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Dimensional Funds World Allocation 80/20

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  • 03-08-2020 9:40pm
    #1
    Blackie01
    Registered Users Posts: 6 ✭


    Hello - my husband and I invested a large amount in the above fund on the advice of our Financial Advisor fourteen months ago. 80% of fund is invested in shares. Medium to high risk. We know it is a long term investment and had decided to leave it for a minimum of ten years.
    However, I am worried about the impact of Covid and the economic consequences world wide.
    The fund is down nearly 5% and I am tempted to take out half my funds and suffer the loss as I feel the next few years will be very uncertain. TBH I would have been happy to leave our money there for ten years and just forget about it, but Covid has made me rethink our strategy.
    I would be interested in hearing your opinions and advice. Many thanks.


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    #2
    Jim2007
    Moderators, Business & Finance Moderators Posts: 9,988 Mod ✭✭✭✭Jim2007


    Where is the point in having a strategy if you are going to abandon it at the first little bump?

    You talk about a minimum investment period of 10 years, so your strategy must have included the very very strong possibility of you encountering two or more recessions during that period??? You are about to meet the first of those assumptions, so what has changed to cause you to abandon your strategy?

    Being out of the market, is not without risk. The follow chart shows the growth in an investment of $100 between 1979 and 2020 and the consequences of missing the best days in the market over that period:

    out-of-market.png


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    #3
    Blackie01
    Registered Users Posts: 6 ✭Blackie01


    Thank you Jim for your reply and advice. What has changed my strategy is Covid. Yes I expected major fluctuations over the course of my investment but Covid and its impact is a different kettle of fish! I can only see my fund performance as negative over the next few years. Your graph is certainly an eye opener and food for thought.


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    #4
    daheff
    Registered Users Posts: 5,833 ✭✭✭daheff


    I think you should take out some funds. 80% is a very high allocation to any one product (appreciating it's a diversified product already).

    For 5% loss, not the end of the world to take it out. Still think there's a bigger drop to go here because of Covid.


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    #5
    Jim2007
    Moderators, Business & Finance Moderators Posts: 9,988 Mod ✭✭✭✭Jim2007


    Blackie01 wrote: »
    Thank you Jim for your reply and advice. What has changed my strategy is Covid. Yes I expected major fluctuations over the course of my investment but Covid and its impact is a different kettle of fish! I can only see my fund performance as negative over the next few years. Your graph is certainly an eye opener and food for thought.

    What is different about it... it is going to cause a recession, you were expecting a few of those right?

    If you honestly can't stick the heat right now and decide to get, then you probably should consider going with a lower risk option moving forward. Because jumping in and out of the market every time something goes wrong will cost you more than the lower return you will get on a less risky option.

    Never take on more risk that is necessary and never take on more risk than you are comfortable with to do otherwise will almost certainly cost you money in the long term.


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    #6
    Shedite27
    Registered Users Posts: 9,363 ✭✭✭Shedite27


    I'm with Jim, hold your investment. Historically, there's a recession in every 10 year period, so you were going to get one at some point in your investment.

    And even with a recession every 10 years, the longer you leave your investments in equities, the higher the chance you have of making a profit, 94% if you leave it 10 years.

    Taking your money out now is the reason the chance of a profit is so low after 1 year

    Prob-of-returns.png


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    #7
    Dave1711
    Registered Users Posts: 467 ✭✭Dave1711


    Unless you need the money i wouldn't take it out high risk investments are going to drop at some point but chances are they will balance out and you will come up over a 10 year period


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    #8
    Blackie01
    Registered Users Posts: 6 ✭Blackie01


    Many thanks for all your replies and advice. I will decide soon and whatever decision I make, I will stick with it and be happy regardless of its outcome!


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