Losing money in my investments

[Sweetchocolatecandy]

So I’m 34 and last year I decided to take control of my finances so opened a SIPP and S&S ISA as I want to start saving after years of being reckless with money. After doing a lot of reading I invested in a few vanguard funds including their life strategy fund and one that tracks the American stock market. When I checked today I’m already in a minus and a lot of my money has been ‘lost’ in the stock market.

My question is- is is normal for money to go down before it recovers? As when I’ve read other threads about ISA’s etc other people seem to be doing really well, or have I just picked really rubbish funds? Are anyone else’s investment doing badly?

I thought I was doing the right thing by opening these accounts but now I just feel like I’ve gambled a big chunk of my money away.

I've got a vanguard stocks and shares ISA. It goes up and down like a yo yo. I'm not quite sure how it all works so would be interested to see if someone knowledgeable can explain. Mine has been open for 2 years and I think I'm supposed to leave it for 5?

Did you not speak to an independent financial adviser first?

Investing in the stock market is risky, it can be incredibly profitable, but it can just as easily go the other way, so you should only do it if you are prepared to kiss goodbye to your money.

It's fairly typical. This is why you need to be absolutely sure you don't need the money in the short term to give you enough time to ride out the dips.

It will raise & fall numerous times over the coming years but it really is a long term game.

Just checked, mine is life strategy. I picked a low risk because I'm clueless about investing

You'll be fine. S&S and pensions are long term investments and certainly won't have made much money since 2021 considering we are only 15 days into 2022, Brexit and Covid etc etc.

Just out of interest, exactly how much money are you talking about?

You did the right thing by spreading your risk too.

If you expected short term gains then you were misadvised. Most investments don't show a return for many years , especially if there were fees upfront,

Mine is the same! I’ve always understood it should be 5 year min to ride out the bumps in the market

What funds have you invested in? Mine have done really well this last couple of years though there have been fluctuations

I’m not planning on taking it out for the next 10-15 years and I only looked today out of curiosity (now I wish I hadn’t!) hoping I would be in a little bit of profit. I did do a lot of research before investing but now I’m doubting myself…

@ThisIsStartingToBoreMe

You'll be fine. S&S and pensions are long term investments and certainly won't have made much money since 2021 considering we are only 15 days into 2022, Brexit and Covid etc etc.

Just out of interest, exactly how much money are you talking about?

You did the right thing by spreading your risk too.

Thank you, I hope you are right. I put ten thousand in each account (basically my inheritance money as I wanted to do something good with it rather than just wasting it). It might not seem like a lot of money to some but it is to me which is why I’m worried!

Yes it's normal. The idea is that it stays invested for a fair while during which the peaks and troughs smooth out and give a steady increase.
Life strategy funds and funds which track a market are usually fine but you'd probably be wiser to spread the latter across more markets.

Stop looking at them, I track once a month out of interest but have seen plenty of dips. When covid hit about a third of the value was wiped off, it was a great way to check my risk tolerance.

If it worries you then think about your risk tolerance, maybe more low risk options would be better. Of course also don't invest money you can't afford to lose, or that you need in the short term (years not months)

Remember you don't lose money unless you sell.

Disagree about an independent financial adviser btw, unless you want to spend even more money.

For what it's worth, i think you've made excellent choices. You just need to stop checking the value - just do it once a year (easier said than done I know).

I wouldn’t worry a bit OP. I converted my workplace pension to a SIPP (so a significant amount of £££) and my investments have been very volatile (even some of the safer options). But these are long term investments and I’m confident their positions will improve.

Have also been investing in a S&S isa over the last 6 years and my Apple stock has increased by 170% - which is incredible.

@ThisIsStartingToBoreMe

For what it's worth, i think you've made excellent choices. You just need to stop checking the value - just do it once a year (easier said than done I know).

Thank you, and I’ll certainly take your advice about not checking them.

@Pinchofnom

I wouldn’t worry a bit OP. I converted my workplace pension to a SIPP (so a significant amount of £££) and my investments have been very volatile (even some of the safer options). But these are long term investments and I’m confident their positions will improve.

Have also been investing in a S&S isa over the last 6 years and my Apple stock has increased by 170% - which is incredible.

Wow that’s amazing! I would be over the moon with that result. Did you invest in apple directly or through a fund?

