New investor Panicking Already seeking reassurance

ChainsawCharlie

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eskbanker

If you've engaged an IFA then they should be the one explaining volatility to you, and this obviously should have been done when ascertaining your short term and long term needs, and risk tolerance, ahead of choosing an investment strategy to deliver that - did they not do this?  Have you asked them about what's happening (which is indeed far from unusual)?

masonic

You've just listed the fund providers without specifying the funds, so can't comment on how the funds are positioned. The top holdings are not surprisingly correlated with the biggest US companies, plus one or two extras, but these might only make up 1-2% each of your portfolio.

Global markets are down a little under 10%, so this is the sort of event you'd expect to happen every few years. There's no way of knowing whether it will remain a correction, or progress into a more severe crash, but if it did, then there's scope for the overall fall to double or even treble in magnitude. Something like that tends to happen less frequently, but most investors with a 10+ year investment horizon would expect to experience at least one such event. Even larger falls are possible, but tend to be quite rare.

I'm holding one or two high risk investments that have fallen ~25%, while some of my lower risk funds are down <5%. It doesn't therefore seem like your fall of 3.6% indicates you are holding too much of the highest falling sectors.

It does seem odd that you've paid for advice and a conversation like this has not taken place already.

eskbanker

ChainsawCharlie said:

Had personal pension with Aviva pot size £176,000 all invested in their 20-60 Mixed Investment S6 Fund. We both have mid risk profile 5/10.

[...]

Running crash tests, and various profiles etc.. we initiated a full transfer away from Aviva personal pension and transferred all £176,000 into an AJ Bell Investcentre RIA SIPP portfolio.
This Portfolio made up from 19 different funds with what we consider to be a diverse list of funds

Just some of the 19 funds listed below,

Scottish mortgage
HSBC
Allianz
Jp Morgan
Blackrock asset management plus other similar.
Some pacific and Japanese funds
Arnd aound £20,000 in various bond and fixed interest

Hadn't picked up on the specifics of the figures, but have you really gone from a 20-60% mixed fund to a portfolio in which only about 12% is in bonds and fixed interest, while being measured at 5/10 medium risk, or are some of those other funds also in bonds or fixed interest?

And were you in the habit of regularly monitoring the performance of the Aviva fund, which is presumably also down over the last few weeks?

Thrugelmir

With sufficient cash to see you through to your State Pension being paid. All you need do is sit on the roller coaster and go for the ride. Equities should be viewed with a 10 year horizon. Over the coming months there are likely to be high levels of volatility in the markets. Constantly monitoring the value of your investments won't do your health any good. With a six figure portfolio. Even small % movements are going to translate into sizable amounts of £'s. 

With inflation running at over 5% your cash holdings are likewise falling in value. Though unlike market movements the loss is taken by stealth. 

masonic

ChainsawCharlie said:

We can't help thinking if we had stuck with the Aviva 20-60 mixed assets S6 fund we may not have lost as much.

The Aviva Mixed Investment (20-60% shares) pension fund is down about 3% from its late December peak, so there doesn't appear to be a great deal of difference. Note the Covid crash where it lost 15% over a few weeks.

Thrugelmir

Unfortunately the only way of measuring the performance of any investment strategy is with hindsight.  The only certainty that comes with stock market investing is uncertainty. 

[Deleted User]

Hi,

is THIS the Aviva fund, if so, it's taken a dip as well since beginning of year?

eskbanker

ChainsawCharlie said:

I have I think around £24,000 in a mixture of bonds and fixed interest

Hopefully the information about your portfolio is presented to you in a clearer manner than what's emerged from a copy/paste job, but it should be straightforward for you to see a split between the different asset classes, so you shouldn't need to guess like that.  If such information isn't clear to you, ask the IFA....

dunstonh

The Aviva 20-60 fund spends most of its time at 60% equities.   

Yes I was watching aviva performance alot whilst I was not using an ifa, but went with ifa to try and stop this,

An IFA cannot stop volatility. The markets will do what the markets will do.  The only way to reduce volatility is to lower your investment risk.    That will almost certainly lower the medium to long term returns as well.   So, you need to decide if you want to reduce investment risk at the expense of increasing shortfall risk and inflation risk.

You cannot take the gain without taking the pain.   If you don't want the pain, you won't get the gain.

The negative period of the last few months is tiny.  Investments at medium risk level are pretty much back to where they were in October.    So, if you are panicking over a retreat in value that has only gone back 3 months then you are in for a big shock when we get a period of negative returns that lasts 3 years.

There was a comparable loss period than that last summer.  There were much bigger loss periods in 2020, 2018, 2015/15, 2008/9 and 2001-2003.    Did you panic in those periods too?  Or it is that you are just looking at these things far too frequently now?

The IFA has spoken to us a fair bit since we transferred over, but I guess we just wanted to see what independent feedback we could find.

The I in IFA is Independent.

The problem you have is that if you reduce volatility, then investment returns will not be sufficient to cover your drawdown.    So, you will have to take less in income.    Indeed, if you are panicking over a small 4% loss then you may need to consider annuity.

There is no risk free option here unless you have sufficient money in your pension fund and overall savings to allow you to draw 0.5% p.a. without taking investment risk.

IanManc

ChainsawCharlie said:

Thanks for the replies 

Yes the IFA did repeatedly warn us of volatility stating this year was going to be volatile.
I guess we weren't expecting this level, and in the 12 years we have been paying into the Aviva pension we never saw losses of £8,000 in 10 days  now that might be because this situation we are in now is far worse, who knows.

The IFA has spoken to us a fair bit since we transferred over, but I guess we just wanted to see what independent feedback we could find.

We can't help thinking if we had stuck with the Aviva 20-60 mixed assets S6 fund we may not have lost as much.

You haven't seen a loss of £8000 in 10 days now either. What you have seen is the market being a bit volatile.

Prices change all the time. One day you might be up 1%. The next day you might be down 1%, but you haven't seen a profit or a loss on either of those days, because you only make a loss or a profit when you sell.

You've invested in the market, and the market is doing what the market does.

In short, don't sell anything now, and then you won't make/crystallise a loss; stop looking at how your investments are doing all the time because they will always go up and down and you're winding yourself up unnecessarily; and start relaxing and enjoying your retirement.  😉