vanguard s&p 500 (VUSA)

stripes123

I've heard a lot of people advise invest what you're comfortable to lose. but how does that work when you want to diversify your investments and keeping your money as cash means it'll lose value through inflation?

ryannnking

There are other ways to keep up with (and hopefully beat) inflation. You can lock your money away in a fixed-term savings account, or take advantage of the 5% interest rate offer from Nationwide, for example.

One investing strategy which is popular is passive investing. You pick a fund, such as a Global Tracker, and invest a specific amount every month. This is known as Dollar Cost Averaging, so you are buying the Fund/Tracker when it is high, and when it is low, to get an average lower cost basis.

This not only takes the emotion out of investing, which is a big factor, but as historically the economy has grown over time, and hopefully will continue to do so, then your investments will be worth more whenever you decide to sell and spend the money.

From reading your messages, it seems like you need to define your time horizon. Going down 10% in the short term is awful if you need the cash tomorrow. However, if you don't need the cash for 5-10+ years then try not to look at short term movements! As they are meaningless.
Also, when people say only invest with what your comfortable with, this is relating to your risk tolerance. You say you have invested in the S&P 500, but this means you're overexposed to the US, so as mentioned a Global Tracker may be better. But obviously a global tracker has lower risk, so a lower return, when compared to a more specific index like the FTSE100 or S&P500.

I hope what I am trying to say is coming across clearly. Take some time to do some reading, and then pursue what strategy is best for you, taking account of how much risk you want to be exposed to, and how long you will be investing for!

Ultimately no one can time the market, and if they say they can they are lying. But there is a saying that time in the market is better than timing the market!

Ryan

Voyager2002

Alexland wrote: »

If you pick your investments carefully you should hopefully never need to cut your losses.

Disagree. If you never need to cut your losses then you have never been properly diversified.

Voyager2002

stripes123 wrote: »

I recently started getting into investing and started with VUSA (VOO) in mid july. The price was initially rising but since has been going down. I understand that this is partly due to negative pressures on US economy with trade deal with china and also that the VUSA has a high tech percentage which isn't doing to well atm. what are people's views on how this ETF will fair in 2019?

Is that your only investment?


While no-one can say how VUSA will perform next year, we can be fairly confident that over most years it's performance will be different from that of the Moscow top 100 companies. So you need to divide your investment between a few different indices or managed funds so that you can be fairly confident that at least some of them will do well in most years.

Alexland

Voyager2002 wrote: »

Disagree. If you never need to cut your losses then you have never been properly diversified.

Hmm.. not sure I understand this comment?

Are you talking about a rebalancing situation where multiple holdings may have dropped but some more than others so to get back to your target mix you would need to sell some at a loss to buy others which have dropped further?

Or are you saying to be diversified you would need to own a type of asset in which this decision would be needed?

Alex

DairyQueen

Alexland wrote: »

Hmm.. not sure I understand this comment?

Are you talking about a rebalancing situation where multiple holdings may have dropped but some more than others so to get back to your target mix you would need to sell some at a loss to buy others which have dropped further?

Or are you saying to be diversified you would need to own a type of asset in which this decision would be needed?

Alex

You pre-empted me. There seems to be a different mindset for those investing with a fixed endpoint and those who view investing as lifelong.

The concept of 'cutting losses' doesn't enter my thinking. I rebalance based on whatever strategy I have adopted to meet objectives. Those objectives have changed over time. Now approaching the deaccumulation phase of life, I am rebalancing in preparation for drawdown. It's the overall value of the portfolio that matters. Whether an individual asset/class/sector has dropped in value is immaterial in a well-diversified portfolio invested over many decades.

OP is currently running the odds on the US, and on tech stocks in particular. Presumably this decision was made on the back of recent performance. No offence to OP but that's a classic newbie mistake.

Perhaps an investment in one of the VLS funds would be more suitable as an entry level investment for OP?

Voyager2002

Alexland wrote: »

Hmm.. not sure I understand this comment?

Are you talking about a rebalancing situation where multiple holdings may have dropped but some more than others so to get back to your target mix you would need to sell some at a loss to buy others which have dropped further?

Or are you saying to be diversified you would need to own a type of asset in which this decision would be needed?

Alex

Certainly I am talking about a rebalancing situation.


There may also be instances when one has to accept that one's original investment thesis has been falsified, meaning that a particular asset no longer has a place in one's portfolio.


My examples of this were funds invested in Brazil, and in Latin America (but mainly Brazil). Political developments over the course of a decade convinced me that this investment would not perform as hoped, and once I reached that conclusion it was time to sell, even though market prices were below the levels at which I had bought.

Alexland

Voyager2002 wrote: »

Certainly I am talking about a rebalancing situation.

Aah mystery solved. I like my investments funds to contain plenty of global coverage so don't find myself sitting there trying to make an (uninformed in my case) decision about what might happen next in Brazil.

Alex