# is it time to cut my losses



## robert18 (21 Jan 2009)

hi just need a bit of advice , 3 yrs this november i started a investment thing with my bank which was 260 euro's a month for 5 yrs and beyond since it has started it has lost 2100 euro so obviously i am nervous about it , i just want to know is there any point in or is it  a good idea to keep going with it and hope that the markets improve .i won't said which bank it is with but the fund is a 50/50 . 50 percent balanced investment fund and 50 percent irish property fund .I should be able to keep up the payments but why should i when it might be worth nothing after it and also do you know if you get a penalty for leaving early thanks .


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## voodoobazza (21 Jan 2009)

Check your policy document to see if there are early penalty charges, I assume there are.
If can afford it you are purchasing units in the fund cheaply at present.
On the other hand, if you wish to save on deposit, you could switch from the Irish Property Fund to the Cash fund for a while until this volitile market settles down.

Check the original Sales material as to charges etc. as it may be penal to exit early.


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## Mopsy (21 Jan 2009)

Check with your financial advisor or the person in the Bank who sold you the investment. It is probably going to be difficult to get a straight enough answer but pulling out of all types of investments whether shares or not will definitely contribute to what is happening in the economy at the moment, not that you should be a martyr, I am not suggesting that! Source more information if you can and check any penalty clauses. If it was me I would give it even another week or two to see how things start progressing in the US with Obama now at the helm cause anything positive that may eminate from there will have an affect on global markets.


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## Car Mad (22 Jan 2009)

Mopsy said:


> Check with your financial advisor or the person in the Bank who sold you the investment.
> 
> 
> 
> ...


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## demoivre (22 Jan 2009)

Car Mad said:


> Mopsy said:
> 
> 
> > Check with your financial advisor or the person in the Bank who sold you the investment.
> ...


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## Car Mad (22 Jan 2009)

demoivre said:


> Car Mad said:
> 
> 
> > Mopsy said:
> ...


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## mercman (22 Jan 2009)

Car Mad said:


> As a matter of interest how long does one think it will take to recover my losses??.



How long is a piece of string ?? Likely to take a couple of years at least. It also depends on which type of equities you are invested with.


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## demoivre (23 Jan 2009)

> My original investment was 20K which I took out in Sep 2006. I contribute 250 per month. To date I have put in a total of 27,250 and as of today its worth 17,760.!!!
> 
> Its a PIP ARK LIFE investment.



I would be looking at a minimum of 10 years for this type of investment so if it was me I would continue investing knowing that my monthly contribution is buying more units now given that markets have fallen substantially. I look at  equity investments over a ten to fifteen year period and property over a twenty year plus period.


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## pAnTs (26 Jan 2009)

demoivre said:


> I would be looking at a minimum of 10 years for this type of investment so if it was me I would continue investing knowing that my monthly contribution is buying more units now given that markets have fallen substantially. I look at equity investments over a ten to fifteen year period and property over a twenty year plus period.


 
I think I shall take this advice. Demoivre I have paid over 10,000 into my fund and it's only worth 6,700 now. Do you think I will get back what I paid into it? The fund is made up of the following

AIB Managed fund series 2 - 50%
AIB Multi-track fund - 50%

Allocation rate 97%

I contribute 100 euros a month.


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## mercman (26 Jan 2009)

pAnTs said:


> Allocation rate 97%



You should go back and try and negotiate a better allocation rate. What you have been given is pathetic.


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## pAnTs (26 Jan 2009)

does the allocation rate mean that Arklife will receive 3% of the profit and only 97% will be allocated to the fund? so out of every E100 they receive E3? How can I negotiate with them as I can't exactly threaten to move it as cashing in now I would lose so much


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## PMU (26 Jan 2009)

jaybird said:


> You can take out what ever you have left, and pay a penalty, or you can sit and wait for the market to recover, however long it takes.


