Sipp lost £3,777. Yikes - advice please?

jimjames

travelodger said:

In six years I have never seen it drop before.

Have you actually been looking at it previously? Maybe that's the problem. There were far, far bigger drops in 2020 that you appear to have not noticed and therefore didn't worry about as well as other drops over the last 6 years. Maybe the right attitude is the one you had then!

Stargunner

travelodger said:

I guess it also relies on FAITH.... that stocks and shares WILL go back up. Seasoned investors currently seem to be 100% certain that they definitely will, but to newbies like me, who haven't been watching them go up and down over decades, it is so alarming to see losses of thousands. I also have a stocks and shares ISA with HL and that has lost £60,000. When I log in and look, my stomach goes into a knot and I feel sick. But I am not paying into that one any more. Hence my question was about Vanguard SIPP - should I keep sticking more money in after I have already lost nearly four grand in seven months?

I am surprised that you titled this thread about losing the £3.7k in your sipp and not the £60k that you have lost in your ISA.

What is that invested in and what sort of % loss is it?

Eyeful

You asked for a Janet-and-John style response I hope the following helps.

1. Every thing to do with money has risk attached, its just the size and type of risk that changes. That includes putting your money into a bank or building society account.

For example, remember the 1970's when the rate of inflation peaked at 25%. That £100 you put into the bank at the start of the year, would only buy you £75 worth of goods by the end of the year. You in effect lost £25 in a "safe" savings account. One of the reasons persons invest is in the hope that they can overcome that type of reduction in there spending power.

2. You should never invest above your "risk tolerance". If you put your money anywhere that then causes you to constantly worry or loose sleep over it, you are investing above your "risk tolerance"

3. Falls in the market of between 10% and 20% are not uncommon. The are called "corrections". The falls can sometimes be even larger. That is why people are told to invest for at least 10 years, with the expectation that you will end up with more than you put in.

4. SIPP's and ISA's are just tax shelters within which you can place your investments.

5. Studies have repeatedly shown that new investors jump into the markets when share have risen for some time and all the news is good. Then when the markets fall substantially and the news is all bad,  they get spooked and jump out, never to return. Hence buying high, and selling low. So ensuring they make a loss on their investments.

6. Before you invest you should make sure you have "an emergency fund", to dip into. How large this fund is depends on the person building the fund.This helps you having to sell your investments at the wrong time. 

7. You mentioned Vanguard below are some things you can watch which I think you will find of interest.
https://www.youtube.com/watch?v=lGQ9KyQq8Jw
https://www.youtube.com/watch?v=W6F3CE3Q5Y0

travelodger

wjr4 said:

Where exactly is the £32,000 income coming from, broken down?

Work pension approx £5,500
Disability benefits approx £9,500
Freelance paid work approx £17,000

Excuse me, but why is this relevant to the investments I make?

p00hsticks

travelodger said:

wjr4 said:

Where exactly is the £32,000 income coming from, broken down?

Work pension approx £5,500
Disability benefits approx £9,500
Freelance paid work approx £17,000

Excuse me, but why is this relevant to the investments I make?

It's not relevant to the investments, but it does affect how much you can actually put into a pension at all - as I said in my previous post, you can only pay in up to how much you 'earn' which doesn't include pension income or benefits.

In your reply to one of my previous posts you said that  your self-employed income was £450, which I took to be a month, and said that this therefore explained why your friend had told you you could only pay in £400 to your pension.

Now you say you ar earning around £17k a year , which is considerably higher ?

travelodger

Aminatidi said:

travelodger said:

Aminatidi said:

I think it's worth mentioning that whilst LS80 might be too much risk travelodger being in a lower risk LS60 or LS40 wouldn't have been significantly better the last few months would it?

There haven't been many safe places even for cautious investors have there?

I can understand the alarm if you're not used to seeing investments lose money and you randomly login and see you're 15% down.

I think it's something you get used to but never like even if you manage to adjust your attitude to seeing it as a buying opportunity.

Thank you Aminatidi, your reply is kind. You make me feel better by pointing out that wherever I had put this money, it would have dropped in value. 

I did indeed log in randomly and I was indeed alarmed and threw a wobbly.

As a relatively new investor who does not understand finances at all, and suffers from a kind of "financial dyslexia", it is indeed a struggle to see this as a "buying opportunity". Before posting I read a few other threads (in case my question had already been answered) and I saw posters saying that it goes against instinct to buy more when you have seen your investments drop, but to seasoned investors it makes perfect sense. I saw it rendered as buy low, sell high. Anyone selling now is selling low and later will be buying high.

I guess it also relies on FAITH.... that stocks and shares WILL go back up. Seasoned investors currently seem to be 100% certain that they definitely will, but to newbies like me, who haven't been watching them go up and down over decades, it is so alarming to see losses of thousands. I also have a stocks and shares ISA with HL and that has lost £60,000. When I log in and look, my stomach goes into a knot and I feel sick. But I am not paying into that one any more. Hence my question was about Vanguard SIPP - should I keep sticking more money in after I have already lost nearly four grand in seven months?

I think if there's something you should be glad of it's that you're invested in something that is pretty "passive" rather than having put all your money into (example) Scottish Mortgage or some other funds that people often put money in because they've done really well historically.

I would tend to agree that with hindsight it looks like you didn't appreciate either the level of volatility with LS80 or your own appetite for volatility but you are where you are right now.

I'd have a really good think about your own appetite for volatility and consider what you think it might really be?

When do you need your investments?

Do you have a cash buffer so you're not a forced seller?

The difficulty is that as I said right now it's been an awful time for almost all asset classes so even if you'd been more cautious in your approach you'd most likely still be sitting on a loss but possibly a smaller loss.

My own mum is a little older but there are some parallels perhaps

She's in LS40 so a more cautious product but the chart below might give you some comfort in that over the past year if you'd been in a more cautious product from the LifeStrategy range you'd actually be worse off than you are.

It's been a strange and difficult few months.

Thank you for all that.

I'd like to become braver and truly believe that the market WILL go back up. Everyone seems 100% certain. If I can just get into that mindset, I will be fine. It sounds like that would be a better strategy than running scared, moving into less volatile shares, or selling up.

I don't think I will ever need this money. It's just in case my disability gets so bad that I need round-the-clock care. 

travelodger

Brie said:

Is there somewhere within the company that you work for that financial advice is available?  Many larger companies either have inhouse or outsourced assistance.  There's also assistance available via unions or industrywide organisations. 

 I don't work for any company. 

travelodger

p00hsticks said:

For the purposes of how much you are allowed to put into a pension, only the £450 a month self emplyment counts as 'earnings' which explains the discrpancy between your total annual income of £32,000 and why your friend said you would only be allowed to contribute £400 a month.

Ahh, that will have been the reason. My income when he advised me was probably £400 a month.

travelodger

I got muddled between months and weeks. DUH.

My income is £200 pw disability benefits, £120 pw work pension and £400 pw paid work. Total £720 pw total £37k pa.

travelodger

jimjames said:

travelodger said:

In six years I have never seen it drop before.

Have you actually been looking at it previously? Maybe that's the problem. There were far, far bigger drops in 2020 that you appear to have not noticed and therefore didn't worry about as well as other drops over the last 6 years. Maybe the right attitude is the one you had then!

 I was told not to login too often. So I don't, and luckily every time I've logged in since 2016 I've only seen rises.