How do I know what a good return looks like?

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This may seem like a stupid question and we know that investments may go down as well as up. We have invested a substantial amount of capital with a well known IFA and have quarterly meetings to check progress. We have taken a low-medium risk approach but since our investment last September the growth has now been virtually zero. How do I know if this is good, bad or indifferent? At our last meeting the growth had been about 1.5% and he said that was good in the current market but even that has disappeared now. Is this market conditions, bad advice or even the investment companies taking their cut?
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  • droopsnoot
    droopsnoot Posts: 1,764 Forumite
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    It may be just too short a time to be looking at results at less than twelve months into the investment period - the whole reason people talk of investing for a minimum of five or maybe ten years is to iron out ups and downs and hope (or plan) for more ups than downs. It may well be that there just hasn't been time for many ups yet.
  • eagertolearn
    eagertolearn Posts: 38 Forumite
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    OK thanks - I guess I am just being impatient and concerned whether I have made the right decision or not
  • le_loup
    le_loup Posts: 4,047 Forumite
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    You know who's paying for these quarterly meetings, do you?
    In my book only pension funds with millions/billions need quarterly meetings to discuss progress!
  • dunstonh
    dunstonh Posts: 116,643 Forumite
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    We have taken a low-medium risk approach but since our investment last September the growth has now been virtually zero.

    There are a stockmarket decline of 20% in that period.
    How do I know if this is good, bad or indifferent?

    An economic cycle is around 10 years. In that period, you will get good years, bad years and nothing years. 8 months into your investment tells you nothing. Even the best investment out there (which no-one knows what it is) will have periods when it underperforms other investments.
    Is this market conditions, bad advice or even the investment companies taking their cut?

    The adviser has no control over investment returns. They will be what they will be.

    I suggest you go back to the adviser and tell them that you are struggling with your understanding of how investments work and would like a refresher. Part of the job of the adviser is to explain things and help you understand.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Shmo
    Shmo Posts: 53 Forumite
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    You could record the value of your managed portfolio in a spreadsheet and compare this against a broad market index like the FTSE All Share, MSCI World or similar. That would help determine whether you're making more money from investing with an IFA over buying units in an index tracker over a given time period. I'd actually expect the IFA to do that for me if the portfolio is significant enough to warrant quarterly meetings. Most investment trusts at least seem to release a monthly factsheet that shows performance against a (probably somewhat flattering benchmark. Of course you'd need a long time period to draw any real conclusions and there's no guarantee any observed trend may continue.
  • HappyHarry
    HappyHarry Posts: 1,593 Forumite
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    We have taken a low-medium risk approach but since our investment last September the growth has now been virtually zero. How do I know if this is good, bad or indifferent?

    You could ask your IFA what the investments should be benchmarked against, and ask for a comparison.

    For a "low-medium" risk approach, it is unlikely that benchmarking them against higher risk indices such as FTSE All Share or MCSI World would make much sense.

    Realistically, seven months is far too short a period of time to draw any meaningful conclusion about performance.
    I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.
  • dunstonh
    dunstonh Posts: 116,643 Forumite
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    That would help determine whether you're making more money from investing with an IFA over buying units in an index tracker over a given time period.

    That is not a good measure. An index tracker would be an awful way to invest. It is also unlikely to match the risk profile of the OP. The OP is concerned about having no growth in 7-8 months in a period of loss. An index tracker (equities) would have suffered around 7% losses in that period and have potential of around 40-50% loss in 12 months. The comments by the OP suggest that would not be acceptable (and we know nothing about capacity for loss).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • eagertolearn
    eagertolearn Posts: 38 Forumite
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    dunstonh wrote: »
    ... An index tracker (equities) would have suffered around 7% losses in that period ...

    Thanks for the replies. This is sort of what I am after really - is there anywhere a financial numoty can look to see the state of various investments over the past year. If there have been 7% losses in one area then that makes me feel better about my break-even investment
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    Thanks for the replies. This is sort of what I am after really - is there anywhere a financial numoty can look to see the state of various investments over the past year. If there have been 7% losses in one area then that makes me feel better about my break-even investment

    Trustnet is a good website detailing funds and performance.

    You can plot a portfolio against a range of benchmarks, if you choose the ima cautious benchmark then that can give an idea of relative performance, but will be very much approximate.
  • george4064
    george4064 Posts: 2,817 Forumite
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    The key is use a suitable benchmark, whcih you can compare your performance against.
    "If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes” Warren Buffett

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