Backache wrote:The way I sometimes look at it is have I got the investment process right? Is my basic plan sound?
As most people have pointed out last weeks sell off although bigger than is common in a week in overall stockmarket terms was a rather trivial fall. It could well fall a lot further.
You have to ask yourself can I cope with significantly larger falls for a prolonged time because they do happen from time to time and they are always disquiteting however much we try to ignore them.
Things which would concern me more would be if my portfolio went down disproportionately to the stock market and I couldn't work out why then I might think my investment process was wrong.
If you are concerned about whether or not you would be prepared to put up more money if the market was to fall significantly or worse be a forced seller this would suggest that you have maybe committed more money to the market than you are psychologically equipped to deal with, at some point in the future the market almost certainly will go down considerably more than it has for the past week and for a long time that is the nature of the market.
Wise words, thank you!
I wouldn't say that I have been especially foolish over the past year, but perhaps that what had been encouraging signs for most of the year maybe encouraged me to then become a little less cautious in some of my investment funds as the year progressed than I maybe should have been (possibly serving as a good reminder to me that a single year is still a short time overall when considering investments, but also that significant changes can occur within just a few days).
After becoming fed up with the poor interest that I was getting on my cash ISA for the past few years, I was finally prompted to look into the stock market (and to this forum and other similar sources of advice), and decided to take the plunge (toe first, at least). I then switched most of my usual monthly savings into a S&S ISA, gradually coming to the realisation that I really should have looked into this much sooner once I had started to have a modicum of cash savings. For most of the year, returns were looking quite encouraging, but after the recent drops, I am now unfortunately practically back where I was at the start of the year. That's disappointing, but not a worry as yet (after all, my Cash ISA at 1% wasn't really earning me very much, either).
This has been a useful lesson for me near the start of my investing activity, and has served as a reminder to perhaps invest a little more in "safer" bond funds, and a little less in some riskier equity-only funds, and, also to keep adding to my cash savings as a much safer fallback (over the past year, I had been putting about 4/5 of my normal monthly savings into my S&S ISA instead, so maybe I should adjust that a little more towards cash).