Badly performing Investment

R

Ryan

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I know shares/investment accounts are a long game but when shares are doing really badly is there a point where you cut your losses and cash in? Damage limitation I suppose.
I have an investment fund with a bank that has lost 15% of its value since the beginning g of the year and continues to fall. i don’t need the money immediately but it just hurts seeing my savings go down the can more and more every week
 
Gordon,
A decent sum in equal amount in both the below mentioned funds, 7 years just up and overall the fund is up about €14k. What would you suggest I do, leave it there or? I know the 8 years will be up oct 2023 and a substantial tax bill cometh into play but the Co pays that from the fund and I've allowed for it in the above figures. Thanks for any help.

1) Zurich life Prisma 4, and Active Asset Allocation,
2) Standard Life My Folio Mkt 3, and Active 2.
 
Ryan said:
I know shares/investment accounts are a long game but when shares are doing really badly is there a point where you cut your losses and cash in? Damage limitation I suppose.
I have an investment fund with a bank that has lost 15% of its value since the beginning g of the year and continues to fall. i don’t need the money immediately but it just hurts seeing my savings go down the can more and more every week
Click to expand...

A couple of thoughts

The question you should be asking is are you invested in the right asset class for your risk tolerance, expected investment term and reasons for investing etc. You shouldn't be surprised that shares can fall 15% thats where they sit in the risk/return space. Whether that's the right place for you is the relevant question. If you're invested as a homemade pension plan with 20 years left then you're probably okay if it's saving for a deposit on a house purchase next year then probably not.

Let's assume you're investment is right for your needs. If you don't need your money in the short-term is it really damage limitation to sell up now or are you compounding the short term volatility by taking a potential loss and locking it in. Related to that, say you do sell what next? Where are you going to put your money to work for you? In a world of stagflation almost everything has taken a hit and may continue to. If it's not falling financial markets it's inflation eroding your deposits. No point jumping from the frying pan into the fire. Likewise locking in a loss now might mean you're locked out of any potential recovery from those shares.

Finally, if you're invested for the long term treat it like that. Don't be looking at it weekly just leave it be. I know easier said than done.
 
This year to the end of last month American stocks (as per the S&P) have fallen by 25%. UK (as per the FTSE250) by 26% and eurozone stocks (as per the Eurostoxx50) by 22%. So if you are down by 15% you have performed relatively better.

I don’t know the Zurich funds, but the SL ones are broad diversified multi-asset funds. So it would appear the fund managers have achieved their objectives, by investing in non-equity as well as equity assets, and have thereby reduced your risk. If you were invested in pure equity funds you would be down by a lot more. In other words, if the fund managers have met their investment objectives, the funds are not necessarily badly performing.

noproblem said:
A decent sum in equal amount in both the below mentioned funds, 7 years just up and overall the fund is up about €14k. What would you suggest I do, leave it there or?
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This is your decision. If you are up 14k, say 8k after tax, and you really really could do something with 8 k profit plus your original investment, maybe you should cash it in. Or you could stay invested, invest more money now while the price of the units is lower, and stand to gain more in the future. It all depends on whether you prefer an immediate reward or are willing to defer gratification.
 
If you remember back in 2008 when markets fell c30%, a lot of Irish Equity investors sold out in early 2009. And from March 2009, markets started to improve. Had the sellers stayed in for 2009 and 2010 they would have recovered their losses and been in profit for the following years.
 
Ryan said:
I know shares/investment accounts are a long game but when shares are doing really badly is there a point where you cut your losses and cash in? Damage limitation I suppose.
I have an investment fund with a bank that has lost 15% of its value since the beginning g of the year and continues to fall. i don’t need the money immediately but it just hurts seeing my savings go down the can more and more every week
Click to expand...
Stop looking then.

Look at the value in October 2023 and see where you are.
 
Ryan said:
I know shares/investment accounts are a long game but when shares are doing really badly is there a point where you cut your losses and cash in? Damage limitation I suppose.
I have an investment fund with a bank that has lost 15% of its value since the beginning g of the year and continues to fall. i don’t need the money immediately but it just hurts seeing my savings go down the can more and more every week
Click to expand...
Liverpool were 0-1 down to Rangers after 17 minutes in the Champions league last week. If you were a Liverpool fan would you have left the stadium after 17 minutes?

Final score: 7-1 in Liverpool's favour.

The scoreline only matters at the end of the game. In your case it's when you plan to use the money. Sit tight and do nothing.
 
Ryan said:
I know shares/investment accounts are a long game but when shares are doing really badly is there a point where you cut your losses and cash in? Damage limitation I suppose.
I have an investment fund with a bank that has lost 15% of its value since the beginning g of the year and continues to fall. i don’t need the money immediately but it just hurts seeing my savings go down the can more and more every week
Click to expand...
I would double down on my investment now that it's on sale (if you can afford to). An 8% rise would see you in the profit overall then. Diversified Global equities are volatile but a very safe option long term.
 
Ryan said:
I know shares/investment accounts are a long game but when shares are doing really badly is there a point where you cut your losses and cash in? Damage limitation I suppose.
I have an investment fund with a bank that has lost 15% of its value since the beginning g of the year and continues to fall. i don’t need the money immediately but it just hurts seeing my savings go down the can more and more every week
Click to expand...
That’s a good return, broader market is down more than 15% this year, do not sell , 15% drops occur frequently, you can’t time the market but by spending a long time in it , you will build wealth

You should buy more of this fund as it’s value right now
 
Nobody can say that the fund is "cheap/value" right now.
Classic timing the market fallacy.
 
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