Too little to late

HavntAClueDoyou

My wife and I downsized 12 years ago and invested £50000 in HSBC GIC account. I didn’t look at our investment till last weak and found out that We were down 2.3% on our initial investment. Is it all bad and what can we do for our short future.

Alistair31

What were you invested in within the HSBC, and why? 

eskbanker

HavntAClueDoyou said:

My wife and I downsized 12 years ago and invested £50000 in HSBC GIC account. I didn’t look at our investment till last weak and found out that We were down 2.3% on our initial investment. Is it all bad and what can we do for our short future.

Not looking at investment performance for 12 years is pretty lax, yes!

What's done is done though (assuming you haven't had a financial adviser involved), so all that matters now is that you have a pot of £49K and need to decide what best to do with it, which will entail considering when you're likely to need access to it, what your other financial assets are (property, pensions, savings, incomes, etc), what your risk tolerance is, etc, etc....

alfred64

Hard to believe this. First post too. Hmm...

Ray_Singh-Blue

If your future is short, do you plan to spend it? Is it earmarked for any purpose like buying in help or care?

artyboy

alfred64 said:

Hard to believe this. First post too. Hmm...

Really? Plenty of dogs out there for the unwary. We just need the OP to come back and confirm what exactly this money was invested in...

peter021072

It looks like a DIY one? A £50,000 investment would need to be worth £73,227 today, allowing for average inflation. I wonder how the investment and banking industries would react if they had to emphasise returns adjusted by inflation?

At present many of the high performing international funds are heavily invested in US equities, of which are large proportion are US tech stocks.  Take US equities out of the portfolio (not Treasuries) how would international funds containing a equal mixture of equities and bonds have performed?

eskbanker

peter021072 said:

It looks like a DIY one? A £50,000 investment would need to be worth £73,227 today, allowing for average inflation. I wonder how the investment and banking industries would react if they had to emphasise returns adjusted by inflation?

It's up to the investor to compare absolute returns with inflation - nobody will dispute that inflation occurs but it wouldn't be practical (or even desirable, really) for financial institutions to adjust actual performance figures to reflect any of the numerous measures of inflation.

peter021072 said:

At present many of the high performing international funds are heavily invested in US equities, of which are large proportion are US tech stocks.  Take US equities out of the portfolio (not Treasuries) how would international funds containing a equal mixture of equities and bonds have performed?

Not sure what your underlying point is here, but there are plenty of developed world ex-US trackers if you wish to invest (or monitor) on that basis?

peter021072

eskbanker said:

It's up to the investor to compare absolute returns with inflation - nobody will dispute that inflation occurs but it wouldn't be practical (or even desirable, really) for financial institutions to adjust actual performance figures to reflect any of the numerous measures of inflation.

Not sure what your underlying point is here, but there are plenty of developed world ex-US trackers if you wish to invest (or monitor) on that basis?

I don't see why returns couldn't be published relative to CPI. I'm sure they are somewhere, but the emphasis is usually on non adjusted returns, which I think is meaningless, or at least more meaningless than inflation adjusted returns. If banks had to display CPI adjusted interest rates on their accounts, perhaps there would be more consumer pressure to improve them? 

My point is more of an academic question, how much of the spectacular returns being quoted are heavily weighted in the US equity market.  An older or cautious investors looking for safety might have been advised or tempted to invest mainly in bonds and/or purely in the UK to avoiding exchange rate worries.  It's not a good strategy, but what would have been the average return over 12 years?  

eskbanker

peter021072 said:

eskbanker said:

It's up to the investor to compare absolute returns with inflation - nobody will dispute that inflation occurs but it wouldn't be practical (or even desirable, really) for financial institutions to adjust actual performance figures to reflect any of the numerous measures of inflation.

I don't see why returns couldn't be published relative to CPI. I'm sure they are somewhere, but the emphasis is usually on non adjusted returns, which I think is meaningless, or at least more meaningless than inflation adjusted returns. If banks had to display CPI adjusted interest rates on their accounts, perhaps there would be more consumer pressure to improve them?

That makes no sense - inflation measures are retrospective, i.e. the headline CPI rate always relates to price changes over the previous year, whereas interest rates quoted by banks are of course forward-looking, to define how much actual return they'll provide in future.

Having said that, I agree with the fundamental point that it makes sense to consider net real-terms returns when modelling performance, but just don't see it as being viable to expect institutions to make those adjustments, even if there was any agreement about which inflation measure would be appropriate.

peter021072 said:

eskbanker said:

Not sure what your underlying point is here, but there are plenty of developed world ex-US trackers if you wish to invest (or monitor) on that basis?

My point is more of an academic question, how much of the spectacular returns being quoted are heavily weighted in the US equity market.  An older or cautious investors looking for safety might have been advised or tempted to invest mainly in bonds and/or purely in the UK to avoiding exchange rate worries.  It's not a good strategy, but what would have been the average return over 12 years?  

I'm not planning to do the legwork for you, but the data is all there in the public domain if you wish to pick through the returns from different markets and asset classes over the past 12 years!  However, hindsight-based strategies do tend to be optimal....

There's been plenty of previous discussion about the pros and cons of home bias, but doing so purely to try to eliminate currency risk seems extreme.

Hoenir

peter021072 said:

It looks like a DIY one? A £50,000 investment would need to be worth £73,227 today, allowing for average inflation. I wonder how the investment and banking industries would react if they had to emphasise returns adjusted by inflation?

Be pointless. As there's no direct correlation between the two. If anything would cause retail investors to make even worse uninformed decisons.