Any words of assurance for first time investor?

Brodel

As a first time investor who has just set up my investments (via an investment management company, using the 7IM platform) I can't help but feel worried after watching their total value drop by 2.6% in the first two weeks. My risk profile was rated at medium-high, or level 6 out of 10 when I completed the questionnaire. So, is this just something that you have to get used to as an investor?

Apologies for what is probably such a basic question, it's just a strange situation to be in for the first time. It isn't helped by constantly hearing about global growth fears and faltering recoveries over the last few days.

brendon

You're doing better than most people. A typical variation would be 0.5% per day, so you can understand why 2.5% over two weeks isn't too bad.

I'm down 14% YTD. Just last month I was up 7%. But, that's the way it goes. It's something you have to get used to. Tomorrow, the market could be rallying up again, who knows.

Drp8713

2.6%? It could be 26% by the end of the day.

Do you need the money now? No, or you wouldnt have invested it.

Do you need it in 10+ years time? Then its the value of it then that matters not now.

As long as you are sensibly diversified then dont worry

jimjames

Problem is that news only focuses on the bad news. How many times do you hear on the news that the FTSE has increased 100% over last 5 years compared to drop of 2% yesterday?

If you're worried about 2.6% then maybe yor risk profile is lower than you thought. That is a possible daily amount as per yesterday, how would you feel with a 40% drop over a few months?

It can be unnerving seeing your portfolio drop but only because it is so easy to view. How many people worry about their house price dropping when it could vary as much as that per month but valuation is not as visible.

Linton

Brodel wrote: »

As a first time investor who has just set up my investments (via an investment management company, using the 7IM platform) I can't help but feel worried after watching their total value drop by 2.6% in the first two weeks. My risk profile was rated at medium-high, or level 6 out of 10 when I completed the questionnaire. So, is this just something that you have to get used to as an investor?

Apologies for what is probably such a basic question, it's just a strange situation to be in for the first time. It isn't helped by constantly hearing about global growth fears and faltering recoveries over the last few days.

It is something you MUST get used to as an investor. If you dont you will continually be buying investments that look good at a high price and selling them after a major fall at a low price. That strategy guarantees you will lose all your money.

You need to think long term, there are moderately large fluctuations now (but no larger than normally happen every year or two) but over a sufficiently long time period you should expect to make a profit larger than by savings. Look at the 2008/2009 crash when shares fell by 30-50%. The majority had more than recovered 4 years later and many investors who suffered during the crash are now enjoying a good profit.

Brodel

Thanks for the replies everyone, I really appreciate it and it has given me some peace of mind. I think because the money was inherited, I feel like I have extra responsibility towards doing the best I can with it.

I'll try to stop checking it every day and maybe delete the app that I have on my phone.

le_loup

Brodel wrote: »

I'll try to stop checking it every day and maybe delete the app that I have on my phone.

A really BAD thing to do ... but most of us do and not just every day.

Freecall

jimjames wrote: »

It can be unnerving seeing your portfolio drop but only because it is so easy to view.

This is very true.

Years ago, retail investments were all handled by post. It would typically take a fortnight after sending a cheque (remember those?) to get the paperwork back and then it was down to annual statements with the occasional look up in the FT in between times.

Investments may well have fluctuated along the way but most investors just got on with life relatively oblivious to such things.

Now of course we have second by second updates and plenty of scope for worrying ourselves.

My advice is to amuse yourself with the predictions of 'experts'.

Here is a great one, it's not so much that it is wrong in predicting record highs, more the date it was published - 25th September 2014 - just 21 days ago!

http://www.brecorder.com/markets/equity/europe/197185-uks-ftse-to-hit-record-high-by-end-2014-keep-rising-next-year.html

jimjames

Freecall wrote: »

My advice is to amuse yourself with the predictions of 'experts'.

Here is a great one, it's not so much that it is wrong in predicting record highs, more the date it was published - 25th September 2014 - just 21 days ago!

http://www.brecorder.com/markets/equity/europe/197185-uks-ftse-to-hit-record-high-by-end-2014-keep-rising-next-year.html

Having said that, it is entirely possible that the prediction could be correct. We haven't reached the end of the year yet and markets can change direction very fast in both directions.

dunstonh

I can't help but feel worried after watching their total value drop by 2.6% in the first two weeks.

2.6% is insignificant. The fact you are concerned suggest you may be above your risk profile.

My risk profile was rated at medium-high, or level 6 out of 10 when I completed the questionnaire.

So that puts you on a typical 1-10 scale at around 25-30% loss potential. So, if this turns into a crash, that is the sort of loss you may end up with,.

ermine

Brodel wrote: »

I can't help but feel worried after watching their total value drop by 2.6% in the first two weeks.

What do you do when Tesco has something on sale? You consider buying more than you would otherwise, if it's durable. The markets have been tedious for the last couple of years, you search and search and value is not to be had, good companies but not good prices of late.

Very few investors have the luck to be starting in a stock market rout. This could be your lucky break. If the mayhem continues, or hopefully increases, then this will set you in good stead for the next few years. Carpe diem and buy more, if you find value out there.

Be greedy when others are fearful and all that...