Investments over the last 2 years

Timbob24

Hi all, looking for some thoughts and insight into what's happening.

We have put £50k into 3 stocks and shares isa's (one is a pension) by our financial adviser.
We invested in March 2022 and now (as of November 2023) the current value is £46,600
This includes a further £980 put in in April 2023.
We are noted as 'medium to low' as risk takers.

We have another long running investment with Royal London, which has steadily risen ovcer many years but we note that in the last 2 years it has carried on rising (last 6 months it increased by £800 on a £14k current value... This is noted as a 'high risk' investment and has nothing to do with the financial adviser above.

So, the question is, what is the story with the 'market' and investments in general? Is everything on the down-turn generally? is there a quantifiable reason to expect a loss of £4k+ over 2 years? 
Whilst another is performing well??

At the moment we are pretty convinced that we should withdraw / transfer to cash ISA's or similar on a fixed rate 5% at least of the next few years to try to recoup a bit...

Any insights / thoughts are gratefully received

eskbanker

Surely your financial adviser is the one you should be asking?  They should have worked with you to determine your investment timescales (which will hopefully be substantially more than two years!) and come up with an agreed strategy accordingly, warning you of the risks of volatility along the way....

Timbob24

Thanks @eskbanker, I'm looking for insight to take into a meeting with the IFA. We did indeed work on the timescales, strategy, etc and yes we were warned of risk... but we are disillusioned and not sure who to trust here (hence coming to Martin Lewis site)... 
Again, any insights are gratefully received.

eskbanker

There are always macro factors that influence investment performance, and the period over which you're measuring progress (or lack thereof) coincides with the Ukraine war, spiralling energy costs and inflation in general, etc, but one specific factor that the IFA will undoubtedly cover is the effect on bonds, which have traditionally been used to dampen the volatility associated with equities, but which have suffered significant value reductions over the past two years.

This has had the effect of suppressing returns on lower risk portfolios with significant bond content, so these appear to have performed worse than usual over that timeframe, although the nature of high v low risk is that the former will usually outperform the latter over a long enough period anyway.

However, the key thing is to invest over sensible timescales (less than two years is way too short a period over which to measure) and at a level commensurate with your risk tolerance - if you're 'disillusioned' after short term losses then either you didn't express your capacity for loss well enough, or it was ignored, or you didn't understand what you were being told about risks.

Your adviser will no doubt highlight to you that buying high and selling low (as you'd be doing if retreating to cash now) is rarely a recipe for financial success....

dunstonh

but we are disillusioned and not sure who to trust here (hence coming to Martin Lewis site)... 

Martin sold this site many years ago.   Your trust should be with the adviser as they know you and what you are want and set the risk profile of the investments to match you.

We have another long running investment with Royal London, which has steadily risen ovcer many years but we note that in the last 2 years it has carried on rising (last 6 months it increased by £800 on a £14k current value... This is noted as a 'high risk' investment and has nothing to do with the financial adviser above.

In most negative periods, the greater the risk you take, the greater the losses.  However, 2021/22 has seen the risk scale turned upside down with lower risk stuff dragging portfolios down whilst higher risk ones offset that

So, the question is, what is the story with the 'market' and investments in general? Is everything on the down-turn generally? is there a quantifiable reason to expect a loss of £4k+ over 2 years? 

Virtually everything was down in 2022.   Anything heavier in fixed interest securities (gilts especially) and technology stocks suffered greater losses.  In 2023, equities are up a bit but fixed interest securities have continued to fall.

It is reasonable to expect to be in a loss position if you are anything lower than high risk.

At the moment we are pretty convinced that we should withdraw / transfer to cash ISA's or similar on a fixed rate 5% at least of the next few years to try to recoup a bit...

That would be a bizarre thing to do.  You have gone through the negative year and pulling out after that before the positive years would just move you backwards.

When investing, one assumes you were told and that you knew that there would be negative periods.   Historically its around 1 in 5 years that are negative, 1 in 5 that do barely anything that way and 3 positive.  The order is unknown and you can get two or even three negative periods in a row (2000,2001,2002 was three in row before 5 positive years where you could double your money).

