New investor Panicking Already seeking reassurance

MarkCarnage

eskbanker said:

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)?

Having it explained and experiencing it are two different things. 

Albermarle

Your thread title is misleading , you are not a 'new investor '

You will have benefited from very good returns over the last few years and now there is a small correction. It has just so happened to be after you changed your investment strategy, but would have happened anyway .

Quite possibly the markets will keep falling in February , hopefully not but I wouldn't bet on it .

eskbanker

MarkCarnage said:

eskbanker said:

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)?

Having it explained and experiencing it are two different things. 

True, but OP admits to having been invested for 12 years, which, as @masonic points out, obviously will have included the significantly more extensive initial Covid-related drop in early 2020.  There would have been a couple of drops in 2018 similar to the current one too.

Having said that, if they're now into the decumulation/drawdown phase then the portfolio should have been (at least partially) derisked accordingly, to reduce volatility, but it would seem unlikely that the dialogue between OP and the IFA wouldn't have included this, although there is a substantial cash buffer available to mitigate inconveniently-timed investment losses....

Audaxer

ChainsawCharlie said:

We also have £160,000 in Cash ISA's which I know isn't ideal. 

We will be drawing down enough to keep in annual tax allowance so around total £16,500 per annum (£12,500 Plus tax free amount) which we need to drawdown this amount per year for next 4 years by then I will be taking state pension, and won't need to drawdown anything by then.

I would say there is absolutely no reason to panic for the following reasons:

• You say £160k in Cash ISA's isn't ideal. It looks to me to be ideal in your situation as it would seem more than enough to live off until you get your State Pensions. If the £160k was invested you would have an even bigger paper loss, and no ready access to income for the next 4 years if markets were to keep falling.
• I would still drawdown the £16,500 pa from your SIPP for tax purposes, and reinvest it in the same or similar funds in your S&S ISA.
• The 3.61% fall in value this month isn't drastic and a lot less than some people are experiencing at this time, and it should be even less of a concern as you do not need to draw an income from it - as I say above, just effectively transfer £16,500 each year into your S&S ISA.

RolandFlagg

Time in the market beats timing the markets,

The worst days/weeks/years in the market are often followed by the best.

If you get out of the market and miss those days it can severely damage your returns.

Over 10 years something like 90% of fund manager and 98% of retail investors can not beat the market.

Do yourself a favour and put most of your money in a range of passive index funds.

Not only do these automatically rebalance, but they take all the emotion out of investing, at a very low cost.

Have a small amount in something more aggressive like a Ballie Gifford fund, although I prefer The L&G Global Tech fund.

People will tell you Bonds and Gold are a good investment. They are not. Believe me, I have reseached the data to death, and they just don't pan out.

Recommended:

Ben Felix Youtube videos.
The Little Book of Common Sense Investing by John Bogle.
Read about Myopic Loss Aversion, esp the studies of Richard Thaler.

Seach Youtube for Terry Smith's "You are the enemy" video.

eskbanker

RolandFlagg said:

Do yourself a favour and put most of your money in a range of passive index funds.

Not only do these automatically rebalance, but they take all the emotion out of investing, at a very low cost.

Have a small amount in something more aggressive like a Ballie Gifford fund, although I prefer The L&G Global Tech fund.

People will tell you Bonds and Gold are a good investment. They are not. Believe me, I have reseached the data to death, and they just don't pan out.

If you're dismissing bonds (without citing any evidence) that are typically used to dampen volatility, then are you suggesting OP (already nervous) goes 100% into equities? 😮

masonic

RolandFlagg said:

Do yourself a favour and put most of your money in a range of passive index funds.

Not only do these automatically rebalance, but they take all the emotion out of investing, at a very low cost.

Have a small amount in something more aggressive like a Ballie Gifford fund, although I prefer The L&G Global Tech fund.

This is essentially what the IFA has done. Looks like mostly index funds with an aggressive BG fund (SMT) and some other things on the side. Seems to have gone a bit OTT with number of funds, but end result looks ok.

Audaxer

RolandFlagg said:

Do yourself a favour and put most of your money in a range of passive index funds.

Not only do these automatically rebalance, but they take all the emotion out of investing, at a very low cost.

It's okay to have a range of passive index funds, but they don't automatically rebalance. That is something OP would have to do either at set intervals, like annually, or whenever he thought it appropriate. Whereas a multi asset fund containing a well diversified range of passive funds, like for example one of the Vanguard LifeStrategy funds, does automatically rebalance to retain the same percentage of equities all the time.

Thrugelmir

RolandFlagg said:

Over 10 years something like 90% of fund manager and 98% of retail investors can not beat the market.

Is this a reference to the S&P 500 index?  Other investments are available in a wide range of markets. 

Thrugelmir

eskbanker said:

MarkCarnage said:

eskbanker said:

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)?

Having it explained and experiencing it are two different things. 

True, but OP admits to having been invested for 12 years, 

Perfect alignment with the longest bull market run in history. Was always going to end. Something that needs to be factored in when deciding whether there's enough in the pot to take early retirement. The headwinds that lie ahead have been well flagged. Though the timing was always uncertain.