Time to cut our loses?

longman27

We invested 200K via Standard Life Wraps, ( 2 x ISA Stocks & Shares of 20K and 160K in a general investment account) in February 2022 via our financial advisor. We've paid a 2% fee at the start so really only 196K invested. There are ongoing fees of 1.86% to pay. Obviously not gone well and now down to 177K total left. We knew there was a risk so not complaining but just don't want to throw good money after bad so my question is should we take 100K back out and at least get 2.6% in a savings account on that and let the rest stay invested? That would certainly feel more comfortable. If investing is as great as advertised then in time the remaining 77K will bounce back in the long, long term. We knew we were investing for the long term but we are nearing 60 and wonder how long the long term will have to be to get back to square one.

Have I got this all wrong?

Thanks for your thoughts. 

phillw

The two things to consider

1. With shares, so far it's only a loss on paper. You only make an actual loss if you sell them.

2. Depending on where your shares your invested, they could either bounce back in a couple of years or sink to £0

Nobody can really answer your question, especially as we know less than you.

GazzaBloom

2% upfront fee plus ongoing 1.86% fees makes my teeth itch. I pay 0.16% pa.

He needs to be one hell of a FA to beat the market +3.86% consistently.

Personally I would withdraw the money, lose the FA and put it in Vanguard index funds and stay invested, the markets will recover, you haven't lost anything, just being offered a lower valuation which you can choose not to sell at. One day that valuation will be higher than when you started if you stay the course.

masonic

A 15% drop is fairly typical of a diversified portfolio, but without knowing something about your investments it would be impossible to even give you a range of possible outcomes for the recovery.

BUT, you invested under advice, and this sort of discussion is exactly what your adviser is there for.

Linton

What funds are you invested in?
When are you planning to use the money?  All of it at at one time or spread over say the whole of your retirement?
What other investments/savings do you have - eg cash?
Have you discussed the situation with your advisor?
How were you planning to get 2.6% with a £100K lump sum?

If you are not planning to use most of the £177K money for say 5-10+ years and the funds you are using are appropriate then keeping it all invested would be sensible as phillw implies . However we really need to know more.

diystarter7

I'd never use one of those jokers.
I just invested/gambled and at times topped up and sold when is what I thought was acceptable profits.

Timing is the key and that is the million dollar question. IE you could sell today then the war ends in Russia, new vaccines for Covid and market go up and up and up. On the other hand, Russia hits a nATO country and we are in danger of WW£.

Timing is the key and only you can decide that.

I sold shares a week or so before the crash of 2008/9 -ish and posters abused me for saying the markets were heading for a crash. It was observations on my part and luck.

With stock markets, often the biggest crashes come when we least expect them.

Timing is the key 

Linton

diystarter7 said:

I'd never use one of those jokers.
I just invested/gambled and at times topped up and sold when is what I thought was acceptable profits.

Timing is the key and that is the million dollar question. IE you could sell today then the war ends in Russia, new vaccines for Covid and market go up and up and up. On the other hand, Russia hits a nATO country and we are in danger of WW£.

Timing is the key and only you can decide that.

I sold shares a week or so before the crash of 2008/9 -ish and posters abused me for saying the markets were heading for a crash. It was observations on my part and luck.

With stock markets, often the biggest crashes come when we least expect them.

Timing is the key 

Are those 2 statements compatible? 

Also you can add that often when you do expect a big crash it doesnt happen.  So unless you have mystic powers you are better off staying invested for the long term to enjoy the benefits of the underlying trends.

fourmarks

longman27 said:

We invested 200K via Standard Life Wraps, ( 2 x ISA Stocks & Shares of 20K and 160K in a general investment account) in February 2022 via our financial advisor. We've paid a 2% fee at the start so really only 196K invested. There are ongoing fees of 1.86% to pay. Obviously not gone well and now down to 177K total left. We knew there was a risk so not complaining but just don't want to throw good money after bad so my question is should we take 100K back out and at least get 2.6% in a savings account on that and let the rest stay invested? That would certainly feel more comfortable. If investing is as great as advertised then in time the remaining 77K will bounce back in the long, long term. We knew we were investing for the long term but we are nearing 60 and wonder how long the long term will have to be to get back to square one.

Have I got this all wrong?

