Reply With QuoteHow long is she looking to invest for? There are some accounts that will pay over 4%
I took out a stocks and shares medium risk investment for 50k 9 months ago with my mum's financial advisor that was supposed to grow at 5% it did ok for the first 6 months then the last 3 months it's lost £850 so I'm now worse of than when I started.
I'm going to ask my financial advisors advice, but I know some on here dabble in stocks and shares so should I just leave it were it is and hope it recovers or put it in a traditional savings account?
How long is she looking to invest for? There are some accounts that will pay over 4%
The investment is mine it’s just through my late mums financial advisor I have some more money in high street savings accounts already the stocks and shares were supposed to be long term 5 years plus but if it keeps losing money at this rate I will never make it back
I think a huge number of people are in the same boat.
The market hadn’t been great for many this year, unless you were actively looking to take advance of falling stocks.
You state that it’s supposed to have a 5 year investment horizon, which you need to take into account. There will be market fluctuations.
You’re looking at a loss of 1.7%, which isn’t nice, but could have been substantially worse.
I wish you well with your investment and for 2023!
It's just a matter of time...
Same for me and pensions have taken a serious bashing. Same for many people.
Originally Posted by Michael 38
I have a spread of funds over different types in my pension fund. It gained quite a lot initially but now it’s worth less than it was a year ago. Someone is making a lot of money somewhere in the markets. (I’m not going into hedge funds with money for my old age. ) I hope in 5 years things will pick up. I have other asset classes and cash separate.
The world is in recession so we’re all in the same boat if that’s any consolation.
I’d stick it out - but maybe diversify if you can?
“ Ford... you're turning into a penguin. Stop it.” HHGTTG
Why not just buy some premium bonds, you can't lose and you might win over the year's.
Sent from a technical device.
You've bought your ticket (i.e. paid the FA's fees) now enjoy the ride. Seriously, as you said yourself it is intended to be a 5 year plus investment so why expect immediate returns? I would place a fundraiser wager that it will bounce back to at least the original value in 2023.
I invested £80k about 6 or 7 years ago in a medium risk fund. It lost almost £10k in the first year! It did recover and performed reasonably well over the next 4 years, but I remember at the time being sorely tempted to cut my losses!
Is anyone really expecting things to get better now? If you can’t afford it, make peace with the losses and put it somewhere safe before there is less of it. Peace of mind is a valuable commodity in itself.
A wise man once said, its time in the market, not timing the market.
If you have time leave it there.
This is what I did with part of mine - averaged about £118 a month in the last 12 months- not sure how he was convinced it would or should grow 5%
I invested a reasonable sum in 2017 and it steadily grew by around 40k, in the intervening years and especially over the past year plus it has dropped over 30k. I think most people are in the same boat
Equities are volatile, basic fact - some years you'll win, some you'll lose - but, over the longer term, you should win. if you're too risk averse for these shorter-term fluctuations, then move into something more certain. Also, if you believe that you were mis-sold or mis-advised by your FA, especially if you have this in writing, then seek some re-dress.
Gilts have also been very volatile recently.
My poxy Aviva pension has lost 14% over the last year. Previously it lost 9% so in 2 years it’s lost 23% and this is a medium/low risk policy with payout available in 2 years if I wanted to.
Amazing I still pay a management fee for the poor performance.
Wish I had a crystal ball.
Good luck with your investment
B
If you invest the maximum 50K in premium bonds, you get the monthly anticipation and excitement of checking your possible winnings on the premium bond app. Most months you will likely win the minimum of £25, and there is always the chance of winning more, perhaps a lot more: 100, 1000, 10000 or even the maximum of 1 million. Much more fun than a boring savings account or fixed rate bond. The winnings are tax free too, and you can always get your original investment back.
I second premium bonds after having an unexpected win in November.
Last edited by boring_sandwich; 6th January 2023 at 21:51.
The Premium bonds must have upped the payouts. The wife and I have been getting between £200 and £300 each for the past couple of months and she got £1250 this month. Prior to that it was £25 or £50.
Cheers
Ross
As a proper investment I wouldn’t go near premium bonds, especially at 10%+ inflation levels
It's just a matter of time...
Precisely. You’re not going to “lose” money in a market crash but your money is going to erode with inflation over the years.
Because unless you win, your bonds will not keep pace with inflation, so its actual value will decrease.
Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
Friedrich Nietzsche
Like equity / guilt back funds that lose value as well so lose even more compared to inflation
“ Ford... you're turning into a penguin. Stop it.” HHGTTG
In order to get that 5%. Your in a moderate to high risk investment which is tied to the stock market. Market goes up. Investment goes up etc.
I would take your £850 any day of the week.
My investments are down (this includes profits) £27,490.00. Only one investment is actually down (never had a chance to gain profit) £6,700
High risk for the high interest. Todays market for the TSX up 307 points which means a possibly $5,000 increase in my investments. Monday could be the opposite.
Long term waiting game. I could reinvest my interest payments to shore them up, but semi retired and transferred to my bank account
My interest is guaranteed. Even if the investment goes down. I still get the same monthly rate and interest of the original principle
If the rate of your investment at 5% is firm. Did you compound the monthly interest profit during the good months vs. interest earned with the £850 loss off original principle during the bad 3 months?
If you only lost £850 off the original principle. How much interest did you earn at 5% over the same 9 month period?
If the principle remained the same over 6 months. You should have earned a compounded amount of £1263.00 at 5% Even as it dropped. You would still be earning 5% on the remainder.
Over the last 3 months less £850 off the principle. You should have earned £616.00 (guess)
Thats £1879.00 interest earned over 9 months - £850 loss off principle = £1029.00 interest earned
My math could be off as I don't know how your interest is actually calculated or if the rate fluctuates and not firm
Wouldn't worry. Everything rebounds. Bad market in 2008. My retirement RRSP's doubled in value from 2011 to 2023 and still holding steady, so I have a very good buffer
DON
Why, yes, I'm sure he did !