If you knew negative years would occur, why would you change anything when that negative year occurs?

Albermarle

Timbob24 said:

Thanks @eskbanker, I'm looking for insight to take into a meeting with the IFA. We did indeed work on the timescales, strategy, etc and yes we were warned of risk... but we are disillusioned and not sure who to trust here (hence coming to Martin Lewis site)... 
Again, any insights are gratefully received.

The forum is open to the public, so any Tom, !!!!!! or Harry can reply to your post.
Luckily most of the regular posters tend to try and give  sensible and informed answers, based on the limited info usually supplied, but just be aware you are not reading some kind of answers vetted by Martin Lewis.

As explained above, investments traditionally classed as low risk have had a rough time due to a unique set of circumstances, that is hopefully over.

LHW99

We have put £50k into 3 stocks and shares isa's (one is a pension)

At the moment we are pretty convinced that we should withdraw / transfer to cash ISA's

Be aware that pensions and ISA's are different wrappers. You cannot withdraw money legally from a pension until you are 55 (soon 57), and if you withdraw it all after that age, 75% will be taxed as income, and going forward you will be restricted in the amount you can add to any new (eg workplace) pension

jimjames

Timbob24 said:

We have put £50k into 3 stocks and shares isa's (one is a pension) by our financial adviser.
Any insights / thoughts are gratefully received

As above you need to check exactly what you have put money into. You cannot have a pension ISA, it would either be a pension or an ISA. An ISA in itself doesn't perform well or badly, it's the investments you buy inside it that do. What are the investments that you've got in the ISA and pension? If you're working then the pension should have been boosted by tax relief of 20% or more and as a long term product you might expect it to have a higher risk profile

Beddie

Quick answer - 2022 was a bad year for bonds. Bonds make up more of a lower risk portfolio than a higher one, hence the disparity you've seen. Bonds are now "back to normal" so you don't need to change your portfolios as long as they're still right for you.

As stated above, have a chat with your adviser (and be told the same thing!)

R_P_W

Timbob24 said:

Hi all, looking for some thoughts and insight into what's happening.

We have put £50k into 3 stocks and shares isa's (one is a pension) by our financial adviser.
We invested in March 2022 and now (as of November 2023) the current value is £46,600
This includes a further £980 put in in April 2023.
We are noted as 'medium to low' as risk takers.

We have another long running investment with Royal London, which has steadily risen ovcer many years but we note that in the last 2 years it has carried on rising (last 6 months it increased by £800 on a £14k current value... This is noted as a 'high risk' investment and has nothing to do with the financial adviser above.

So, the question is, what is the story with the 'market' and investments in general? Is everything on the down-turn generally? is there a quantifiable reason to expect a loss of £4k+ over 2 years? 
Whilst another is performing well??

At the moment we are pretty convinced that we should withdraw / transfer to cash ISA's or similar on a fixed rate 5% at least of the next few years to try to recoup a bit...

Any insights / thoughts are gratefully received

Do don't say how old you are, what your objectives and timescales are for the investments.  As others have said, you don't seem clear what you have invested in as a pension cannot also be an ISA.

You know that investments can go up and down, you also know that two years is a short period of time so I don't understand how you can all of a sudden arrive at the position that you should withdraw into cash for a period of time?

What if the investments you are thinking of selling go on to grow by 8% per year for the next 3 years?  What would you be thinking then?  Not buy back in and wait for them to drop?

Unless you are very close to retirement or already in it I don't think any of that makes sense at all.

Medium / Low risk doesn't mean no risk.  

Kaizen917

"High risk" comes from the theoretical volatility that an investment can have (whether up or down) but it doesnt imply that this has a higher chance of being down compared to a "medium" oriented portfolio.

I am being generic saying that but the likely culprit for your 50k investment was the same that caused my workplace pension to kinda stagnate over the last 2 years - bonds taking a bit of a hit (only reason it didnt go down was because I switched to more equity about a year ago).