Is my investment isa going down the drain

APhil

Just over a year ago I opened a legal and general investment isa with an opening balance of £4000.. , invested in Property/index trusts. Just received by first statement and total value is now £3,454.56! Over £500 down the drain (for now i hope)

Not a great year for property i know but right from the start the L&G said it should be a long term investment (min 5 years) so should i continue with it.

I thought there might be a slight drop in the short term but this is abit shocking,

Neil.

EdInvestor

APhil wrote: »

Not a great year for property i know but right from the start the L&G said it should be a long term investment (min 5 years) so should i continue with it. .

Yes.Markets in general have had a bad year, it happens sometimes. Hence the 5 year rule.Be patient.

dunstonh

2007 was a year when really only the high risk stuff made money (and good money at that). Low and medium risk (in general) lost or broke even.

It happens and you take the rough with the smooth and look at the averages.

exil

I can sympathise with the op - in my case I have 20k in ISAs so I've lost quite a lot. Difficult to be philosophical about it when such big sums are involved. I've lost more than I used to live on for a year!

EdInvestor

This is why the 5 year rule is important.For instance I invested a drawdown plan in 2003.Its capital value was up 50% (dividend income withdrawn*) around a year ago.It is now up 25%.No doubt in due course it will be up 50% again.

You need patience to be a successful investor.

It's a well known characteristic of the 'mug punter' that he buys high and sells low.

*BTW one of the few bright spots in the current market mess has been the excellent performance of dividends: many companies have announced big rises, in the double digit range. Banks in particular have not neglected their shareholders in this area, despite their share prices being trashed. The best so far has been BP at +31%(!).British American Tobacco at +18% is also worth a mention.

dougz_2

I cannot see that the 5 years on its own makes your investment safe. The ftse has recently been languishing at levels where it was 10 years ago if you got unlucky with the timing. So I am thinking you should also be more diversified, and try to phase it rather than in a big lump.

EdInvestor

dougz wrote: »

I cannot see that the 5 years on its own makes your investment safe. The ftse has recently been languishing at levels where it was 10 years ago if you got unlucky with the timing. So I am thinking you should also be more diversified..

No equity investment is safe of course: that's a given. The last major downturn had a particular distortion created by the tech boom: in most cases over 5 years a portfolio of shares in a variety of companies will recover because of the business cycle, if for no other reason.

But if you are heavily concentrated in one sector ( eg dotcoms, oil, commodities) you run the risk of a prolonged downturn. So diversification is an important risk reduction strategy.

Phasing investment may mean you reduce losses (if out of luck) but it also almost always means you also reduce gains simply because you aren't invested. So not a very useful approach IMHO.

davey9998

dont forget dividend returns from the ftse. think it is yielding about 4% ish at mo

a simple example:
if you had 100k of lloyds tsb shares and next year they were worth £99k it doesn't necessarily mean you have lost £1k. you would have had dividends worth appx £7,000 so you would still be up on the deal