Selling long term investments at loss

Herbalus

I am taking stock over the festive period and re-evaluating long term investments (held in LISA for retirement over 30 years away).

I'm regularly investing in HL, and the strategy is probably best described as haphazard.

I like

L&G International Index ex-UK and am happy with this as the base.

I then wanted to add back in the UK, so picked

FTSE250 tracker (reason being it's "more UK" than the FTSE100 which has 80% of earnings made overseas).

At some point I decided to increase the risk profile (after all it's a 30 year horizon) and add another £25 per month in an emerging markets fund from

Blackrock.

So I've now created my own mini portfolio which is very overweight UK (39%) and EM (14%). Whether this all matters on a sub£4k pot I have no idea.

I'm considering switching into a different portfolio fund like Blackrock consensus 85, potentially as a complement to the L&G international index as Blackrock is 32% UK equities and to my mind that is too much - keeping L&G would lower this % overall. Any thoughts on mix and matching funds like these? I do like the look of Blackrock and fees are discounted on HL.

However, all my funds are currently sitting at a loss: FTSE250 fund down 8.5%, EM down 4.6%, L&G down 4.4% (all figures are absolute, not annual). I understand that selling at a loss is a mistake, especially when investing over 30 years - does this essentially mean I should wait until they eventually catch back up before switching the portfolio around to get the desired portfolio allocation?

I don't want to crystalise the loss, but wonder whether getting the right asset allocation is more important at this time. Of course Blackrock Consensus is also down and would rise when the market in general starts back up, but has not fallen as much as the others.

ChrisK....._3

I have no shares in anything but there is a simple philosophy you should use
There is absolutely no reason shares should take any direction just based on their history (what you paid for them)
Ergo: If you would not buy those shares TODAY you should sell them TODAY
Difficult psychological hurdle t overcome but true (lot of folks would wait for hell to freeze over before selling at a loss)

AnotherJoe

It doesn't make any difference selling at a loss for a few reasons.
In particular because everything's down so whatever you buy is also much cheaper than what it would have been a few weeks back so relatively speaking you would likely be buying the same number of units of whatever.
Also because the time you are looking at is very long,30 years.
Also because it's a poor strategy to just hang on until you haven't made a loss. What if what you want to buy goes up much more, relatively than what you are hanging on to. That after all is why you want to buy the new thing,because you think it will rise more than what you are selling (otherwise why buy it) so it would be illogical to wait.

Novice_investor101

MY stocks & shares ISA is very similar & is made up of the L&G international index fund, iShares FTSE 250 tracker & L&G UK index tracker (all share, but by default weighted to the 100). My allocation is basically 5% iShares, 5% all share/ftse100 & 90% international index tracker.
I used to have L&G Pacific index & L&G European trackers as well, but I got lucky & decided I was being silly trying to create a portfolio with no rhyme or reason to it geographically so sold those two in August & switched into the international index tracker - so I sold those two high, but also bought high...

I'm happy with the international fund as the core global fund (cos I've held it since starting the ISA) & adding the UK part via the two other funds gives me a bit of home exposure - the FTSE 100 may as well be international, hence the FTSE 250 fund.

My LISA is 100% invested in the vanguard FTSE global all cap.

I want an investment strategy that is 100% equities for max growth but diversified globally - & this is the easiest, fuss free solution. I've no intention of messing about with various funds & the tweaking of them for the next 15-20 years. I'll dial down the risk a bit when I'm 55. Til then, it's a set & forget fund/strategy.

Both of these fund choices sit comfortably within my risk tolerance - 100% equities but in mostly large cap & developed markets that grow by dividends as well as appreciation. I can cope with the ups & downs between now & retirement. Im not keen on overweighting myself on EM or Asia as the volatility is too high, & I accept I'll therefore miss out on some reward.

