Stocks & Shares ISA - Time to Cut my Losses or Sit Tight?

Pintydee

I could really kick myself now but in October last year I opened two stocks and shares ISAs each with 20k (including one for my other half).  This was simply because interest rates were low and the money was just sitting in an easy access savings account doing nothing.

As a complete numpty, I chose a managed portfolio as I assumed that I would just hand over the money and someone knowledgeable would manage it for me and invest it accordingly.  After a quick look around, I chose H&L and transferred in the money.  The funds the ISA has been invested in is the H&L Multi-Manager Balanced
Trust, Multi-Manager Special Situations Trust and Multi-Manager Strategic Bond Trust.  I stuck to the default proportions for each one.

This Pot of money Is just devaluing by the day, there has been no growth at all in a year and my losses are really starting to worry me.  What I didn’t realise was, by putting in a lump sum of money when the markets were doing fairly well, I was on the road to a hiding straight away because the funds aren’t “managed” as such and only rebalanced every few months.  I just didn’t get it.  On reflection I should have dripped the money in over a period of time.

So far we’ve lost 5k, which is a lot to lose in less than a year (nearly 13%)  I understand that money can go down, but realistically when things have been going well  for so long, you don’t think it’s really going to happen, do you?  

When I did the initial questionnaire, I opted for growth rather than an income - would this have made much of a difference?

I really don’t know what to do, I know all is not lost until I cash it in and I was hoping the fund was going to rally, but it’s not looking likely anytime soon.  Obviously I don’t want to lose anymore and I know that nobody has a crystal ball, but should I just pull it out now and take the loss?  I was just going to leave it where it is but I can remember having an endowment policy in the late 80’s that never made anything like was projected and we seem to be heading for similar times again.  At the moment the 1.6% I'm getting in my easy access savings account doesn't seem so bad!

 Any advice would be really appreciated, and please be gentle with me - thanks

Albermarle

Pintydee said:

I could really kick myself now but in October last year I opened two stocks and shares ISAs each with 20k (including one for my other half).  This was simply because interest rates were low and the money was just sitting in an easy access savings account doing nothing.

As a complete numpty, I chose a managed portfolio as I assumed that I would just hand over the money and someone knowledgeable would manage it for me and invest it accordingly.  However well it is managed, it is very difficult to buck the market. After a quick look around, I chose H&L and transferred in the money.  The funds the ISA has been invested in is the H&L Multi-Manager Balanced
Trust, Multi-Manager Special Situations Trust and Multi-Manager Strategic Bond Trust.  I stuck to the default proportions for each one. These funds have quite expensive fees I think, which will not help in the long run. Managed funds do not usually perform any better than passive ones.

This Pot of money Is just devaluing by the day, there has been no growth at all in a year and my losses are really starting to worry me.  What I didn’t realise was, by putting in a lump sum of money when the markets were doing fairly well, I was on the road to a hiding straight away because the funds aren’t “managed” as such and only rebalanced every few months.  Even if they were fully managed, they would probably have performed similarly, maybe better  or maybe worse. I just didn’t get it.  On reflection I should have dripped the money in over a period of time. Hindsight is a wonderful thing.

So far we’ve lost 5k, which is a lot to lose in less than a year (nearly 13%)  I understand that money can go down, but realistically when things have been going well  for so long, you don’t think it’s really going to happen, do you?  Unfortunately, 13% seems on the high side, but it all depends on how it is invested .

When I did the initial questionnaire, I opted for growth rather than an income - would this have made much of a difference? Not really

I really don’t know what to do, I know all is not lost until I cash it in and I was hoping the fund was going to rally, but it’s not looking likely anytime soon.  Without a crystal ball, you just do not know what will happen. Obviously I don’t want to lose anymore and I know that nobody has a crystal ball, but should I just pull it out now and take the loss? Normally best to stick it out, investing is a long term game.  I was just going to leave it where it is but I can remember having an endowment policy in the late 80’s that never made anything like was projected and we seem to be heading for similar times again.  At the moment the 1.6% I'm getting in my easy access savings account doesn't seem so bad!

