Some advice needed on my current investment strategy!

M

Mister2000

Guest
I invested 110k about 2.5 years ago and it is now worth around 80k... this investment was spread across Evergreen (90k) and Trilogy(20k). I was aware of the risk at the time but naturally the current financial crash is an exceptional scenario and I admit I was not prepared for such a loss. About a month ago I moved 10k from the evergreen to the trilogy with the hope that the additional risk would allow for a better return when things bounce back... My investment term was originally 5 years. I am prepared to leave it there now for 10-12 years.

What advice would people have in the current circumstances... I do have a good deposit so I will not need the money short term... still should I act to protect the principal 80k from further losses or ride out the storm.
 
i would ride it out for now as we are due a good bounce into the new year. in january / feb then i would close the whole lot and put it in a high interest savings account
 
I think sensible advice would be to diversify your investments. Check to see what companies your current funds have invested in. I suspect they're heavily weighted in Irish companies. Nobody can predict with any great certainty what market conditions will be like in 10 years time but you can reduce the risk to your investments by diversification across regions and industries. E.g. Regional diversification might involve spreading investments between Eurostox, Emerging Markets and a US fund..

Apart from cash and shares, you can also make investments in gold and bonds too.
 
Unfortunately there's no easy answer to that question as there are a number of variables to take into account.

If you are the type of person that is personally interested in investments then get yourself some information, learn about valuing companies, set up a virtual portfolio and take control of your money. There's plenty of information out there (start with AAM) but you have to be prepared to do the work, it's like a part-time job.

If you are not interested then determine the level of risk that you are happy with and get some good independent advice. At the very least research that advice and know exactly where your money is going....question everything. Don't assume that your investment adviser knows what they are doing, I've talked to a lot of them (primarily associated with the banks) and generally the level of knowledge has been poor, especially if you look beyond Ireland for investments. Also from listening to the Q&A sessions after company presentations/quarterly results I'm boggled at times with the level of knowledge that these brokers have on the company in question....makes you think twice. Keep track of the news, the industry/companies that you are invested in and question regularly.

Over the long term the stock market will perform so don't sweat the current financial crisis; it will pass and we will encounter another one in the future sometime. The cycles are predictable, the timing is not. Follow the lead of Buffet, now is the time to go on a shopping spree; he is currently down on his investment with Goldman Sachs (5bn investment I believe) but he's not worried as he is not trying to time the market, he will eventually make a lot of money....over time. Invest in companies with strong fundamentals...and sleep well at night.

Failing that, do some research on the best deposits, settle for a reasonable return on your money and go and play some golf.

Good luck.


Mister2000 said:
I invested 110k about 2.5 years ago and it is now worth around 80k... this investment was spread across Evergreen (90k) and Trilogy(20k). I was aware of the risk at the time but naturally the current financial crash is an exceptional scenario and I admit I was not prepared for such a loss. About a month ago I moved 10k from the evergreen to the trilogy with the hope that the additional risk would allow for a better return when things bounce back... My investment term was originally 5 years. I am prepared to leave it there now for 10-12 years.

What advice would people have in the current circumstances... I do have a good deposit so I will not need the money short term... still should I act to protect the principal 80k from further losses or ride out the storm.
Click to expand...
 
Mister2000 said:
I invested 110k about 2.5 years ago and it is now worth around 80k... this investment was spread across Evergreen (90k) and Trilogy(20k).
Click to expand...

before you bought these flashy named funds did you do any research??

did you ever find out what were the components of each of these funds??
ie what ratio of stocks, commodities, etc, and what individual stocks

did you ever research each of these components, and also the history of
the fund? eg did they hold oil companies BEFORE the commodity boom
of just buy into it when oil when over $100??

Why did you decided on that 90-20 ratio?


now, imagine you are starting fresh, ie no history of e110
and you are going in fresh with e80k

if you havent done any of research above, would you do it now??

you seem to have moved on though in your investment decision though,
which is good
the initial 110k is well irrelevant, and now you are rightly only focusing
on the 80k (mark-to-market)

but only when you research those flashy named funds will you be able
to make real decisions wrt your investment requirements and timeframes.

JR.
 
JR Rizzo said:
before you bought these flashy named funds did you do any research??JR.
Click to expand...

Bit harsh here in my opinion.

Sounds like research was done, just wasn't prepared for that level of loss... who was?

I agree however, if it made sense last year in most cases it should still make sense today.

Trilogy uses Geared Property which is riskier than the Evergreen but could produce a better return when Property eventually comes back- provided you have the right time frame I would hold my nerve and stick with it at present.
 
I feel I did do sufficient research at the time and was happy with the asset split across equities, commercial property etc... also the past performance on these funds was very good and they did get some very good press over the last couple of years... so I felt comfortable albeit I was somewhat inexperienced... in hindsight I feel I should have invested in a capital guarantee scheme and have even considered doing this lately as I simply was not prepared to see this kind of loss.

The Evergreen does also have a capital guarantee scheme which will gaurantee your initial investment after 6 years... it will also lock in any profit over 6% during each year. I have been thinking that this may be a more appropriate investment for me and am considering doing that if things improve!
 
You've lost 30% which, if you ask me, is a great performance in the current climate, considering someone who had invested in the Iseq about the 10,000 level would now have lost around 70%.
 
Mister2000 said:
The Evergreen does also have a capital guarantee scheme which will gaurantee your initial investment after 6 years...
Click to expand...

There is a cost for this. Very bad conditions can result in your plan becoming 'cash locked'... you then have to wait for the time of the guarantee which could be years from now.

Do you think that by leaving your monies in the funds that you might be back to break-even by the end of year 6?
 
I don't know if I will break even after year 6 with the current plan... I would seriously hope that things would bounce and make some good gains in that time!
 
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