lacklustre results

justme111

Been drip feeding into 5 funds , £50 to each(started with HSBC American , HSBC FTSE all share and HSBC pacific 18 months ago , added Aberdeen emerging and HSBC Japan 15 months ago)trough Cavendish for the last year and a half. Calculated the "return" today - the total amount I transferred to them is about £ 30 more than what my portfolio estimated now. Not very encouraging I must say , am I missing anything or have I just hit a little dip and it is meant to work better long term ? Apologies if the question is so naive it makes you cringe

Thrugelmir

Take a long term view with a minimum of a 5 year horizon from the date of purchase. Contrary to common belief making money isn't easy. Does require hard work even if that just means monitoring the portfolio. Also find a way of saving a little more. As it's the compounding of income that ultimately builds the return.

I remember my years ago feeling the same way. So don't be disheartened.

justme111

Thrugelmir wrote: »

Take a long term view with a minimum of a 5 year horizon from the date of purchase. Contrary to common belief making money isn't easy. Does require hard work even if that just means monitoring the portfolio. Also find a way of saving a little more. As it's the compounding of income that ultimately builds the return.

I remember my years ago feeling the same way. So don't be disheartened.

I understand re long term. It's just that if in a year and a half I lost £30 it looks like in 5 years I would have lost 3 times that amount , ie £150

bowlhead99

It depends the shape of the share price curve when you are drip feeding money in.

So for example, if a fund is pretty much the same price today as it was 18 months ago, but the share price graph looks like a little hill, going up and then back down again over the period, you have mostly paid more than today's price with your monthly fifty quids.

So you lose money on that fund (until you wait for the long term, over which time it ends up at a much bigger number and you don't mind that some months near the start you paid a bit more than others).

Some of it is just being in the wrong sector at th wrong time - if you took Aberdeen as an example, the share price is lower than it was 15 months ago as emerging markets have not been doing so well as elsewhere. So even if you had put all the money in on day one you would be down.

With other funds, they may be showing a good headline return but you fed a good chunk of money in at the top of the hill so it goes up 10% while you are flat or down 10%. For example HSBC Japan will be up a decent percent overall in 18 months but all the money going in 12 months ago will have lost value.

You can't really complain about an individual fund going down a bit and thinking that means you're in the 'wrong' fund because the whole point of a portfolio is to have some things that move in different ways at different times to each other. But also you can't say that just because you are down 10% while a fund is up 10%, you could extrapolate that to 5 years and the fund would be up 50% while you were down 50%.

The trend of all the markets over a long enough period is usually upwards and so eventually you end up in a situation where what you have is worth a nice chunk more than you paid for it. But looking at a quick snapshot over a short period, sometimes the average buy price is below what it's now worth and sometimes it's above.

In the long term the ending price should be higher than the average price you paid, because you will be sitting there in 10 years with 120 monthly contributions and if the price has been generally going up, even though maybe not smoothly, the vast majority of the 120 monthly contributions will be lower than the final price. Plus of course there are dividends reinvested, compounding up to give you more performance, which is one of the things that helps you make money overall, but one year's dividend compared to the fluctations in that one year just gets lost in the noise. Ten years dividends and a generally rising market means it usually comes good in the end.

justme111

Thrugelmir wrote: »

. Also find a way of saving a little more. As it's the compounding of income that ultimately builds the return.

If I put more than £250 a month where I can not tell right from wrong I may have a heart attack .
Thank you for confirming it all goes by plan , looking forwards to either playing with that money or using it as a source of income in 10 years time . Or who knows , I may get some life crisis and spend it on a car

sterlingstash

Log in to the fidelity mobile site and you can check your profit/loss since starting, just to double check your calculations are correct

jimjames

justme111 wrote: »

Been drip feeding into 5 funds , £50 to each(started with HSBC American , HSBC FTSE all share and HSBC pacific 18 months ago , added Aberdeen emerging and HSBC Japan 15 months ago)trough Cavendish for the last year and a half. Calculated the "return" today - the total amount I transferred to them is about £ 30 more than what my portfolio estimated now. Not very encouraging I must say , am I missing anything or have I just hit a little dip and it is meant to work better long term ? Apologies if the question is so naive it makes you cringe

They shouldn't all be down. Have you checked each fund?

FTSe & US are near peaks so you definitely should be positive on those.

But if it is lower then think of it in another way - you are buying units at a bargain price. It only seems to be in shares where people worry if the price drops. If you go to the shops everyone is happy to bag a bargain - do the same with funds and it will turbocharge your portfolio.

dunstonh

Not very encouraging I must say

Why not? You dont invest for 18 months. With a regular contribution, you are looking at 10-15 years minimum to get any meaningful results.

An economic cycle is closer to 10 years. 18 months could see a nothing period, a good period or a bad period. It has largely been a nothing period.

I understand re long term. It's just that if in a year and a half I lost £30 it looks like in 5 years I would have lost 3 times that amount , ie £150

That isnt how investing works. You have to accept good, bad and nothing periods and average them out.

Thrugelmir

justme111 wrote: »

I understand re long term. It's just that if in a year and a half I lost £30 it looks like in 5 years I would have lost 3 times that amount , ie £150

Statistically stock markets fall 15% every 4 years. :eek:

Then rebound and recover.

If you are not prepared for the shock of Doomsday then stock markets aren't for you.

dunstonh

To put that average in context, the dot.com (and other events of that period) resulted in a 43% loss. The credit crunch also saw a 43% loss. A more "typical" crash is 25% with corrections at 10%.

If you are 100% invested in equities and cannot handle a 40% loss then you are invested above your risk profile.

justme111

Before placing my direct debits I been reading this forum for a while so I have known what you saying . Just wanted to check it was the case in my case if it does make sense . Ah , and I forgotten about reinvested dividends - those indeed will play bigger role as amount increases smoothing movements down , thanks for reminding it .No , they are not all down , I meant the total result was down ,most of them are actually up , even aberdeen one. I believe it was Japan one that dragged the whole lot .
Let's hope we all will be here and well for my next report in 4 years time :beer:
Thanks for a tip re fidelity mobile site , may do.