Reassurance: I'm putting 50 a month into investment, index funds and

[Summerwhereareyou]

All that happens is zero. Expect the amount I put in goes up and the amount it's worth stays the same.

Any reassurance. I know things are suppresed but it's hard to keep the faith at the moment.

Since investing in index funds about 3 or 4 years ago, its profitability has been -15%. I've lost about 5K 😭

I keep ploughing 300 a month into it as they say you should keep it up, and I'll never get back everything I lost if I take it all out now (sunken costs fallacy!)

But, like you, OP, I'd love some reassurance! 🙏

@FuoriComeUnBalcone
5k!!

I'd never cash out right now because I know that woud consolidate a loss but it's hard to feel what in doing will ever pay off.

I have a sipp and I must have brought that at the right time because that's doing so much better.

Look at the stock market pattern over time- it will go up eventually. I started investing £200/month ish at start of covid. My returns are ~5% but the real benefit is that I've saved the capital, and because it's in S&S, I don't want to pull it out early, so I'm actually ~£6.5k up on what I likely would be if I'd tried saving normally!

Time in the market versus timing the market. Keep plugging away provided the fund has a history of producing good returns.

Stop looking at the value, forget about it and revisit it in 5 years time.

Equity investing is for the long term ie 10 years. Keep plugging away and it will go up and down but over the long term you'll definitely get good returns. It does depend though on what your underlying investments are.

Have a look at meaningful money and pension craft on YouTube. Both excellent for learning about investing.

@Amboseli I hope I'm in the usual recomdned ones eg my 50 a month is going into a vanguard us stock market one.

My sipp is doing better did I buy the isa at the wrong time?

@Summerwhereareyou I really recommend watching the two YouTube channels I've mentioned.

I think they'll help you feel reassured and more confident about your investments.

The good thing is that as long as you keep putting money in when things are down you're buying the same thing at a lower price.

The difficult thing with investing is having to have patience.

Have a look at charts on compounding returns and you'll see that the greatest returns happen after at least 20 years of being in the market.

Your sipp is getting extra contributions from the gov, maybe that's why it looks like it's doing better?
Same position here, put all my savings in vanguard three years ago and it's lost 3% overall. Just got to hang in!

@aramox1 i don't think so because I'm not adding to it unfortunately.

I think I brought it lower.

@Amboseli honestly if someone else wanted sane reassurance I would've been saying exactly the same.
It's just this seems to be surprssed for longer than covid! Massive dip with covid but quite soon bounce back..

I work in this area, keep the faith! Particularly if you're monthly investing so you average out the in-cost if the market drops.

It's not all been doom and gloom. US stocks had a pretty torrid 2022 but the FTSE 100 bucked the trend. Commodities have also done well.

I'm not a massive fan of passive funds (index trackers) but they should see you well over five years or so. However, I think the heady tech days of 100% annual returns are over for now. I was chatting to a fund manager and he said double digit returns would be a good achievement over the next 5-10 years.

You need to stop looking at it. S&S are long term investments. Keep putting in your £50, and look at it in 5 years time. Seriously, lose the login details. You’re trying to time the market - don’t, your information flow isn’t good enough to do that, just accept that over the long term there are good returns and that money is tied up for the long term so it’s not a thing to worry about or try to control. The only piece you can really control is your fees, and vanguard aren’t usually bad in that respect.

The other tip would be to ask which platform/provider you use? Fees can have a surprisingly erosive effect on the value of your portfolio over time.

It's become a very competitive market with the entrance of zero commission providers and the likes of Hargreaves Lansdown, AJ Bell and interactive investor have trimmed some of their fees.

Just leave it, we have a large next egg with Royal London, we have written it off for the next ten years, we do have the app on our phones and amuse ourselves by looking at it first thing every morning and trying to be the first to over coffee to say in a sing song voice The value of your investment can down as well as up… …. At one point we were £10,000 up within six months, but it dropped and we are generally 4% up, it will all balance out.

@grass321 can I ask why you're not a fan of passive trackers?

I'm invested in mainly passive trackers because I read that active funds don't beat passive over the long term and they cost more. Although some actives do but it's hard to pick which ones.

I'm making my projections based on 6% average return pa over 20 years. Is that realistic do you think?

@Summerwhereareyou I do understand how you feel. Some of my investments are down because I bought at the wrong time. In the long run I know it'll be fine but it's not nice to see your pot go down and stay down.

I just keep ploughing money in and try not to worry too much. The tax benefits of pension salary sacrifice are too good to pass up.

The market is cyclical and we are on a downtrend at the moment, but the downs are always and inevitably followed by ups so we just have to hang on.

I've been reading Howard Marks about market cycles which is very informative and reassuring. Would highly recommend it.

