My money...?!
Fizban140
Registered User, __BANNED USERS regular
Registered User, __BANNED USERS regular
I had some spare money so I decided to put it in a capital growth fund, I really do not know much about it so I let an investor at the bank explain it all to me and then he suggested that and I went with it. Supposedly it is suppose to be great right now to invest since the economy is so bad that once it picks up it should start to do a lot better.
Well so far in about three months I have lost almost 10% of the money in that account, it wasn't bad until a couple weeks ago where I have been losing a bit each week. I was told that if I keep the money in there it will eventually recover and start to grow but I am not so sure, and I really do not know about all this stuff. I could take it out now and have just lost that much or I could keep it in there and hope it comes back. Which is the better course of action?
This is not money I depend on or even emergency money, this is just money I wanted to invest and I plan on keeping it in there for a while (at least four more years). I am going to call my bank tomorrow and ask them but I wanted to know what people here thought, is it bad to have money invested in something aggressive?
Well so far in about three months I have lost almost 10% of the money in that account, it wasn't bad until a couple weeks ago where I have been losing a bit each week. I was told that if I keep the money in there it will eventually recover and start to grow but I am not so sure, and I really do not know about all this stuff. I could take it out now and have just lost that much or I could keep it in there and hope it comes back. Which is the better course of action?
This is not money I depend on or even emergency money, this is just money I wanted to invest and I plan on keeping it in there for a while (at least four more years). I am going to call my bank tomorrow and ask them but I wanted to know what people here thought, is it bad to have money invested in something aggressive?
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The flip side of this is that things can't get much lower. If you ride out the storm, in a few months, things are virtually guaranteed to get better. You bought when stocks were at a historic low, which means if you're just patient and let it ride for a while, you'll do fine.
This is assuming, of course, that you bought a decent fund, which you probably did since it was at the advice of your bank. Do you happen to have any of the paperwork for the fund with you? Alternatively, would you feel comfortable saying which fund it is?
the "no true scotch man" fallacy.
Don't get freaked out by a loss over a three-month period. That's just the rollercoaster; it'll average out in your favor over time.
the "no true scotch man" fallacy.
Since you're in it for the long term you shouldn't be too concerned with week to week performance. Virtually every stock and mutual fund has declined in value over the past few months. We've recovered from bear markets before and we'll do it again.
Could you give us more details about the fund your money is in? What is its expense ratio? Are there any loads? It's important to remember that the motives of a bank's financial adviser may not line up with your own. There's a chance they're just selling you whatever junk earns them the highest commission.
Top Ten Holdings as of 01/31/2009
EXXON MOBIL CORPORATION 2.55%
INTERNATIONAL BUSINESS MACHINES 2.45%
GLAXOSMITHKLINE PLC 2.02%
WAL-MART STORES 1.93%
HEWLETT-PACKARD CO 1.91%
MCDONALDS CORP. 1.75%
ASTRAZENECA GROUP PLC 1.75%
MICROSOFT CORP 1.64%
TELEFONICA SA 1.61%
ALTRIA GROUP INC 1.59%
That seems pretty good to me, with my incredibly limited knowledge of this.
I should buy some of that
Looking at that list, I don't see any companies which are likely to drop off the face of the Earth due to the recession, they will all recover eventually but there has been a massive and rapid drop in values right across the board and that's going to take a long time to recover. Optimistic estimates are saying that the economy isn't going to start recovering for at least a couple of years and even once it does start recovering, it's going to take a long time to get back to pre-crash values.
So the value of your shares will likely continue to drop for a couple of years, probably more slowly than previously, then with time will slowly start to recover lost value. You've bought fairly recently so it is highly probable that the value will eventually recover your initial investment and then go on to exceed that as, whilst values are still dropping, they dropped a hell of a lot already. This is going to take a long time though, we're not talking windfall in time for summer '09 here, we're talking 5-10 years depending on what miracles happen.
It's like that stock fund that's made up of porn, tobacco, and casinos. It's called the Vice Fund or something :winky:
Remember that more risky funds generally mean a higher average return. So it'll suck this year, be awesome the next, then repeat that. Just make sure you sell it when it's awesome, not when it sucks. You don't lose money unless you sell it when it's down.
