Lost £570 this year in L&G - what to do?

bundly

Hi folks I am panicking again cos I had £38,000 in Legal and General Unit Trusts, of which £12,000 is ISA money, and it has plummeted by £570 over a year.

I am very ignorant about investment matters and just feel a rising panic. I have a small income and need this money to grow not shrink.

I just spoke to a friend and he said, take the lost out before you lose any more and put £30,000 into Premium Bonds, cos even if you never won a single prize in a year, you'd still have £30,000. And moreover, there is really no chance of NOT winning a few prizes.

Anyone offer any advice on this?

B.

Lokolo

Losing 1.5% over a year isn't all that bad. What unit trusts has it been invested in?

The problem with buying Premium Bonds is that you have inflation risk. The money you invest in PBs will not be worth as much this time next year (unless you win a really big prize, which is very unlikely).

With investments you have the risk that you could lose money, but you have the benefit of the chance of outgrowing inflation over the long term.

bundly

Lokolo wrote: »

Losing 1.5% over a year isn't all that bad. What unit trusts has it been invested in?

The problem with buying Premium Bonds is that you have inflation risk. The money you invest in PBs will not be worth as much this time next year (unless you win a really big prize, which is very unlikely).

With investments you have the risk that you could lose money, but you have the benefit of the chance of outgrowing inflation over the long term.

Hi Lokolo

Stock Market Linked Savings Bond.

Thanks for reminding me about the inflation risk. I never thought of that!

So, should I stick with it then?

B

Lokolo

Who did you buy it from?

bundly

Nationwide, but they passed it on to Legal and General

Lokolo

http://www.nationwide.co.uk/NR/rdonlyres/1D5161D3-A77C-4C11-B3D7-026E3160B6BA/0/PEBDepositKFD.pdf

Is it this once?

If so I am unsure how you have lost money.

bundly

Yes, but it is plan 4

dunstonh

Hi folks I am panicking again cos I had £38,000 in Legal and General Unit Trusts, of which £12,000 is ISA money, and it has plummeted by £570 over a year.

Are you serious?

You lost 1.5% in 12 months (FTSE100 was down 5.6% in 2011) and you call that plummet!!! What would you call all those that lost 25-40% in 2007/8?

just spoke to a friend and he said, take the lost out before you lose any more and put £30,000 into Premium Bonds,

What a truly awful recommendation. Take what he says with a pinch of salt.

cos even if you never won a single prize in a year, you'd still have £30,000.

But lost around £1500 in spending power in that same time.

And moreover, there is really no chance of NOT winning a few prizes.

Average rate is around 1.5% (havent looked recently so it may have changed but it will be in that ball park). So, if you get average you will be losing money in real terms.

Stock Market Linked Savings Bond.

Your friend's advice is even worse now you have named the product. These plans have capital security at varying levels on maturity but fluctuate in between.

It isnt good that you dont know the product basics. Unfortunately, you shouldn't have bought via a tied sales rep at Nationwide. However, dont compound the error by making decisions on the comments of someone telling you to suffer a charge to get the money out (therefore compounding a loss that really doesnt exist) and doesnt even know the product you are in.

If so I am unsure how you have lost money.

Lokolo, they have a running value until maturity. During that time, if someone surrenders early they get no capital security. That only kicks in on maturity. So, its a paper loss that doesnt really exist unless you surrender it.

thenudeone

Unit trusts are invested in shares of individual companies. Sometimes Companies fail and the shareholders lose everything (eg Woolworths, Bradford & Bingley etc). The value of shares depends on the economy generally and what others are prepared to pay based on their view of the company's prospects.
These factors change all the time which means share prices are volatile. Between the peak of 2007 and the worst point in 2008/2009, Shares dropped in value by around 40%, although they have since risen considerably. So, depending on when you invest, you could lose or gain a in a big way.

Shares / Unit trusts are not suitable if you can't afford to lose any money - Savings accounts, National Savings, or government bonds are suitable in those circumstances. The risks should have been pointed out to you when you invested. If not - you have grounds for complaint.

I wouldn't advise Premium Bonds - there is a chance that you won't get any thing at all for years. Although there is a very small chance that you'll win a big prize, it's far more likely that you'll receive a few small prices and that you would have been far better off putting the money in a decent savings account.

bundly

No not joking, I really AM that naive and uninformed, Mr Dunston! I'm just not in the "financial world". £570 is a lot of money to me -- 2 weeks income -- and I panicked when I saw I had lost that.

Thank you VERY much for putting my mind at rest.

And thenudeone- put some clothes on! :rotfl:

Oh, and thanks, also :T

middlepuss

Stick with your L&G investment.

Chances are your valuation is now out of date and you might even find you are now in profit.