.

Watch the variations. When all the press talk is of doom and gloom increase what you're paying in for a while. When the talk is of boom and unending success or a changed situation that will never fail look to switch to cash or bonds with some of the money. This is the sort of thing that has you doing more buying at low prices and selling at high and can help to boost returns. It's difficult to buy and sell at those times - who wants to buy when all the talk is of doom or sell when the talk is of boom?

It's quite rare for there to be a year where the price never falls below the price at the start of the year so you may well be able to buy more cheaply later this year. Or not, no guarantee, some years the price doesn't fall below the start at all.