Should I cash in Vanguard lifestrategy investment?

nb008

I decided to invest 10k of my savings in stocks and shares and chose Vanguard lifestrategy 60. Unfortunately when I did this the war in Ukraine happened a month later. Straight away the investment went down and it's never recovered. I'm still at a 5% loss. I did expect to leave this as a 5 year investment (at least), but due to circumstances, I've had to use all my flexible savings that aren't tied in, so I'm in a position where I need some accessible cash. I'm wondering whether to just take out (say) 1k and leave the rest, or to take it all out and move it elsewhere. From what I've read recently, the market may not make any big recovery any time in the near future, so maybe I should take it all out and put it in a decent rate savings account. I know I will have lost money, but at least I could make it back in the next 12 months. 
Any thoughts? 

El_Torro

If you need the money to spend and you have no cash available then it sounds like you will have to spend some of the investments. Either that or take out a loan, though that's probably not a good idea. 

Who's to say that shares and bonds / gilts will perform badly next year? There's always plenty of reasons why they would perform badly, yet the general trend has always been up. You already knew when you invested that you were doing it for the long term. 5 years is not a great timescale for investing, 10 years or more would be better. 

Personally I would leave it alone if possible, just take out what you need for necessary spending. You should prioritise rebuilding your emergency fund as soon as possible too.

dunstonh

From what I've read recently, the market may not make any big recovery any time in the near future,

Bonds won't. That will likely take over a decade (including income reinvestment) but there is no reason why equities won't.

Any thoughts? 

Crystal ball job.    You are effectively asking us to predict the future.   If you need money to spend in the next 3 years, then clearly that should not be invested.  However, money beyond that could have some investment applied to it.

Beddie

Firstly, if you need some money, withdraw it.

As for if you should put it in fixed savings - no one has a crystal ball. Investments should do better over the long term, but no guarantees.

Therefore, you need to make this decision based on your own attitude to risk. Can you cope with losses? If not, it's a savings account for you!

At least you can dip into this as needed (not saying you should), whereas a fixed savings rate really is locked away for the term. Unless you use a fixed ISA, as they allow a withdrawal but there's be a penalty for doing so.

Just do what makes you feel comfortable.

metrobus

dinstonh “Bonds won't. That will likely take over a decade (including income reinvestment) but there is no reason why equities won't.”

What do you mean by “income investment “

If you are so sure bonds won’t recover for 10 years why are people still investing in them ? 

I am not saying you are wrong, just curious how you are so sure.

Thank you.

Grandst2

I was invested during the early 2000's, believe me a 5% loss is nothing compared to what can happen, so if you need the money take it.

dunstonh

What do you mean by “income investment “

Fixed interest securities - aka bonds - see the majority of the return in income.       The unit price for income units may never return (or take a very very very long time).   However, if you reinvest the income, the unit count goes up.
 

If you are so sure bonds won’t recover for 10 years why are people still investing in them ? 

Prices are at 30 year lows.    There hasn't been a better time in the last 30 years to buy them.  Whether we are at the very bottom yet is unknown but with the interest rate cycle appearing to be at peak or near peak,  that is generally the time you look to move more back to gilts/bonds.

I am not saying you are wrong, just curious how you are so sure.

Broadly speaking, values go down as interest rates rise and values increase as interest rates fall.

However, the "sureness" on not recovering to late 2021 prices is that values were in a bubble as a result of the lowest interest rates in over 300 years and quantitative easing.    We are not likely to return to either of those. 

enthusiasticsaver

This is always the downside of investing.  None of us have crystal balls so my attitude is that I only invest money I will not need in the forseeable future.  I also do not worry about market noise. It will always go up  and down and all you can control is when you buy and sell. Investing for me is more than just making profits.  I like the simplicity of not having loads of savings account or worrying when you get to the £85k FSCS limit. Having said that I draw a monthly income from my portfolio so I am selling every month.  5% is not a huge loss though. If you have only invested £10k and now have no emergency savings I would be tempted to remove it.  Personally we keep £20k available in cash although my IFA says that is too high. 

Albermarle

nb008 said:

I decided to invest 10k of my savings in stocks and shares and chose Vanguard lifestrategy 60. Unfortunately when I did this the war in Ukraine happened a month later. Straight away the investment went down and it's never recovered. I'm still at a 5% loss. I did expect to leave this as a 5 year investment (at least), but due to circumstances, I've had to use all my flexible savings that aren't tied in, so I'm in a position where I need some accessible cash. I'm wondering whether to just take out (say) 1k and leave the rest, or to take it all out and move it elsewhere. From what I've read recently, the market may not make any big recovery any time in the near future, so maybe I should take it all out and put it in a decent rate savings account. I know I will have lost money, but at least I could make it back in the next 12 months. 
Any thoughts? 

On a wider scale/ at a later stage you should think about splitting your spare money in a logical fashion.

Money that might be needed within the next 4 or 5 years - keep in cash savings
Money that might be needed in longer than 10 years - Investments ( like the Life Strategy and others ) 
For in-between 5 and 10 years maybe some lower risk investments or a mix of investments and cash.
For longer term/retirement investing via a pension is usually the best way, especially if you have a workplace pension where the employer also contributes.

nb008

Thanks to all those who have commented so far. Has given me food for thought.