Sipp returns

[Deleted User]

Yep. I allowed myself to get carried away during dot.com and “invested” 1k in technology, losing 80% or so. Thankfully, I only played with a very small amount leaving the rest in broad market funds. With the hindsight the lesson was well worth 800 quid. Crucially, didn’t stop me from being invested in the stockmarket which would have been the worst reaction possible

cfw1994

OldMusicGuy wrote: »

They are in this case. I was insistent that my money went into very low risk funds. I know better now, and am more balanced in my approach to risk, because I understand more how investing in funds works.

It's an area we are terrible at educating people in, isn't it!

For my kids (now coming towards the end of Uni time), I have tried to explain things as they grew up: Santander did a great account for when they were around 12-13, and it evolved as they grew (I imagine many banks offer that now).
More recently, we suggested they got a Monzo card (handy for low cost overseas money on their holidays), and our daughter then figured out her budget so that if she expected to spend £50 in a week on food/ents, she would load the Monzo with that. If she approached the end of the week with no money, she would try hard not to spend any more (from her 'main' account, obviously!)....but if she had a good week and had £20 left, she would only add the £30 to top it up to £50 for the next week (thus keeping the £20 to build up savings - Santander offering a modicum of interest on their accounts).
Equally, I opened a Vanguard LS100 ISA account for them each with a small monthly input from me, which let me explain how it is not about timing the market to make money, but time IN the market....& how that money is essentially long-term funding. 14 months in & they can see how that has performed (the more interested one spotting when it went down last autumn, but understanding now how it climbs back up - over that 14 months they have gained a 14% rate of return!)
We could do with doing something similar for helping them build funds for potential future house (or longer), but struggling to find the 'best' HISA & LISA!

Anyway...bit of a meander, but to the OP, I feel it is your understanding of your attitude to risk that might have caused your current "predicament"....& even then, you are still money up, not down, so not all bad!
If this is long term funds, then my *personal* view is that you really should take more 'risks' with investments than if it were something you might expect to use in the next 5 years.

IFAs, love 'em or loathe 'em, ultimately have to make that call based on your responses to questions (I believe - haven't used one for decades!), and I bet a lot of people come across as more risk-averse than they mean to!
But equally....be aware markets are cyclical!

bostonerimus

This is a bit of a cautionary tale. If you use an IFA then there needs to be good communication so that the customer knows what to expect and understands how their money is invested. Both the IFA and the customer bear some responsibility here. If you hire an IFA it is your responsibility to understand exactly how your money is invested ie what individual funds or other investment vehicles. I'm always amazed that people will give over hundreds of thousands of pounds to someone without fully understanding what they are doing with it......it doesn't matter if its an IFA, the customer still needs to do some due diligence and take personal responsibility and the IFA needs to make sure the customer really understands their investments; not just take the answers to a questionnaire that might not have been fully understood in the first place.

The OP is also running into the issue of comparing the size of investment returns. If you don't need big returns then a perfectly good plan might give you just a couple of percent annual return because it is very low risk. Investment return is just one evaluation metric.

FYI I DIY and have a simple 75% equity 25% bond index tracker portfolio that is inexpensive and has returned 15% over the past 2 years. I've probably spent less time on it than the OP has with their IFA run plan. Many people will have done better and many will have done worse, but I know exactly how my money is invested that the returns align nicely with my retirement plan.