You are very young Adam! If you find a good, no-load stock mutual fund, you'll get your 20K back times ten in about 25 years. Just keep investing in small, monthly increments and you can hardly be disappointed in the long run. I'm curious about the particulars of your fund, Adam. Is there a link to an analysis of it? A bond fund should not have lost 25% in 10 months! I want to pick its brain, so to speak. I bet it was made of corporate bonds.
My investment is basicly invested in many different markets spread all over the world: Stocks ( of all kinds of companies ), bonds and a small percentage in real estate. I had to make a so called "Investor's profile" so that the ones that take care of my investement would know how much risk I'm willing/able to take. In the end it turned out that 50% of my investment should be put into bonds, 40% into stocks and 10% into real estate. Since the value of most stocks declined rapidly over the past few months, I lost nearly 25% of the investment.
Fortunately, I have regained a part of the losses now, and my investment's value has risen to around 17.000 now again.
The reason why I was surprised that I lost nearly 25% while everything was invested in bonds is that I missed the fact that they sold a large portion of the stocks before they had become worthless. It wasn't purely invested into corporate bonds, but I believe a portion of it was also Government bonds.
I can't seem to find any pages that explain how the fund works, but I hope my explenation was clear enough.
I might put some money I have saved aside and buy some stocks myself, rather than invest it into another fund. The only problem is that I lack the time and information to make optimum decisions, but the sooner I learn how everything works the better. And most stocks are going up again, so now might be the right time to do it.
Yes, that makes perfect sense.
A bit of advice: don't invest in individual stocks; find a stock-index, no-load, mutual fund (that's a lot of adjectives) and put money into it that you won't need to withdraw for at least 10 years. It's best that you dollar-cost-average (a fancy term for putting a certain amount of money into an investment at regular intervals...example - X number of Euros per month.) It's better to break down an investment over time because when stock prices are higher you buy less individual shares and when prices are lower, you buy more shares; over time, this adds up to a significant advantage. And any advantage OVER TIME, will add up to a large chunk of change!
Of course, I went against mt own advice and pulled a large amount of dollars from the stock market to treasury bonds on August 1, 2008 (my own coarse attempt at timing the market) only to put it all back in to stocks on October 10. I sold in August because of many factors including LIBOR, the price of gold, the price of oil, and reduced credit availability. The probable housing market collapse also factored into it. The stock index charts even gave visual indications of a decline. I guessed right by accident and I don't recommend market timing unless you can afford to lose all your money. Market timing refers to the practice of trying to buy low and sell high. The risk of doing that is you can miss out on large, unpredictable positive changes in the market and be at risk of buying during a down turn.
For those who have 20+ years until they need their money, the stock market continues to be the best bet for long-term capital appreciation. Mid-term (10-20yrs) investments should be a blend of stocks and bonds (the shorter the goal, the less stocks you should own.) If you have shorter term (5-10yrs) investment needs, AAA rated bonds are the best bet. Short term (<5yrs) investments are maybe best placed in money market accounts or lower risk bond funds. If you're trying to protect an already large retirement fund from volatility, you should be <30% stocks, >70% bonds.
My asset allocation is 100% stocks. I'm 29 and won't be needing the money for at least 30 years (unless I get head cancer from watching South Park.
No one can predict when you die.) An all stock portfolio can expect to see an 11% rate of return over the long term. An all bond portfolio can expect to see a long term rate of return of only 5.5%.
Let's examine the difference.
A 1,000Euro investment with a 5.5% rate of return over 40 years will be worth 8,500.
A 1,000Euro investment with an 11% rate of return over 40 years will be worth 65,000!
There's quite a difference (7.64 times, to be exact!)
The longer your investment time horizon, the more stocks you should own. The shorter, the less stocks you should own.