Feel your pain OP but then I read about people on here who have investments doing amazingly well & Im just confused!

I've only got small amount in sipp similar investment and it's up over 3 grand

@Summerwhereareyou that could well be because of when the money went into the investments.

My DCs JISAs and JSIPPs are doing really well but that's definitely due to when the money was invested. They're down compared to the highs from a while ago. But still up overall by nearly 30%.

If I was more hands on I was have sold some of them when they were very high and bought back when they went down but I hadn't read Howard Marks at that point and so didn't understand what was happening and where we were in the market cycle.

can I ask why you're not a fan of passive trackers?

I had the joy of writing a report on this. Although it's true that the majority of active funds don't outperform passives (particularly in well-researched markets like the US), it ignores the outperformance of those that do.

Looking at Trustnet (which is a good resource for comparing funds), the highest performing fund over 5 years in the U.K. sector is an active one (Royal London Sustainable Leaders) with a total return of 49%, with the second highest at 39%. Highest tracker in the same sector is 33%, followed by 20% for number two. 35 active funds delivered a higher five year return than 20%.

Plus, technically active managers can take steps to limit losses (although this may be limited in reality), whereas there's nowhere to hide in an index tracker if markets fall.

Yes, you have to pick your fund manager and there's no guarantee that they'll be the 'winners' in the next five years. But I'm willing to take the chance for the extra 0.3% or so in annual management fees. (I have some passive investments but more commodities based.)

I'm making my projections based on 6% average return pa over 20 years. Is that realistic do you think?

That sounds sensible. The last 18 months aside, my investments have made around 20-30% a year on average (and a couple of active funds doubled in a year) but I think 20-30% unlikely to be realistic going forward unless you look at fairly niche (and higher risk) sectors.

@grass321 it is true that some active funds outperform passives. Not sure this is true over the long term due to mean reversion?

The trouble is picking the actives that are likely to outperform before they outperform!

I feel I'm doing things backwards as I invested some money during the pandemic without properly reading up on investing, didn't understand that there was a bubble and went from being in profit to a smallish loss.

I'm now doing my research after the event (!) and can see what I did wrong.

I can only hope that my investment recovers over time. It's a relatively small amount of money but it's still not nice to lose money essentially through my own stupidity by failing to do proper research. Although even at the time I was investing I had a niggling feeling the upward trend couldn't last. And yet I still went ahead.

It sounds like you work in the the investment field so know what you're doing. I find it really interesting, but just don't have the time to spend on research so have decided the safest thing for me is to invest monthly in diversified index trackers and just leave them to do their thing.

20% a year is fantastic! But now with higher interest rates it's unlikely we'll get those sorts of returns again, not for some time anyway.

The trouble is picking the actives that are likely to outperform before they outperform!

This is very true. I managed to buy a number of Baillie Gifford funds just before they went from hero to zero! (Textbook past performance bias).

Although I'm an ex accountant and investment banker so most of the concepts are familiar, my investing knowledge is self taught. There's so many great resources and once you realise that the basics aren't that complex, you get into it quite quickly. And we all make mistakes even after doing our research (I bought a double short FTSE 100 ETF to hedge my portfolio and the FTSE 100 has since hit an all time high...).

There's nothing wrong with passive funds but I'd have a mix personally, not just actives but different assets (equities, bonds, commodities etc) and sectors (geographical and industry). And look at long term themes in terms of net zero and AI.

I have to write about investing most days and it's very difficult to know where the markets are heading. As you say, inflation and interest rates need to fall to give stock markets a tailwind. The UK has been more resilient than the US but is still trading on lower valuations. Whether it can continue is another question.

@grass321 thanks.
Could you explain what you mean by "double short to hedge"

I hear you OP. Especially when interest rates generally are high and I keep thinking about the 4, 5% accounts I could move the S+S to...

Could you explain what you mean by "double short to hedge"

Shorting is a way of betting on the price of an asset to fall. So, for a FTSE 100 short, the ETF (or whatever) rises by 1% for every 1% that the FTSE 100 index falls. The double short (or x2) rises by 2% for every 1% the index rises.

It was something I learnt from reading The Naked Trader (with a really awful photo on the front cover...). If you have a number of U.K. investments in your portfolio, you could sell some if you think they're going to fall. This is fine but (unless you have a zero commission platform) can be expensive in terms of trading fees. Buying a short ETF is a simple, low-cost way of hedging your portfolio against falls in price (although you're also limiting potential gains).

You can also go short via derivatives (CFDs and spread betting) that let you trade 'on margin' whereby you borrow some of your stake from your broker or platform. I steer clear of these as you can rack up losses very quickly.