 If you look at this chart http://seekingalpha.com/article/116077-jeremy-siegel-stocks-for-the-short-term taken from Prof Jeremy Siegel, author of ‘Stocks for the Long Run’, you can see that over long durations no other asset class gives a return like stocks, with cash being a real loser, and gold a dead duck.  But what constitutes the ‘long run’ (i.e. the time period within which (to date) any investment in stocks gave a positive return) may well be a very long time.  But it would follow from Prof Siegel’s research that one should stay put and not cash in.


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## pAnTs (26 Jan 2009)

hmmm thats interesting, is that little dip above the 'a' in "Real" the depression of the 30's?


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## Askar (26 Jan 2009)

PMU said:


> If you look at this chart http://seekingalpha.com/article/116077-jeremy-siegel-stocks-for-the-short-term taken from Prof Jeremy Siegel, author of ‘Stocks for the Long Run’, you can see that over long durations no other asset class gives a return like stocks, with cash being a real loser, and gold a dead duck. But what constitutes the ‘long run’ (i.e. the time period within which (to date) any investment in stocks gave a positive return) may well be a very long time. But it would follow from Prof Siegel’s research that one should stay put and not cash in.


 
Presumably the stocks in this chart are US equities only? What about performance of stocks on exchanges in Eastern Europe and Russia before the iron curtain came down? Can you extrapolate that these returns are possible for stock exchanges in emerging economies that are not democratic, innovative and competitive, and where the state is very often the invisible hand. I think only very limited conclusions can be taken from this chart; and it provides no guidance for geographically 'diversified' equities. I think Buffett makes the point that being an american citizen in the 20th century was basically a lotto win for him and his ability to invest.


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## mercman (26 Jan 2009)

pAnTs, I assume that you are a different OP than the original ??


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## pAnTs (26 Jan 2009)

yep Im just riding the wave so to speak...Robert18 doesn't seem to have come back


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## robert18 (26 Jan 2009)

pants i am watching but seeing that i don't understand the last few posts i said i would just read ,i suppose i am taking from this is that i should sit still and see if i can keep put it in thanks for all the advice .


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## pAnTs (26 Jan 2009)

oh I see, sorry bout hijacking your post. I shall be doing the same I think. I don't need the money for the foreseeable future so I suppose it can't get much worse or can it!!!? no advantage to me taking it out now anyway so I may as well gamble some more


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## george.shaw (27 Jan 2009)

It is difficult to argue re stocks outperformance of bonds, cash and bills from 1800 to today. However, it is very easy to argue with Siegel's data and assertions regarding stocks outperformance of gold since 1800.

The phrase "lies, damn lies and statistics" comes to mind. Of course stocks outperformed gold since 1800 as gold did not 'perform' at all. It did not need to 'perform' at all as gold was money. Every single dollar was backed by gold at varying fixed prices up until 1971:






US stocks, bonds, bills were all priced in dollars which was priced in gold. Thus stocks, bonds and bills were under the Gold Standard priced in gold.

Incidentally, since gold has been freely traded in 1971, it has outperformed the Dow Jones and the S&P 500.

Diversify.​


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## PMU (27 Jan 2009)

Askar said:


> Presumably the stocks in this chart are US equities only? What about performance of stocks on exchanges in Eastern Europe and Russia before the iron curtain came down? Can you extrapolate that these returns are possible for stock exchanges in emerging economies that are not democratic, innovative and competitive, and where the state is very often the invisible hand.


Askar, that is good point, similar to the one Naseem Talib makes on page 165 of ‘Fooled by Randomness’.   Siegel’s research AKAIK relates to US equities.  But, e.g. ABN Amro’s ‘Global Investment Returns Survey 2008’ says that: “An investment in UK equities of £100 at the start of 1900 would, with dividends reinvested, have grown to over £2.2 million by the end of 2007, a return of 9.7% p.a.” and that “. . . since 1900, equities are the best-performing asset class in every [developed market] country”  This is the same conclusion as Siegel’s that equities (at least in developed markets, which make up 85% of world market cap) are the best performing asset class in the long run.   So, unless global markets are about to change significantly in the future, it would be prudent to remain invested in equities for the long run and not cash in.  (But the long run could be a very long time.)    However, that is not to say that remaining in an IE managed fund of the type discussed in this forum does not carry certain non-market risks.  For example, if the fund manager was unable to safeguard the value of your investment when markets fell, does he / she have the ability to recoup your loss when / if it recovers; and (b) will poor initial allocations and / or high management fees significantly reduce the recovery of your investment?