The S&P 500 has historically gone up 8 out of every 10 years but yes, there will be dips and losses, it’s normal and expected when investing over the long term. Depending on when you opened your account, you could be in the red, because you haven’t been in the market long enough. You have many years of investing in front of you if you are in your early 30s, keep at it!

I’ve been investing for almost 20+ years and put money in whether the market is up or down, it’s the only way to take advantage of long term market growth and compound interest. And no, you don’t need to see an advisor if you are in Vanguard lifestyle funds, the point of them is to save you on fees, advisors included.

If you are in a vanguard lifestyle (and not picking stocks, or in riskier assets) you will be ok long term.

@eagerlywaitingfor

Did you not speak to an independent financial adviser first?

Investing in the stock market is risky, it can be incredibly profitable, but it can just as easily go the other way, so you should only do it if you are prepared to kiss goodbye to your money.

That really isn't true. The Vanguard fund is full of about 18,000 companies. unless you think all of them would go bust (global Armageddon maybe) then you really won't be kissing goodbye to anything.

I have an Isa with HL and a sip
Yes they go up and down but over a 10 year period they will generally be up.
However, me and DH are quite proactive and buy and sell regularly. You don’t have to do that but we check daily and decide whether to buy, sell or hold

Yep, mine have been quite volatile too (I also have the s+p 500 with vanguard). Over the last couple of years they've done really well though and if you check more regularly I'm sure you'll see them go up as well as down.

Of course it is normal for the stock market to go down.

People suffer with loss aversion when it comes to investing but it isn't reckless or unwise to lose money and it's part of investing to live with that. If it goes down another 40%, don't beat yourself up over it. You are trying to do a postive thing for your future. Hopefully it works out but there's a risk it won't.

The risk is what you get the returns for. There are no guarentees, even over 5 years.

I found loss tolerence improves with time. Like you, I used to check everyday and sweat the ups and downs but you will get bored of that eventually. Now I'd be annoyed if I lost a tenner by droping it on the floor but losing £5,000 on stocks wouldn't spoil my day.

Normal to go up and down.. Those 2 have had a good run of things last year or so. I had Vanguard Lifestrategy 60% Equity. Small lump sum then drip fed every month with small regular saving amount. I cashed out at around 20% profit after 2/3years when markets tumbled early part of pandemic. I wanted to realise the gain. (I have other individual stocks at not such good profit ) However they have regained and more from when I sold. If I had just left and let them fall then rise again, I would have bigger % profit. Better still I should have bought a few lump sums at the lower prices to add. I did that with some individual shares. Generally with these kind of investments you should do well over longer term. Buy on dips, hold and don't look daily.! Review say 6 monthly/yearly. Don't panic cash out when markets drop to some external event.

Boring and hands-off wins the race with index investing. The best thing you can do is heavily diversify (which you’ve done in going for Lifestrategy), carefully consider your risk level according to your needs, leave it in for as long as possible, and don’t look at it more often than you need to. Markets will constantly be going up and down (and experts predict that these next few years will have more volatile swings and slower gains than usual), but with enough time the trend goes up. Trying to time the market is a fool’s errand, and doing so will only set you up to make snap decisions out of either fear or greed instead of logic. The best thing you can do is keep buying a bit every month, whether the market is up or down, and leave it for several years to ride out the ups and downs.

Anyone who has only seen the spectacular gains of the last 10 years on tech heavy funds is feeling spooked at the current dips, myself included, however, after seeing the big drop and fast recovery when covid first hit, I know that long term, it’s likely to recover at some point.
Doesn’t stop me kicking myself for investing a £10k ISA lump sum in November, it’s dropped 5% and in far ‘safer’ funds than the 100% equity ones I invest in for my pension.
Drip feeding cash in smooths out the volatility but statistically, lump sums have better returns.

The best thing for ordinary, long term investors is to go for a global index tracker, I have Vanguard lifestrategy 80 and HSBC FTSE all world index in my Sipp. Both low charges.

Vanguard LS funds are overweight to the UK, around 20% weighting as opposed to the 4% of the actual global markets. So for very long term, say 20 years, that could prove a drag on investments, but in reality nobody knows.

I invested 40k in a Fidelity stocks and shares ISA (20k in Feb and 20k in April). I’ve taken 2k out and spent it on big treats and it’s now worth 43k. I didn’t do much research on what funds I chose. I did choose a health one as thought it may rise with the Covid situation. A couple of funds did nothing so I ditched them and put more money in the better performing funds.