I think the market is going to crash. How do I protect my money?

lisyloo

I think you are saying you are not a sophisticated investor (neither am I).
but you an investor as your money is invested.

your options are 
1) sell completely. You will crystallise any current loss. 

2) hold

2) you could “average down”. Example, let’s say you buy 1 unit of stock at £10, then you buy a second at £8, the average price was £9. It’s a good time to buy stocks when they are cheap.

Those on here who are in a position to do so will be buying.
for me long term this is good for my pension as I’m buying at cheap prices.

do you need the money?
can you afford to leave It?
can you afford to put more in to average down?

if you really believe there will be a crash and it’s keeping you awake at night and affecting your mental health, then you might be better off just selling.

but basically your options are sell, hold or buy.
I'm buying (but into a diversified portfolio of investments which is hedge in terms of asset classes, geo politically and in terms of currency).

RG2015

JusinScot said:

Albermarle said:

I am not an investor.
 I have the bulk of my money in a VLS 80 and BlackRock consensus 100 funds

The two statements are completely contradictory.

I think the market is going to crash.

Some would say it has already crashed, or at least had a significant downward correction. The best time to sell was about 10 months ago. It is quite possible that now is quite a good time to buy rather than sell. In reality nobody knows.

 

I don't consider myself an investor. I did some research, found a couple decent funds, put my money in it and hoped for the best.

I get that no one know but my guess is it's going to crash and I'm looking for options on what to do in my case? 

To get a more considered answer you will need to provide a little more information.

Your goals and age will play a big part in this. How long until you retire, are you saving for a mortgage deposit etc?

Linton

JusinScot said:

Albermarle said:

I am not an investor.
 I have the bulk of my money in a VLS 80 and BlackRock consensus 100 funds

The two statements are completely contradictory.

I think the market is going to crash.

Some would say it has already crashed, or at least had a significant downward correction. The best time to sell was about 10 months ago. It is quite possible that now is quite a good time to buy rather than sell. In reality nobody knows.

 

I don't consider myself an investor. I did some research, found a couple decent funds, put my money in it and hoped for the best.

I get that no one know but my guess is it's going to crash and I'm looking for options on what to do in my case? 

The general view among experienced investors on this forum is to stay invested. Significant crashes happen every few years and history shows that recovery generally happens within a small number of years.  There was a much larger crash than we have seen in the past few mnonths in March 2020 when Covid started, 6 months later prices were at new highs. Even with the crash in 2008 prices recovered in 3 years.

There are 2 dangers with trying to time the market:
1) You dont dare to rebuy until it is too late.  After all any apparent recovery could be illusory.
2) You predict more crashes than actually occur.  In those circumstances you either stop investing completely or buy back in at a higher price than you sold.

The net effect is that on average by selling when you believe there will be a crash you lose more than you gain.

You should only hold investments that you wont need to sell for say 10 years.  By that time the price even in a crash could well be higher than the price at the start.

lisyloo

As a general suggestion you either need to 

1) do a lot more research as a DIY investor
2) don’t invest
3) get an IFA to balance/diversify your portfolio in terms of asset classes, geo political risk etc.

I got for 3 and I’m probably down less that some DIY investors because the foreign parts of my portfolio are not affected by British politics and currency wise are worth more £s when the £ is low (a currency hedge).
My IFAs don’t have a crystal ball and of course I have to pay them, but I’m not overly exposed for any type of risk that a DIY investor might not be aware of.

some people on here are of the opinion that you should do 1) and not 3) but I think it requires more effort than just picking a few funds.

Rollinghome

Unfortunately, in times of high inflation and low savings rates, there is currently no guaranteed way to preserve the value of your savings and investments. If there were, then the markets would have already have priced that advantage away. There’s no little-known secret sauce out there.

With cash, the value of your nest egg will almost certainly fall over the next few years.  Risk investments may rise or fall, but in either case, whatever you are left with will also be subject to the effect of inflation.  There will be a profitable time to invest, but current prices will always be determined by the judgement of the markets.

The course you take depends on your specific circumstances and how painful a substantial loss of capital would be to you.  If you are young and healthy with many years of sufficient earnings ahead of you, then you are likely to be well-placed to take risk in return for a better long-term return.  If you are elderly and dependent on your savings and investments to supplement your income, then you would need to be more cautious.  

If you are elderly but with sufficient to enjoy a comfortable lifestyle regardless of almost any financial turmoil, then you might choose to take on risk similar to someone much younger to maximise what passes on to family or worthy causes.

You seem to be heavily invested in equities rather than bonds, though that bias has been no bad thing this year. The two investments mentioned by Linton have a good track record for wealth preservation - but there are never guarantees of future performance.  At the end of the day, it’s not just about numbers, it’s also about how comfortable you are with your position.

jscol

It's rumoured that house prices will fall. Would you sell your house? Buy it back when it's cheaper? Would you worry if it was worth less than it presently is? 
There are similarities to your investment situation. 

lisyloo

jscol said:

It's rumoured that house prices will fall. Would you sell your house? Buy it back when it's cheaper? Would you worry if it was worth less than it presently is? 
There are similarities to your investment situation. 

It’s not that similar although I understand you point about I being a “paper” loss.

houses have high transactional costs plus provide a place to live.
would you worry?
depend on circs again
if you had no plans to move and plenty of equity then probably not.
if you might want to move and don’t have equity then yes it could be a  if worry for some.

Krakkkers

Sell for cash and buy assets.

Albermarle

Deleted_User said:

I am in a similar position to OP, so I'm assuming they meant that, while they do invest, they are not necessarily savvy about the market? 

I think the OP's questions are dependent on how long they intend to invest for. Unfortunately, I have money in my VLS that I will need for a house deposit so am putting some into cash. Annoying though, as it has gone down in the last few weeks. However, I intend to keep the rest in VLS. I did considering putting it in cash and reinvesting/ buying when the market drops a lot, but this is a risk and, as far as I know, a significant drop is predicted but not inevitable. Market ups and downs become quite normal when you are investing long term and the general advice is not to panic and to 'ride the waves'. However, if you might need the money soon, it could be a different story. 

 as far as I know, a significant drop is predicted but not inevitable. 

There are many opinions that a further drop in the markets is inevitable. There are also many opinions, that from here on . it will be up,up,up. Then many think not a lot will happen, and markets will bobble along at a similar level for quite some time. 
In other words nobody knows. The key point is that if the markets really thought another  big drop was coming, then it would already have happened. Of course new unexpected news can change the market direction unpredictably, but all known news is already priced into the current market level. 

B0bbyEwing

I think some people here are doing what they usually do and taking what someone says literally, word for word.

When the OP said they aren't an investor & in line with the rest of their post, I took it that they mean they're not really that confident when it comes to investing. They possibly realise they're towards the upper end of the risk scale but in their mind the market is going to crash so they're having a panic - realising that they don't have the stomach for a drop in value and want to know what to do.

They possibly see "an investor" as someone who has a bit of know how over what funds to pick & can ride the drops out - the opposite of themselves.


I really do not think they literally mean "i am not an investor but I have money invested and I'm saying this sentence thinking it for sure doesn't contradict".