And if you've been buying monthly across different price points, and the current fund value is higher than a few of the prices you bought at, could you think of it as withdrawing those cheaper payments and therefore not making a loss?
Hi - just wondering if you had say £10,000 in an index fund that is currently worth £9,500, and you withdraw £1000, have you taken a loss? Or because you haven't withdrawn the full amount is that £1000 still worth £1000 disregarding inflation?
In a sane world where people don't have weird hangups about "crystallising losses", you don't make a loss when you withdraw the £1000. You have already made a loss, and your choice is whether to accept that loss in return for the security of turning your money back into cash, or to gamble on making a gain in the future equivalent to, or greater than, the loss. All you have really done is made it harder to make that gain - if you had £10k and it's now worth £9.5k, you need a gain of 5.3% to get you back to your overall starting position. If you withdraw £1000 you effectively turn those numbers into £9k and £8.5k, so you need a gain of 5.9% to get you back to par. All the way down to, say, you withdraw £9k you need to double your money on the £500 that's left.
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