Vanguard Lifestrategy - should I cash in my "gain"?

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Murmansk
Murmansk Posts: 929 Forumite
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I'm relatively new to investing but I've done a lot of background reading and I have a question.
I have had enough money in Vanguard Lifestrategy since October to have seen it go up in value by about £4,000.
It's been suggested to me that I should withdraw £4,000 in cash in case the market drops so that at least I'll not have lost that gain.
I'm aware that the advice generally is to keep your cash in for years on end, not keep looking at the value of it, benefit from compound interest, etc but I can see the logic of this suggestion and I wonder what people think?
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  • A_T
    A_T Posts: 959 Forumite
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    How do you think you'd feel if in a few months' time markets fall and it drops £4K in value?
  • Murmansk
    Murmansk Posts: 929 Forumite
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    >>How do you think you'd feel if in a few months' time markets fall and it drops £4K in value?<<

    I'd think it would have been good if I'd taken out the £4K BUT as I am committed to long term investing I'd think that in due course (possibly a number of years) my investment would grow and the growth would be bigger than if I'd taken out that £4K
  • Prism
    Prism Posts: 3,803 Forumite
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    In a number of years, should you keep it invested it could be going up or down by 4K (or more) on a daily basis - a nice problem to have :)
  • smoulder
    smoulder Posts: 30 Forumite
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    Markets are going to drop at some point but no one knows when. A rule of thumb is that you should be "comfortable" with seeing a drop in value equal to half of the equity portion of your portfolio.

    Consider your portfolio as a whole and try to imagine how such a loss would make you feel. If that's going to stop you sleeping at night, then dial back the equity proportion of your portfolio (the Lifestrategy series of funds offer several bond/equity splits - not sure which one you have right now but I'm guessing it's largely equity).
  • eskbanker
    eskbanker Posts: 31,034 Forumite
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    Murmansk wrote: »
    I'm aware that the advice generally is to keep your cash in for years on end, not keep looking at the value of it, benefit from compound interest, etc but I can see the logic of this suggestion and I wonder what people think?
    I think it's worth ignoring anyone who offers advice about investments that includes any reference to 'interest'!

    If you withdrew £4K, what would you do with it that seems better than leaving it to grow as per when you originally decided to adopt a long-term investment strategy?
  • BLB53
    BLB53 Posts: 1,583 Forumite
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    Then again it could grow by another £4K over the coming few months..nobody knows so best advice would be to just forget about timing and just leave everything as it is.
  • Broken_Biscuits
    Broken_Biscuits Posts: 356 Forumite
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    Stay the course. Over many years you will likely be better off.

    But If I’ve read this right, you have made about 4K in 3 months and name a fund that has made about 4% over that period. So 100k invested as a lump sum.

    If my understanding is correct then that’s too big an amount to be in an ISA. If you havnt filled your ISA contribution this tax year, then move some across now to a similar investment in a tax efficient wrapper. Then in April do the same with another chunk. No point paying unnecessary tax when you do finally decide to cash in.
  • newatc
    newatc Posts: 845 Forumite
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    Tricky problem all investors have. Don't know where the stock market is going to go but I think it is reasonable to say that over the short term (say 18 mths) the potential downside is much greater than the potential upside and if I was looking at that sort of time frame I would be inclined to sell up to lock in the gains.

    But over the longer term who knows what's best (we'd be millionaires if we did). I think you have to go what you are most comfortable with.
  • dunstonh
    dunstonh Posts: 116,371 Forumite
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    Trying to time the market usually ends up in lower returns over the long run.

    you dont know when the next drop is going to happen
    you dont know how big the drop will be
    you dont know when the bottom will be hit
    you wont know when the real recovery comes (so when to go back in)

    Most people are better punching through it and coming out the other side without making withdrawals. That said, adding to it after a drop is often a very good idea. A lot of people will pile more in during a loss period.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • sixpence.
    sixpence. Posts: 295 Forumite
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    It depends how long you want to invest the money for? Are you in it for the next 10-20 years? If so no way take it out. No way mannnn. If you had a VLS just before the stock market crash you still would have made money now if you had stayed in. Just keep some money on the side so you can keep investing if there is a crash, that way when you back up you will have rocket power :) You feel so silly if the market goes up again this year and next year. For all we know there might not be a crash for ten more years.
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