Should she stop paying into the fund?

jsmoke

jsmoke

jsmoke

Soldato
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My mother pays a monthly DD into a fund which I think tracks the s&p500, hence it's value is around 22% down for the year. She's wondering whether she should stop the DD and what else is safe in the current market conditions to pay into. I did say the s&p500 will likely eventually come back up but from what I can see that could take years.

What would be the most option atm?
 
Really the point of paying into a S&S account on a regular basis is that you hedge yourself against peaks and troughs over time. Markets go up and down and right now they're down. This year has been painful, but a year is just the amount of time it takes for the earth to orbit the sun, it's not in any way a useful measurement of financial performance for an index. Unless the investment will need to be liquidated in the next few years, I would consider keeping the DD rolling. Stop checking the price every week as well, it's bad for your health.
 
Find out exactly what she is invested. In GBP terms VUSA (vanguard s&p 500) is only down 6.5% this year because the fall in the pound has shielded UK investors so definitely find out what she is invested in. Assuming she is in the UK.
 
"Dollar cost averaging" and "Time in the market not timing the market" are often quoted as the best way to make money in stock markets.

I do it but I do occasionally dip in and out of stocks as I'm interested in the whole process but the majority of my investments are planned to be left until the end of the decade before any significant review.
 
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Pound-cost averaging aims to provide some protection against the market reducing in value. It prevents the investor from using all their lump-sum to buy at the top of the market. Instead, the shares are bought as prices are falling, reducing the cost of the investment and therefore increasing the benefit of rising prices when markets improve. Overall, pound cost averaging can help smooth returns in investment markets that constantly move up and down.
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Assuming she doesn't need the monthly payment for anything else - Leave it alone and keep paying.

Stop looking at the performance currently. It's only going to depress her - But the ongoing payments will benefit her when the fund/markets start to rise again.
 
First and foremost, you shouldn't take financial advice from a forum or anyone unqualified in general.

As an aside, I echo what people said above, stopping payments in a bear market defeats the purpose of using a fund.
 
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