Like the February Correction ?

john5001

Alexland wrote: »

Thought so you have one too many 6s in your posting. So you have a £20k ISA from a previous tax year and you have been investing £1660 per month during this tax year?



Sure always totally possible which is why investment is unsuitable for time periods of less than 5 years as the risk of having a loss upon withdrawal is unacceptabley high. What is your plan for when and how the money will be eventually used?

Alex

Ahh yes typo.

I would like to release the money in around five or so years. My plan was really to use inheritance after my mum died a year ago.

The money, given I am sixty now, would be used to have money to use for mainly leisure activities and or emergencies.

john5001

AlanP wrote: »

So if we assume that you have 20k + 7 months @ 1660 in your USA that is £31260.

1k down is about 3.2%.

That could be a 1 day movement either way and overtime it is really insignificant as a fall.

You have chosen an adventurous approach, were you really expecting a steady 6/7% a year for the rest of your life?

As above what timescale and what objective is the isa for?


How did you fare earlier this year when there was a small correction that recovered in a couple of months? Why do you think it is different this time?

I think alarm bells started ringing due to he fact the market has dropped so soon after my initial investment. My plan is a five year time period but flexible.

The emerging markets are suffering because of the dollar strength and trade wars, this seems to me as a protracted scenario. Hence I was looking for other opinions.

I know fluctuations are to be expected, but government policies dictating the global financial stability at present are not IMO, a short term correction. More looking like a long term issue if that makes sense.

Prism

john5001 wrote: »

I think alarm bells started ringing due to he fact the market has dropped so soon after my initial investment. My plan is a five year time period but flexible.
.

An important thing to consider is how much of this investment you want to access in five years. If its all of it then you probably shouldn't invest in equities at all. If you want to start taking percentages out of it gradually then thats a different matter. To do that you really need a balance of higher risk to lower risk investments so that if there is a downturn just before that 5 year period you are somewhat protected.

Alexland

john5001 wrote: »

I would like to release the money in around five or so years. My plan was really to use inheritance after my mum died a year ago.

The money, given I am sixty now, would be used to have money to use for mainly leisure activities and or emergencies.

Investment is not suitable as an an emergency pot (at any risk level) as if you don't have any control of when the emergency occurs and you might be forced to withdraw the money while the markets are down.

I suggest you consider spliting your money between what is needed for emergencies or the short term (cash, less than 5 years) and what can be invested for the medium or long term. If the leisure spend is going to be evenly paced during your retirement a balanced risk investment may be suitable.

Whatever happens as a result of this correction, market return forcasts are low so you need to keep your costs low and HL are expensive for S&S ISAs and very expensive on their own brand funds.

Alex

john5001

Alexland wrote: »

Investment is not suitable as an an emergency pot (at any risk level) as if you don't have any control of when the emergency occurs and you might be forced to withdraw the money while the markets are down.

I suggest you consider spliting your money between what is needed for emergencies or the short term (cash, less than 5 years) and what can be invested for the medium or long term. If the leisure spend is going to be evenly paced during your retirement a balanced risk investment may be suitable.

Whatever happens as a result of this correction, market return forcasts are low so you need to keep your costs low and HL are expensive for S&S ISAs and very expensive on their own brand funds.

Alex

Whatever happens as a result of this correction, market return forecasts are low

This is what I fear that the upturn could take some time.

Whilst I am not dependant on this investment, say three years down the line it has not recovered, this is when I may weaken and sell.:(

Alexland

In which case follow best practice - don't invest money you may need in the short term and where you do invest align to your volatility tolerance and keep costs low.

dunstonh

john5001 wrote: »

Whatever happens as a result of this correction, market return forecasts are low

This is what I fear that the upturn could take some time.

Whilst I am not dependant on this investment, say three years down the line it has not recovered, this is when I may weaken and sell.:(

An economic cycle is around 10 years. You shouldnt be investing when you are only looking at around 3 years.

Several times in the last 30 years, there have been multiple negative years or a negative surround by two nothing years.

If you invest for 10 years, you pretty much know you are going to get the whole of the cycle. If you invest for less than 10 years, you dont know if you are going to get the good part or the bad part or a mix and match part. Seeing as we have just come off a really strong growth period, the odds were on for some negative periods soon.

snowqueen555

john5001 wrote: »

Thanks for your reply. The £1660 is 12 instalments of this years 20k ISA allowance.

Just really concerned, if the funds will take more than a two-three year period to recover Is this a realistic forecast?

I've actually had a google of the funds you are invested in you are paying quite a lot in fees.

So not only do HL charge 0.45% (use them too)

Your funds posted charge around 1.5%. That means each year your portfolio has to grow about 2% just to break even.

I do use HL but I choose the cheapest index funds e.g. 0.10% charge. My typical yearly fees total around 0.60% which isn't great but isn't terrible either.

Alexland

Yup there's a reason HL shares trade at a P/E of 36 with loads of punters queueing up to risk their money to pay high fees and get poor returns. The cautious and balanced HL investors get the highest proportion of their returns erroded in fees.

I am myself an HL customer for our LISAs but that is a less competitive market and when the accounts are big enough the fees will be capped at £45 for ETFs and ITs. They are very poor value on their own brand funds.

Alex

john5001

snowqueen555 wrote: »

I've actually had a google of the funds you are invested in you are paying quite a lot in fees.

So not only do HL charge 0.45% (use them too)

Your funds posted charge around 1.5%. That means each year your portfolio has to grow about 2% just to break even.

I do use HL but I choose the cheapest index funds e.g. 0.10% charge. My typical yearly fees total around 0.60% which isn't great but isn't terrible either.

Yes aware that HL are expensive. At the time of investing, there was a lot of publicity regarding how they are the leading fund manager company and was impressed by their website.


I think my timeframe is around five years so with that in mind, I will monitor but try and not panic unless I have to sell because of something urgent that may crop up.