Glad to hear it, Don, and long may it continue - wishing you a long and happy retirement!
Lewie - do you have maximum holding?
I hold premium bonds and do relatively well.
Premium bonds prize fund increased from 2.2% to 3% from this months (jan) prize fund along with other changes to prizes.
This is a very good explanation: https://www.moneysavingexpert.com/ne...ium-bond-rate/
Edit: 2.2% to 3%
Sent from my iPhone using TZ-UK mobile app
Last edited by T1ckT0ck; 7th January 2023 at 11:41.
Presumably you took the FA advice because he had done well by your Mum.
If you think his plan for the 5 year term makes sense, investing with a plan to mitigate the current economic situation, recession, interest rates rises, inflation, plus sensible geographic focus etc then stick with it. But it will be volatile, so you will need to come to terms with the fact that your principle sum may be reduced at times.
If the last 9 months have caused you stress then it may well be the case you want a lower risk investment.
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It’s medium risk and it goes up and down - sounds to me like you didn’t fully understand what medium risk meant - was it explained to you? Was your capacity for loss discussed?
If you check it again in 3 yrs you’ll probably be fine, but short term fluctuations are perfectly in keeping with that type of investment
I’ve spoken to my financial advisor and he said it is the gilt markets that are the problem and it’s very unusual and said the same as a few members that it will go back up over time, I have some more money invested in a nationwide bond and a variable rate building society account that are are my stress free nest eggs so I will monitor it over the next few months.
I do not use premium bonds as my only investment, I have lots of other investments too. I treat the premium bonds as a bit of fun - the anticipation and excitement every month in checking whether I have won anything, and normally I do, even if it is only £25 (the minimum). But sometimes it has been much, much more.
You were unfortunate that you invested in a year where both stocks and bonds lost value simultaneously. This is very unusual and many (including myself) have lost far more than you during the period.
As others have said, if your time horizon is min 5 years then you should expect short term fluctuations but over the medium term history suggests you can expect a positive return on the investment.
If you bought 9 months ago you may have entered at a time when the market was already depressed some, it’s fallen further but in the remaining 52 months we have to hope Putin is long gone, Covid is a memory and all is well( as good as it gets) and recovery is all good to a point higher than when you entered. I bought into a fund in 2020 with £55k, it rose to £73k but is now around £48k, long term strategy is what I’m hoping for, although it does pay £350 monthly without affecting value, so far. Timings is everything.
Yeh £50k- I bought them in Dec 21 so just had them for 12 months
I did have a pretty good win this month at £575
Which markets are you exposed to ?
The FTSE 100 closed yesterday close to a five year high, the FTSE 250 is 20% down on the 5 year peak, and 10% down on pre-Covid.
Nasdaq is down 30%, and tech stocks are looking flaky for the rest of '23 - DJI is around 10% down, and tracking upward.
If you understand the risk profile of your plan, you can make informed decisions.
I don't really understand much about it that's what I hopefully pay the financial advisor to sort out
Your financial advisor can only guide you towards the right investment plan for you, they are not in control of market forces which have been horrible this past year. I'd say they've done you very well to be down so little.
Try not to look at the number day to day and think longer term as per your original decision and reason for investing.
Yes but there's no magic bullet, no guarantees. I'd make more of an effort to understand it, even allowing for an IFA, as there's no one going to take more of a care about your own money then you, I say this sincerely.
Lots of advice already but a loss will only be realised when you sell this portfolio, hopefully it’s been spread across a lot of areas.
A FTSE tracker is hard to beat over a long period for a novice investor.
I trust his judgement he looked after my mum's finances for 30 years I probably took it out at the wrong time
I trust that he knows what he is doing he has been doing it for 40 years, he explained it all at length and I got the basic jist and it’s spread across a very diverse range as I understand it and he said he would recommend the same thing again and this as I said is only part of a wider savings plan I have.
I had some work mates who used to dabble in the stock markets who supposedly knew what they were doing and always ended up losing money this was when the times were good and why I payed someone else to choose where to invest it.
Fair enuff.
Gotta agree on the management fee. Just adds to the huge losses!
The yield on UK gilts was less than 2% in March, it is not obvious how your advisor was proposing to earn you 5% a year if he has allocated a decent proportion of your investment to these, such that he is blaming them for your poor return... Might be interesting to see the actual portfolio?!
Agreed. Premium bonds are great to hold for the entertainment value. It's good fun receiving an email at the beginning of the month letting you know you've won some extra cash. It's a nice lift and something to look forward to.
But you definitely won’t end up with less than you started with or put in
In real terms you will. Nobody should look on premium bonds as an investment. Fine to have and enjoy but you should be maximising other avenues first if you are looking for real capital growth. Same with savings accounts if you are looking further than a five year window.
dear OP, you pretty much now know with the replies your loss is nothing to be too concerned about at this time ,its part of along term plan, my pension which i have been drawing 3 years is up 5 K as of Friday but could be 2 K down Monday!!
my strategy with savings has always been diversity, my pension is acceptable in stocks & shares , my physical gold is worth more than i paid and its good to look at, max in premium bonds that pays peanuts but i did win £125 this month :-), i have blown my brains on crypto down some 5.5 k on a 8 K puntand i am surprised as i am no expert but my few watches have increased in value but that was not why i bought them.
so hang tight its going to be a bumpy ride for a few years
OP - apparently most people overestimate their risk appetite before investing - it is when you lose money that you know how you’ll react.
Good luck with whatever you decide. Only you know how much this is affecting you.
That doesn't sound that bad relatively speaking, considering you are talking medium risk
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