 Any advice would be really appreciated, and please be gentle with me - thanks

See in bold above. Your timing has been a little unlucky but in the long term it should recover. 

Cus

Do you need the money soon?  If not, leave it, go outside and play. It will likely recover and more in a few years.

Pintydee

Thanks, I know its the right thing to do, I just needed some reassurance.

InvesterJones

Hi, firstly, don't overly worry about your choice of funds - the market as a whole has seen similar. When you made the investment you should have received information that helped you decide that a stocks and shares ISA was right for you. It will likely have said something about performance variability and that stocks and shares are long term investments that should ideally be held for 5+ years.

You've held this investment for a lot less than 5 years, so it's a bit early to judge. With the benefit of hindsight we can always say that we should have picked X or Y investment instead, but it's impossible to know ahead of time, and likewise we can agonise about short term movements which when we look at the bigger picture are not very significant.

So what should you do? Look at the reasons you invested in the first place. If they still apply, then no need to change. Likewise if you had reasons to pick those particular funds then assess if they still apply as well. Take short term performance out of the equation if you are invested for the long term.

dunstonh

 After a quick look around, I chose H&L and transferred in the money.  The funds the ISA has been invested in is the H&L Multi-Manager Balanced
Trust, Multi-Manager Special Situations Trust and Multi-Manager Strategic Bond Trust.  I stuck to the default proportions for each one.

Expensive choices (effectively, you paid more for going DIY than if you had used an IFA)

This Pot of money Is just devaluing by the day, there has been no growth at all in a year and my losses are really starting to worry me.

When you invested, no doubt you knew investing means the value will go down as well as up.  And that you never know when those negative periods will be.   So, knowing that there would be a period of losses, why are they now worrying you?

So far we’ve lost 5k, which is a lot to lose in less than a year (nearly 13%)

13% is not a large loss.   A stockmarket crash is defined as 20%.   2020 saw markets fall around 35%.  There was a similar loss to now in 2018 and in 2015/16.     A loss like this was always coming.  Whether it be this year, next year or whenever.  And then again and again and again.

 I understand that money can go down, but realistically when things have been going well  for so long, you don’t think it’s really going to happen, do you?  

What do you define as going well for so long? (noting the drops in 2020,2018,2015/16,2008,2000-2002)

When I did the initial questionnaire, I opted for growth rather than an income - would this have made much of a difference?

No.

I really don’t know what to do, I know all is not lost until I cash it in and I was hoping the fund was going to rally, but it’s not looking likely anytime soon.

You need to be invested for about an economic cycle. That is about 15 years.   You have been in it less than a year and YTD, it is a negative year.     There is nothing unusual going on at the moment.  Just routine volatility due to unexpected negative news.  Nothing we haven't seen before and nothing we won't see again.   

You just ignore it and wait to come out the other side.

tacpot12

I'm sitting on a pension portfolio that has lost about the same as your investments (13%), but I've seen the markets crash and recover before. While it's entirely possible that they won't recover, it's a lot more likely that they will. The only question is how long will it take. 

I would suggest you consider whether investing in purely growth stocks is a good model for you. My pension is invested in mostly income-producing funds, and since retiring five years ago, I have recieved £65,000 in dividends. (This is about 18% or 3.6% per year of the portfolio when it was purchased). My portfolio has varied in value from £360,000 to £405,000 over the last five years and is now only worth what I paid for it, but I have had the income. 

Thirty9

It could be beneficial, if you have spare cash, to invest more now that the market has fallen.

Beddie

Sit tight, if you are willing to ride out the ups and downs for a few years. You'll probably make money in the end, but of course no guarantees. If your bad experience so far has caused you stress and anxiety, then investing is not for you, so stick it in a savings account instead.

bostonerimus

If you are investing for a long term goal like retirement that's more than 5 or 10 years away then it's best to sit tight as things will recover. Hovever, in your case I would look at the funds you have chosen as they have very high fees. Maybe consider other multi-asset funds from Vanguard, HSBC etc. that are far less expensive.

RolandFlagg

Buy when people are selling, or you are doomed to fail with the herd.

Watch every Howard Marks video you can.
He will explain that selling in a bear market is the best way to destroy future wealth.