Leave funds invested and watch it drop or take out and put into bank…??

Spice52

Hello all

 I have funds invested in iSA’s and collective investment accounts.

 They have taken a massive hit, and the last month a huge amount of funds has disappeared.

 Heart breaking as it taken me 30 year to save what I have.

 I am considering taking the remaining out an just parking it in a bank account, at least then it wont drop by thousands

 I have spoken to my FA and he recommends I keep it in for the “bounce back” but my view is it could of dropped so much I never get back to where it was.

 But if I take out for a year or 2, keep the monies safe then re-invest when things pick up..??

 My FA say all the studies show you should stay in but its dropping so much daily it will take a considerable amount of time to get anywhere near what it was.

 Any views---thoughts…??

 Thanks lots

DoublePolaroid

I would listen to your adviser. 

Also if you have a six figure sum parked in the bank it will indeed drop by thousands, but in a more insidious, less visible way, via inflation. 

jaypers

Worst thing you can do is take the money out during volatility. All logic and historical trends show that they will go up again. If you cash out you will be taking a double hit as you will be upset again when the investments recover. Unless you need the cash, leave it. It’s current worth is meaningless as you’re not using it, 

Stubod

If you don't need the money then it is probably better to leave it in and ride it out. Currently it's only a "paper" loss, if you withdraw it then it becomes an "actual" loss. (A lot of people will actually be investing at this stage!)

masonic

How do you know their value will keep falling, and for how long? How do you know the FA is wrong about the "bounce back" and that you understand things better? How will you determine when things have picked up?

You haven't given any indication of what you are invested in or what percentage you've seen your investments fall so far, so I cannot comment on what is possible for them going forward.

Frequentlyhere

"But if I take out for a year or 2, keep the monies safe then re-invest when things pick up..??"

So sell low, buy high? It's not a great idea. Look at what happened in the covid drop - did you feel the worst had passed by mid-March 2020?  Well, the markets did, and they soared by 9% in a single day and never looked back whilst onlookers expected a quick reversion to them falling.

But yes, it does depend on the sort of thing you're invested in.

 

Bravepants

How old are you?

When will you NEED the money?

What are you invested in?

You signed up to a financial adviser for a reason...for their advice.

You were prepared to let them tell you what to do with your money then, but why are you so quick to not listen to them now? 

Aretnap

Every schoolboy knows that the secret to good investing is to buy when the price is low, and sell when it is high.

However when the price of something we own falls, our natural instinct is to get out and sell at the new, low price. 

And when we see the price of something going up our natural instinct is to think "I want some of that" and buy at the new, high price. 

In other words our natural instinct is to sell when the price is low and buy when it is high - exactly the opposite of what a successful investor does. And by planning to sell now the price has fallen and then buy when it goes back up again, that's exactly the trap you are in danger of falling into.

Your adviser is right. Selling now would be a very bad thing to do. If you're spooked by recent losses (which are fairly minor compared to say 2001-2003 or 2007-2008) then it might be worth having a conversation about whether your investments are too risky for your own risk tolerance, but that's a different conversation to whether you should sell the lot and park the money in cash. 

dunstonh

They have taken a massive hit, and the last month a huge amount of funds has disappeared.

Can you define what you mean by a massive hit as most people are down around 8-15%.  That is not a massive hit. So, if you are down by more than that, we need to understand why.

Heart breaking as it taken me 30 year to save what I have.

If you have been investing for 30 years then you are massively up because of investing.   It will also mean you saw bigger loss periods in 2020, 2018, 2015/16, 2008/9, 2000-2002 amongst others.   So, why is this rather minor fall now a concern?

 I have spoken to my FA and he recommends I keep it in for the “bounce back” but my view is it could of dropped so much I never get back to where it was.

You really need to tell us what you are invested in.
Investments zig zag in value in the short term.   Negative periods are frequent and nothing new.

But if I take out for a year or 2, keep the monies safe then re-invest when things pick up..??

So, you would take it out to crystlise the current loss and wait for it to go back up again whilst missing out on that recovery.

My FA say all the studies show you should stay in but its dropping so much daily it will take a considerable amount of time to get anywhere near what it was.

The majority of negative periods recover inside of a year.   The larger negative periods (which this is not) can take longer.

We are only back to late 2020/early 2021 values.  You should have seen the period 2000-2002 which was three negative years in a row.  Although the five years that followed that doubled your money.

MEM62

Spice52 said:

Hello all

 I have funds invested in iSA’s and collective investment accounts.  Very sensible.  

 They have taken a massive hit, and the last month a huge amount of funds has disappeared.  No, they haven't.  The market may be down at the moment but that is immaterial.  Any losses are only crystalized when you sell / pull out.  

Heart breaking as it taken me 30 year to save what I have.  And how did you feel about other market drops over those 30 years - some of which have been much more severe that anything you are currently seeing?

I am considering taking the remaining out an just parking it in a bank account, at least then it wont drop by thousands  The number you see as the account balance may not drop but the real-terms value will be falling against inflation  Do you want to look at number that makes you comfortable or do you want to protect what you have build up over three decades.     

 I have spoken to my FA and he recommends I keep it in for the “bounce back” but my view is it could of dropped so much I never get back to where it was.  Of course he would.  He should know what he is talking about.  

 But if I take out for a year or 2, keep the monies safe then re-invest when things pick up..??  Then you would loose money.  You care suggesting cashing out when prices are low and buying back in when prices rise. That only ensures that you make a loss.  

My FA say all the studies show you should stay in but its dropping so much daily it will take a considerable amount of time to get anywhere near what it was.  Will it?  On what basis are you making this market prediction? 

 Any views---thoughts…??

 Thanks lots

You are making the classic rookie mistake and panicking because the market has fallen.  Stay tied in and do some reading on how markets work so you at least have a realistic view on the subject.      

jaypers

I’m actually thinking of buying more stocks again soon. Market could keep going down but inevitably it will recover and go higher. A time of stocks going high is not the time to buy and them going low is not the time to sell unless the particular investment is in danger of being liquidated.