Wesleyan with profits ISA losing money

Serwin

Hello everyone. I'm looking for some advice regarding my Wesleyan stocks and shares ISA. I opened it 5 years ago together with a separate small pension. Both the ISA and the pension lost a lot of money during the pandemic.  At the time, I was advised by a financial advisor working for Wesleyan to leave them alone for at least 5 years and the market would pick up again. They were quite slow to recover but both had been doing very well in the past year. Now that Donald Trump has announced his tariffs, however, both have been haemorrhaging money in the past 10 days. Nobody knows how long this instability is going to last so should I ride it out again or move it elsewhere? (I had thought of transferring it to a cash ISA). I read everywhere that I should avoid a knee jerk reaction but I'm not getting any younger (I'll be 65 this year). Is anyone else in this situation? Any advice would be welcome. 

dunstonh

At the time, I was advised by a financial advisor working for Wesleyan to leave them alone for at least 5 years and the market would pick up again.  They were quite slow to recover but both had been doing very well in the past year. 

Most investments were back in surplus by Summer/Autumn of 2020 following the Coronavirus falls.  2020 ended up being a positive year.   So, the deficit period was about 5-8 months.  That was a very quick recovery.

 Donald Trump has announced his tariffs, however, both have been haemorrhaging money in the past 10 days. 

That would be unusual.  Most of the last 10 days have been positive.  The bulk of the loss in this cycle of events happened longer than 10 days ago.

 Nobody knows how long this instability is going to last so should I ride it out again or move it elsewhere? 

Financial crisis occur on average every 7 years, and there is a stockmarket crash (a drop in excess of 20%) on average of every 4 years.

Nothing is going on at the moment that should result in any changes to your investments.

That said, you are using a tied sales agent of a company that offers a largely obsolete and old fashioned investment style.   There is scope for you to improve the investments but the concept of investing is not an issue.

boingy

Ride it out but in the longer term consider moving to a cheaper and better provider. You will get plenty of suggestions on here.

Serwin

Thank you both for your advice. It is concerning that I'm continuing to lose money when there is no real reason for it. I had thought that everyone with a stocks and shares ISA was in the same boat as me. I will definitely be looking elsewhere to invest my money!

jimjames

Serwin said:

Thank you both for your advice. It is concerning that I'm continuing to lose money when there is no real reason for it. I had thought that everyone with a stocks and shares ISA was in the same boat as me. I will definitely be looking elsewhere to invest my money!

Check out the charges you're paying! The cheapest index trackers will be in the range of 0.1-0.2% annual fees. I suspect your product is probably paying 1.0-1.5% so over 10x as much which will have a big impact on the returns you get.

Edit - just searched and fees could be as high as 1.7% if you have an adviser and you may have paid 3% of your investment as initial fees. Those numbers will definitely affect the performance results you're seeing!

Serwin

jimjames said:

Serwin said:

Thank you both for your advice. It is concerning that I'm continuing to lose money when there is no real reason for it. I had thought that everyone with a stocks and shares ISA was in the same boat as me. I will definitely be looking elsewhere to invest my money!

Check out the charges you're paying! The cheapest index trackers will be in the range of 0.1-0.2% annual fees. I suspect your product is probably paying 1.0-1.5% so over 10x as much which will have a big impact on the returns you get.

Edit - just searched and fees could be as high as 1.7% if you have an adviser and you may have paid 3% of your investment as initial fees. Those numbers will definitely affect the performance results you're seeing!

Thanks for your help. Yes you are right. I had to pay 3% initial fees. I opted out of the 1.7% rate for ongoing  financial advice but I still have to pay a management charge of 1.2%. I'll have to do a bit of research!

Albermarle

Initial fees are a rarity nowadays.
The cost for a typical S&S ISA with a low cost fund is around 0.5%, but some newer providers are offering them with less than that , even zero charges in a couple of cases.

I had thought that everyone with a stocks and shares ISA was in the same boat as me.

Most investors either via a S&S ISA or otherwise will be down in the last month, due mainly to some big drops earlier this month, which have only partly been reversed.
Probably most people will be 3 to 8% down from the peak, but still a little bit up over 12 months ( and a lot up over 5 years)

phillw

My Scottish widows pension shows up in Lloyds banking app (which I didn't ask for, and it's annoying)

Because I took a hit with the whole Trumpflation scam, but it has recovered a bit the last two days 

Serwin

Albermarle said:

Initial fees are a rarity nowadays.
The cost for a typical S&S ISA with a low cost fund is around 0.5%, but some newer providers are offering them with less than that , even zero charges in a couple of cases.

I had thought that everyone with a stocks and shares ISA was in the same boat as me.

Most investors either via a S&S ISA or otherwise will be down in the last month, due mainly to some big drops earlier this month, which have only partly been reversed.
Probably most people will be 3 to 8% down from the peak, but still a little bit up over 12 months ( and a lot up over 5 years)

phillw said:

My Scottish widows pension shows up in Lloyds banking app (which I didn't ask for, and it's annoying)

Because I took a hit with the whole Trumpflation scam, but it has recovered a bit the last two days 

Thank you. Yes the fees are excessively high compared to others. Checked this morning and my pension has lost more money. The ISA hasn't been updated from yesterday. This is the wake-up call that I needed!

Albermarle

Serwin said:

Albermarle said:

Initial fees are a rarity nowadays.
The cost for a typical S&S ISA with a low cost fund is around 0.5%, but some newer providers are offering them with less than that , even zero charges in a couple of cases.

I had thought that everyone with a stocks and shares ISA was in the same boat as me.

Most investors either via a S&S ISA or otherwise will be down in the last month, due mainly to some big drops earlier this month, which have only partly been reversed.
Probably most people will be 3 to 8% down from the peak, but still a little bit up over 12 months ( and a lot up over 5 years)

phillw said:

My Scottish widows pension shows up in Lloyds banking app (which I didn't ask for, and it's annoying)

Because I took a hit with the whole Trumpflation scam, but it has recovered a bit the last two days 

Thank you. Yes the fees are excessively high compared to others. Checked this morning and my pension has lost more money. The ISA hasn't been updated from yesterday. This is the wake-up call that I needed!

Obviously I do not know the details of the investments in this pension.
However we see in many posts there is a tendency amongst many people to focus too much on very recent losses, and to forget about the longer term gains.
There are even names for the tendency.
Recency bias - means you are too affected by current events ,and struggle to see that in the long term what is happening today will one day be long forgotten.
Loss aversion- A common human trait where losses feel more negative, than gains feel positive.

So yes it sounds like you need to look at an alternative pension provider, but whoever you go with there will be ups and downs, and it remains a long term game.