Thanks for your thoughts. 

I am in no way qualified to give advice on financial matters, and my only investments are 2 x £20,000 S & S ISA's. (Alas not 20k any longer though). But reading the wiser comments on here over the months (it is for you to determine which ones are wise) I am in no doubt that riding out the storm is my best option and just to wait for the better times to return, as history tells us they will. If you invested in February of this year knowing you were doing so for the long term, then 4 months is perhaps slightly shy of any notion of long term. Long term is years. If you take the money out now you a make big loss, and if you don't actually need the cash at this moment then why inflict an immediate loss on yourself?  I shall be leaving my losses on paper.

Oh, and stop checking the market every 2 hours, that way lies madness. Long term strategies should not be measured moment by moment. Good luck with whatever path you take.

Eyeful

Did you get your advice from an Independent Financial Adviser(IFA) a (FA) or a Wealth Management Company? 

With the amount you are paying in fees, this is a discussion you should be having with that (FA). Hand holding & comforting in such times as these is what you are paying for.

Hopefully you already know the following points:-

1. If where you put your money or investments is causing you much worry or sleepless nights, you are investing beyond your "risk tolerance" and should be adjusted until you can sleep at nights. 

2. There is always risk with money, its just the size & type of risk which changes. In the 1970's when rate of inflation peaked at 25%. The £100 you put in the bank or building society at the start of the year was worth only £75 (in real terms) by the end of the year. So you lost £25 in a safe savings account!

3. Studies show that people pile into share after they have gone up considerably and all the news is good. Then pile out when there is a large fall in the markets and the news is bad, never to return. They therefore buy high and sell low, so making a real loss, not just a paper loss. This time I am sure will be no different.

4. Falls in the market of between 15% and 20%. are common and are called corrections. It is because of these & larger market falls, people are told to invest for at least 10 years. The longer the better.

5. Maybe you should learn how to invest yourself. You can make it as simple or complex as you like.

6. No one can foretell the future so no one will be able to answer your question.

diystarter7

Linton said:

diystarter7 said:

I'd never use one of those jokers.
I just invested/gambled and at times topped up and sold when is what I thought was acceptable profits.

Timing is the key and that is the million dollar question. IE you could sell today then the war ends in Russia, new vaccines for Covid and market go up and up and up. On the other hand, Russia hits a nATO country and we are in danger of WW£.

Timing is the key and only you can decide that.

I sold shares a week or so before the crash of 2008/9 -ish and posters abused me for saying the markets were heading for a crash. It was observations on my part and luck.

With stock markets, often the biggest crashes come when we least expect them.

Timing is the key 

Are those 2 statements compatible? 

Also you can add that often when you do expect a big crash it doesnt happen.  So unless you have mystic powers you are better off staying invested for the long term to enjoy the benefits of the underlying trends.

They are and I did not want to write an SA but I've said it on othr threads before EG, people bang on about stocks, property crash for years at times. However, when it comes it often comes unexpectedly.

Crash or no crash as I said timing is the key EG, by a billion shares shares at  4p and sell them for 4.1p.

dunstonh

Did you get your advice from an Independent Financial Adviser(IFA) a (FA) or a Wealth Management Company? 

Probably a wealth manager as Abrdn  (no longer Standard Life) have two platforms.  Wrap is aimed at the Wealth management companies/FAs and Elevate is aimed at the general practitioner IFAs.     I cannot get access to Abrdn Wrap as I am a general practitioner IFA and refuse to guarantee £x million of pounds to be placed on their platform or they be the sole platform I use.  That is, IMO, incompatible with being an IFA.   Hence, I use Elevate.

 We knew there was a risk so not complaining but just don't want to throw good money after bad so my question is should we take 100K back out and at least get 2.6% in a savings account on that and let the rest stay invested?

Investments zig zag.  There are always going to be periods like this that occur periodically.   We know this and you appear to know this.   So, the fact it happens shouldn't be a surprise and shouldn't change any decision you made originally.      Nothing is happening that has not happened before and will not happen again.

 If investing is as great as advertised then in time the remaining 77K will bounce back in the long, long term. 

Most crashes recover in a year or less.    The extreme ones can take multiple years.   The drop so far is not on par with any of the three largest we have had in the last 25 years.    So, why do you think "long, long term" ?