Relax. Don't look at your account every day, don't watch the stock markets and don't get swept up into all of the money mumbo jumbo you see on TV. Think of it like this, if you invested around 2001 you would have probably lost a lot of money for the first year. If you had backed out during that period of loss, you would be looking at the investment again in 2006 seeing that it was roughly twice as high as it was when you invested and you would be kicking yourself in the ass.
So long as the rationalization for the initial investment stays the same, you should probably stay in the investment. Has your goals/needs changed since 3 months ago?
If yes (e.g. now want to use it for downpayment on a house, your arms fell off and you need bionic ones that insurance won't cover) then make decisions to accomodate those new goals/needs.
If no (these funds are a long term investment), then leave it alone.
If you want to see how the fund compares to others of its class, go to morningstar and lookup the fund. Ideally you'd want to be in the top 1/3 or 1/4 of comparable funds.
A financial planner would be the best person to talk to here. Unless you're a trader there's no need to watch valuations closely.
Well the easy answer is when it's worth as much as possible, but that doesn't really help you. It's basically like asking "When should I stop gambling?" There's no way to know for sure how valuable or valueless your fund will become. You can research and make suppositions, but ultimately it's a bit of a crapshoot.
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when you need it
Evil = profitable (because Good = dumb, etc.)
I know, when you abandon morals you can make a lot of money
If you're not thinking long term, then yea, just whenever you think you have a better use for the money.
They will be able to help you get the maximum results, it all depends on if you are trying to invest for general purposes, or if you have a specific goal in mind (i.e. buying a house)
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De-limed
Not all financial planners have your best interests at heart. Many are simply selling whatever high load garbage their firm tells them to.
Understand that I and many others here have lost thousands of dollars from this recession. For me, it was around ten. And I think I got off easy.
The money will come back.
Even if it all tanks, you shouldn't be worried about it because it was spare money you don't need.
Even if it all tanks, you're right that we'll be concerned with more important things than our invested money.
win / win?
Let 'em eat fucking pineapples!
Do not look at it for the next 3 years. It is invested and takes time to grow - it's not a fucking casino.
Also what Entreich said.
this. try to forget about it. i have about $5k sitting in an account i forget about until i see the statement every quarter. its really nice when you can think that you have money sitting around that you arent taking into consideration when you evaluate your wealth.
I am down about $30k in my 401k and IRAs. But I know that I put that money in there so that I could live my retirement Hemmingway-style, drunk on a beach. I still have 30 years to go, it will gain its value back.
Stop looking at it. You invested it in a fund. You are not a day trader. Forget about it. And investment is a gamble, the fund you bought was a particularly low risk one even. Ride out the recession and collect your gains, but that may take a few years.
Taking your money out towards the bottom of the market and dumping it into something with a low rate of return is a bad idea.
I doubt you purposefully timed the market correctly. Also, you have less net money now even though you have a plus in the money market because you now lost those shares. You bought high and sold low, which is bad. The illusion of gaining on the money market is at a much, MUCH lower rate than what you lost or could ever hope to make up.
Let 'em eat fucking pineapples!
There ARE times when you pretty much have to cash out to mitigate a loss. The prime example right now would be baby-boomers around the age of 60 who aren't sure if they can wait as long as necessary for the market to recover their lost assets during its next growth cycle. Withdrawing some assets into money-markets or FDIC-insured CDs if you're in this group isn't a horrible idea. There are other groups looking at this sort of option, too--if you're 17 years old and going to college next year, and all of your college savings are in mutual funds, maybe making sure you have a year or two of tuition secured in a CD might be worth talking about with your financial advisor.
Alternatively, if you have some money in traditionally-low performing funds and you want to jump into a fund that traditionally outperforms the market during growth cycles while the price is low now, that's a decision that might be worth a quick cost-benefit analysis.
I have a nice mix - about 50% in a US index fund, 25% in a US small cap index, 25% in a foreign index. I contribute 7% of every paycheck to this 401(k). I get a company match up to 3%.
The market is hemorrhaging. World-wide. If you've only dropped 10%, you're doing well. Besides, if you're young - no worries. Buy now, banking on the eventual recovery. That's what I'm doing.
For perspective - I work with a couple of guys in their sixties. Neither are huge earners - both have a nice but modest salary. Both are fairly frugal and have put a lot of their earnings into retirement investments for decades.
These fuckers have both "lost" amounts in the six figures. It's just how the market is going these days. I have decades to recover. They only have a few years. So it goes.