Stocks & Shares ISAs - Seriously Worried about Losses

morriJ

I know very little about investing and this is my first post, so please be gentle with me.
At the end of last year, due to the really low interest rates I was getting on my savings, I decided to open two Stocks and Shares ISAs (one for me and one for my other half).  I put the max of 20K into each one, and because I knew so little about investing, I opted for managed funds, one run by Hargreaves Lansdown and the other by the Halifax.  My main problem is that I bought into both funds at the top of the market (something that I hadn't even considered at the time) and the losses, just in the past 6 months, are really starting to frighten me.  I know the thing to do is to hold on in there, but so far I have lost nearly 8% of my initial investment.  Each day I look and the funds are worth less and less and I don't know what to do.  Any advice would be welcome, I don't know if I should cut my losses and pull out now, or take a chance and hope things will improve. 

eskbanker

You need to see investment as a long term activity and not be influenced by short term fluctuations, so, assuming it's money you don't need access to in the next few years, it makes more sense to leave it alone....

TELLIT01

Leave it alone and keep your fingers crossed.  In theory long term there should be gains, but there is no guarantee.  If you want to protect yourself against risk, put money into a savings account instead.  Over time it may not perform as well as a stocks and shares investment, but your original capital will be safe, up to £85k per bank.

Albermarle

I know very little about investing and this is my first post, so please be gentle with me.
At the end of last year, due to the really low interest rates I was getting on my savings, I decided to open two Stocks and Shares ISAs (one for me and one for my other half).  I put the max of 20K into each one, and because I knew so little about investing,

You will not be the first or the last, but was it really sensible to put 40 Grand into investments , when you say your self you know little about them ? My first bit of advice is therefore  to spend some time learning about investments !

There are lots of resources on the internet and the two companies you mention have general guidance on their websites .e.g.

Get Started With Investing at Hargreaves Lansdown (hl.co.uk)

My main problem is that I bought into both funds at the top of the market (something that I hadn't even considered at the time)

Now when you open the HL website on the S&S ISA page , this is clearly visible ( and I am sure it will be the same with Hailfax)

Important information - Investments can go down as well as up in value, so you may get back less than you invest.

 Each day I look and the funds are worth less and less and I don't know what to do.  Any advice would be welcome, I don't know if I should cut my losses and pull out now, or take a chance and hope things will improve. 

When you have studied investing a bit more closely and/or become a regular reader of this forum , you will see the same message time and time again .Investing is for the long term because then you have the time to ride out the normal ups and downs in the market . In this case long term means ideally more than 10 years .

By the way an 8% drop is not considered that significant in this area .

dunstonh

 My main problem is that I bought into both funds at the top of the market (something that I hadn't even considered at the time) and the losses, just in the past 6 months, are really starting to frighten me. 

The recent drops are relatively small in the scheme of things.  In general, a medium risk investor is around 10% down currently.  Mostly due to low risk assets rather than stockmarket.

By contract, during the coronavirus falls were 35%, credit crunch and dot.com period both had falls around 45% and there have been several 20% drops in between and plenty of 10% drops.

I know the thing to do is to hold on in there, but so far I have lost nearly 8% of my initial investment. 

When you invest, you are always going to suffer losses.    At the moment, it is a minor loss and we dont know if it will get worse before it gets better.   

Each day I look and the funds are worth less and less and I don't know what to do.

An economic cycle is around 10-15 years.  In that period you will get good years, bad years and nothing years.   Looking at your values daily is the worst thing you can do.

 I don't know if I should cut my losses and pull out now, or take a chance and hope things will improve. 

Can we assume that you looked at the loss potential of your chosen funds before you invested?  If so, you would know that loss periods around double or more of the current loss were possible.        If you knew you could lose around 25% of your value in short term loss periods, we are you now worrying when you are suffering a smaller 8% loss?

Loss periods are unpleasant.  Each time you go through one it gets easier until it becomes "here we go again".  

Just close your eyes to it.  Do not look at the values and wait until it comes out the other side.

Beddie

It's your choice. If you are willing to leave the investments then they will probably recover. But there are no guarantees - they could keep losing money and you could be down 50%. How would you feel about that?
If you cannot take the stress of ups and downs then withdraw it all and put it into a saving account.

The worst fund I ever bought fell by about 95%. This was during the tech bubble of 2000 and "fortunately" it was not all of my money. But don't think that couldn't happen again, it really could.

bargainhunter888

I have bought some FANNG stocks in recent months and i'm seeing much bigger drops!
-40 to 50%
hope they recover lol 

Thrugelmir

Firstly define what the objectives are for the money. Markets are as far removed from savings accounts as you can get. 

Out of curiosity what have you choosen to invest in? 

eskbanker

dunstonh said:

Can we assume that you looked at the loss potential of your chosen funds before you invested?

That was probably a rhetorical question, but where would you recommend private investors access such data, in reasonably quantified form?

Thrugelmir

bargainhunter888 said:

I have bought some FANNG stocks in recent months and i'm seeing much bigger drops!
-40 to 50%
hope they recover lol 

Will in time. Meanwhile maybe somewhere better to be invested. Buying individual shares is generally a sure way of underperforming the broader markets for most retail investors. 

Albermarle

Beddie said:

It's your choice. If you are willing to leave the investments then they will probably recover. But there are no guarantees - they could keep losing money and you could be down 50%. How would you feel about that?
If you cannot take the stress of ups and downs then withdraw it all and put it into a saving account.

The worst fund I ever bought fell by about 95%. This was during the tech bubble of 2000 and "fortunately" it was not all of my money. But don't think that couldn't happen again, it really could.

As the OP seems to be in some inhouse managed funds , then probably they are not high risk as they only have dropped 8% in recent months . That would indicate a 50% drop is not at all likely but 25% could be possible.