Spooked by ongoing sharp decline in value of investments - should I cut my losses?

Grandst2

Shares aren't for everyone, it's a wild ride with lots of sleepless nights, just look at the last 26 years. You can look at multi-asset funds to smooth the ride but with probably lower returns.

thunderroad88

https://forums.moneysavingexpert.com/discussion/comment/81932466#Comment_81932466

Even the multi asset funds don’t smooth your ride in times like these…since March 2, HSBC All World Index is down about 5%. The main 60/40 multi asset funds like HSBC Global Strategy Balanced, L&G Multi Index 5 or LS60 are also down between 4-5%. Bonds are suffering, gold is suffering. The only safe haven has been, and quite possibly will be for a few months yet, cash…and while interest rates are likely to rise, so too will inflation, probably by more

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81932498#Comment_81932498

But a 60/40 multi asset fund will smooth the rise through a proper crash, which this is not.

chiang_mai

Which begets the question, what assets/markets have done better than most? The one month FTSE100 is -7.19%, the S&P 500 is -5.83%, the Nikkei is -7.13% and the Hang Seng is -4.30%.

https://www.reuters.com/markets/

InvesterJones

https://forums.moneysavingexpert.com/discussion/comment/81932660#Comment_81932660

Cash & commodities so far. In terms of equities, energy sector obviously. But one month is quite a short time frame also (though useful for testing risk tolerance).

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81932660#Comment_81932660

To give a longer view ; Over the last 12 months :

S&P500 + 15%

FTSE 100 + 14 %

Nikkei +41%

Hang Seng +4%

CaptainCrank

Hello, well congratulations on moving to investing rather than saving. I feel sorry for you and can understand your doubt because investments go up and down. You just experienced a down before an up! Its easier if you have seen your investment go up 10% and then down 3%. Its just timing and you cannot predict that. I always tell myself when I see a drop, that if I had not been in the market then I would not made this much money in the first place. Its all part of the game. The worst thing you can do is sell. Hold tight. You mention that you bought a world etf. This is great investment and has a CAGR of about 7-10%. That means on average it grows 7-10% YOY.

If you are putting money in regularly from your salary, then whatever you do don't stop. Take advantage of Pound Cost Averaging and keep going. Google that.

Take a moment to zoom out on the graph to 1 year ago. Yes there was a small hiccup last year after liberation day. Look how fast that recovered. Zoom out and look at the drop in 2020 during Covid. Look how fast that recovered. Keep going and you will see that despite periodic drops the trend is strongly upwards.

Keep going and don't panic. In 5 years this will be nothing.

chiang_mai

https://forums.moneysavingexpert.com/discussion/comment/81932773#Comment_81932773

Context is important! The OP is concerned about his losses this year hence it's useful to quantify them. Gains that others may have made during the previous twelve months, aren't a part of his picture.

Section62

https://forums.moneysavingexpert.com/discussion/comment/81932911#Comment_81932911

The figures from the previous 12 months add context that the current one-month numbers look more like a minor blip, rather than the disaster they are being portrayed as (i.e. necessitating MSE updating the forum to say "now is a particularly poor time to invest.")

Exiting investments and vowing never to invest again due to the minor blip 12 months ago would have meant forgoing the growth since then.

That doesn't mean we could expect similar growth over the next 12 months: the takeaway is not to overfocus on the here and now.

chiang_mai

https://forums.moneysavingexpert.com/discussion/comment/81932963#Comment_81932963

I do not agree. If an investor has accrued profit from the good times, the "blip" means very little. But, if the investor starts off on Day 1 by experiencing loss and that continues for the month, he can be forgiven for thinking that he picked a bad time to start investing and duly packs his bags and goes away. Pointing out that things would be very different, if he'd started a year earlier, don't really mean anything at that stage. There is a world of phsycological difference between loosing your own money in the here and now and loosing theoretically accrued profit.