What is your investment strategy? What do you hope to achieve? You say "get the right asset allocation", but what is right? You're adding BlackRock to add some UK to the L&G fund - what is wrong with the ftse250 fund for adding UK? The BlackRock is a multiasset fund, it falls into the 40-85% shares bracket - do you want some Bonds/property etc in your portfolio? Is the UK allocation in the BlackRock fund made up of mainly the ftse100?

& While your investments are small, don't fall into the trap of creating a portfolio that just emulates what a single global equities tracker or a single multiasset fund does, but without any rhyme or reason to the individual weightings behind it

Figuring out your strategy takes time & experiencing the ups & downs will help realise what you're risk profile really is & what your comfortable investing in, or not. At least playing around whilst your investment values are relatively low means you'll learn those things about yourself quite cheaply - I did!

Alexland

Hi,

It is likely Consensus 85 won't have fallen as much because it contains bonds. My view is would be a mistake to dial down your risk as markets are falling (unless you were otherwise likely to 'bottle it' if they fell lower) however switching between equivalent risk funds is fine provided you are not just chasing yesterday's return.

I prefer one fund per account particularly on the smaller accounts such as LISAs and JISAs where the annual contribution rate is limited. Our HL LISA choice is the discounted Consensus 100 which is around 13% UK and around 5% global EM. Keeping accounts simple makes it easier when considering the overall asset allocation across all our investments. I hold bonds in my pensions.

Alex

dqnet

Alexland wrote: »

Hi,

It is likely Consensus 85 won't have fallen as much because it contains bonds. My view is would be a mistake to dial down your risk as markets are falling (unless you were otherwise likely to 'bottle it' if they fell lower) however switching between equivalent risk funds is fine provided you are not just chasing yesterday's return.

I prefer one fund per account particularly on the smaller accounts such as LISAs and JISAs where the annual contribution rate is limited. Our HL LISA choice is the discounted Consensus 100 which is around 13% UK and around 5% global EM. Keeping accounts simple makes it easier when considering the overall asset allocation across all our investments. I hold bonds in my pensions.

Alex

Agreed. Keeping accounts simple is my moto too.



I'm new to the whole investment game and my funds are currently at loss but I'm looking for the long term 20+ years so i'm doing my absolute best to utilise the set-and-forget strategy for now. I might even buy more from the same funds to offset the loss at buying at a slightly higher price earlier in the year.

Alexland

Yup with fairly new accounts 'averaging down' is a great strategy to reduce your percentage losses and bring forward your recovery.

Herbalus

Alexland wrote: »

Yup with fairly new accounts 'averaging down' is a great strategy to reduce your percentage losses and bring forward your recovery.

I have been doing this is S&S ISA but when it came to LISA I started to wonder whether it was best to tweak strategy.

What I might do is just leave the current investments where they are, and put future investments into the new strategy. I do expect the current funds to rebound, so you may ask why I would think about leaving for another, but the nub is that it's probably that the current asset allocation is too volatile.

Leaving the funds at current levels but focusing future money into the core funds will reduce exposure to more volatile aspects over time.

It is small amounts, to I understand the reasons for simplicity. Part of me wants to play around and understand my risk tolerance whilst the amounts are at this level.

itwasntme001

Alexland wrote: »

Yup with fairly new accounts 'averaging down' is a great strategy to reduce your percentage losses and bring forward your recovery.

Assuming of course that what you are buying will go up enough (to recover the losses + opportunity cost) sometime in the future.

kidmugsy

The shares don't know what you paid for them; you will not hurt their feelings if you sell them.

Alexland

Herbalus wrote: »

What I might do is just leave the current investments where they are, and put future investments into the new strategy. I do expect the current funds to rebound, so you may ask why I would think about leaving for another, but the nub is that it's probably that the current asset allocation is too volatile.

Yes the current funds should rebound eventually but you are building a mess.

Herbalus wrote: »

Part of me wants to play around and understand my risk tolerance whilst the amounts are at this level.

With a bit of imagination you should be able to determine what it would feel like to lose 50% of your money and still not know if you are at the bottom of the market or if there are more losses ahead.

Alex