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## Askar (27 Jan 2009)

PMU said:


> Askar, that is good point, similar to the one Naseem Talib makes on page 165 of ‘Fooled by Randomness’. Siegel’s research AKAIK relates to US equities. But, e.g. ABN Amro’s ‘Global Investment Returns Survey 2008’ says that: “An investment in UK equities of £100 at the start of 1900 would, with dividends reinvested, have grown to over £2.2 million by the end of 2007, a return of 9.7% p.a.” and that “. . . since 1900, equities are the best-performing asset class in every [developed market] country” This is the same conclusion as Siegel’s that equities (at least in developed markets, which make up 85% of world market cap) are the best performing asset class in the long run. So, unless global markets are about to change significantly in the future, it would be prudent to remain invested in equities for the long run and not cash in. (But the long run could be a very long time.) However, that is not to say that remaining in an IE managed fund of the type discussed in this forum does not carry certain non-market risks. For example, if the fund manager was unable to safeguard the value of your investment when markets fell, does he / she have the ability to recoup your loss when / if it recovers; and (b) will poor initial allocations and / or high management fees significantly reduce the recovery of your investment?


 
I think the answer to those questions is probably a resounding 'no'. With a 97% allocation and I would imagine hefty management fees in the order of 2.5% or more (no info given on this, but there will be management fees), it is clear that the markets need to increase over 5.5% p.a. just for OP to maintain nominal value of each year of invested monies i.e it is possible that for every €100 invested, fees take up €5.50, so only €94.50 of the €100 euro is invested. If you include inflation (say 2%) that would require 7.5% return from these markets each year just to maintain existing value of the investment. So I am guessing that OP would only be likely to be making return from the investments if and when they start delivering over 7.5% p.a. - which I cannot foresee as likely. This does not take into account the initial losses from lump sum and contributions already invested which is continuing - and presumably attracting annual management fees (2.5% or so?).


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## pAnTs (29 Jan 2009)

Im not sure if this is a silly question but I shall ask anyways. 

So you know the way a lot of companies are going belly up at the moment, well what happens if the stocks AIB have bought on your behalf have been in a company who's gone bust??? also how do they decide what companies to purchase stocks from? does everyone who have the same investment plans have different shares?


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## PMU (29 Jan 2009)

pAnTs said:


> Im not sure if this is a silly question but I shall ask anyways.


 It’s not a silly question



pAnTs said:


> So you know the way a lot of companies are going belly up at the moment, well what happens if the stocks AIB have bought on your behalf have been in a company who's gone bust???


  If a company goes bust the common shareholders are last in the queue for any assets remaining after bond holders, preference share holders and other debt holders have been paid in full.   So the value of the fund will decrease.



pAnTs said:


> also how do they decide what companies to purchase stocks from?


 This will be detailed in the prospectus for the fund. You should read it (and understand it) before you invest.



pAnTs said:


> does everyone who have the same investment plans have different shares?


 Almost certainly.  With managed funds  it’s up to the fund manager to select the shares to meet the fund’s objectives; even with similar type funds, each fund manager will [should] select the shares he / she thinks best will meet the fund’s objectives.  So even similar types of funds may hold different shares.


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## pAnTs (29 Jan 2009)

Thanks PMU, God so some people may be doing better than others because of the fund manager?? thats interesting, I wonder what mine is like? are the banks obliged to tell you how many companies if any go under?


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## mydosh (12 Feb 2009)

Hi -

Quick point here....I think everyone knows investement are, at least were meant to be long term BUT in these times will banks be around in 5 to 10 years time. And if not then is the money invested in these funds covered by the goverment guarantee schems?

Personally I don't think the money is guaranteed but open to correction on this?

Regards,
mydosh


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## robert18 (17 Feb 2009)

hello again just said i would ask as this topic went a bit over my head ,should i stay with it or cut and run thanks .


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## PMU (17 Feb 2009)

robert18 said:


> hello again just said i would ask as this topic went a bit over my head ,should i stay with it or cut and run thanks .


     You received good advice in the posts from voodoobazza and Mopsy after your original post.  The rest of the thread is a debate on whether or not it is worthwhile keeping up contributions. So I’d say you’ve received enough advice to make an informed decision.


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## pAnTs (21 Feb 2009)

Mopsy said:


> Check with your financial advisor or the person in the Bank who sold you the investment. It is probably going to be difficult to get a straight enough answer but pulling out of all types of investments whether shares or not will definitely contribute to what is happening in the economy at the moment, not that you should be a martyr, I am not suggesting that! Source more information if you can and check any penalty clauses. If it was me I would give it even another week or two to see how things start progressing in the US with Obama now at the helm cause anything positive that may eminate from there will have an affect on global markets.



did anything improve after Obama's inauguration? my investment has gone down even more, I have now lost over 3,000. Im down from 10,000 to 6,800!!! hard pill to swallow


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## robert18 (11 Feb 2010)

robert18 said:


> hi just need a bit of advice , 3 yrs this november i started a investment thing with my bank which was 260 euro's a month for 5 yrs and beyond since it has started it has lost 2100 euro so obviously i am nervous about it , i just want to know is there any point in or is it a good idea to keep going with it and hope that the markets improve .i won't said which bank it is with but the fund is a 50/50 . 50 percent balanced investment fund and 50 percent irish property fund .I should be able to keep up the payments but why should i when it might be worth nothing after it and also do you know if you get a penalty for leaving early thanks .


 
Hello people just said I would try and get a bit more advice , have kept up investments and still paying in montly with no sign of it going up , now I can still pay it but is there any point .


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## GSheehy (11 Feb 2010)

robert18,

Can you just confirm that the value of your plan has not increased in value from the date of your original post?


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## Billo (11 Feb 2010)

pAnTs said:


> my investment has gone down even more, I have now lost over 3,000. Im down from 10,000 to 6,800!!! hard pill to swallow



That's only a loss of 32%. 

I hear that people who invested in bank shares in the last few year's are down over 90%.
Investing is a risky business.


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## robert18 (12 Feb 2010)

The fund is down 3200 euro since I started it .Now to be honest it has stablized in the last year not dropping anymore but is not going up either .My initial plan was to leave it about ten years but is this a waste of time ,would you say they will ever come back .As I said before I am not stuck for the money and can leave it but I am still paying in monthly thanks .


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## cancan (12 Feb 2010)

I don't see what buying high, selling low is going to achieve for you, other than lock in losses at this point.
If you feel that world economies have no where to go but down over the next 7 years of your investment window, or have an alternate investment that offers in your mind a higher return over that window, by all means sell.
We have just come through one of the most turbulent periods in world markets in 70 years.
Give it time.
One of the main reasons equities offer higer historical returns is in a trade off for higher risks involved.
If people only expect (or can only stomach) their investments to increasing in value, there are other less risky avenues open with lower guaranteed returns.
If you are going to play the game, know the rules.


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## sunrock (12 Feb 2010)

pAnTs said:


> Im not sure if this is a silly question but I shall ask anyways.
> 
> So you know the way a lot of companies are going belly up at the moment, well what happens if the stocks AIB have bought on your behalf have been in a company who's gone bust??? also how do they decide what companies to purchase stocks from? does everyone who have the same investment plans have different shares?


 
Well I would imagine that the AIB fund manager might invest in a company that AIB made loans to or have some connection with.
However lets assume the fund manager picks the best stocks for you as he sees fit, as previous posts have stated you are down 5.5e for every 100e invested...you are only investing 94.5e. Surely in this day and age you could pick your own stocks.Big retailers or big industrial concerns or some kind of tracker or index linked would be safe enough and drip feeding of course.


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## Kepler (14 Feb 2010)

If you have financial capacity to withstand loss, then you should give time to recoup. The markets have almost bottomed out. I think it is better to switch from property to technology stocks, with looming threat of property prices going further down.


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