Timeline for What is the worst thing that can happen with my investment in mutual funds?
Current License: CC BY-SA 4.0
8 events
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| Jul 26, 2021 at 11:17 | comment | added | FrozenKiwi | @Yakk. So what do you make basic investing decisions on? Past results are quite literally the -only- way to estimate future returns. You have a point on multiple funds, but on the whole I would avoid any fund that doesn't have 10 years of history at least | |
| Jul 22, 2021 at 15:43 | comment | added | user3067860 | @DStanley It is trivially possible to lose all of your principal, dinosaur-killer asteroids do exist. Saying that the risk is so small that you won't bother to even consider it is how people got bit by 2008, 2020, GameStonks, etc. Know that risk always exists, figure out what it is to a comfortable approximation, and make decisions accordingly. | |
| Jul 22, 2021 at 14:00 | comment | added | Yakk | Prior results really don't predict future returns. It is a common practice for someone wanting you to invest in a fund to first launch multiple funds, then stop marketing the ones that don't give good returns. If the return is completely random, the funds marketed will all have above-average past returns, despite there being no reason to think they are better than random. | |
| Jul 21, 2021 at 17:37 | comment | added | Bob Baerker | There are a variety of structured annuities that provide a caps along with downside protection. A common type offers 7-10% gain to the upside (depends on the sector/ETF chosen) while indemnifying you for the first X percent of the downside (say 10%). These are generally based on a combination of option positions and if you do it yourself, you'll have a higher profit cap and/or larger amount of downside protection. Ironically, these two numbers get even higher (a good thing) when implied volatility increases. | |
| Jul 21, 2021 at 16:39 | comment | added | D Stanley | There are investment vehicles that protect your principal by giving up some of the upside (e.g. if the fund gains 20% you only get 10%, but if the fund loses 10% you lose nothing), but they are typically only available to very large investors (meaning I don't know of a mutual fund or ETF that works that way). | |
| Jul 21, 2021 at 16:38 | comment | added | D Stanley | Yes you can absolutely lose some of your principal - just not all of it. Depending on the risk (variance of returns) of the fund you might lose, say, 30% over 3 years in a worst-case scenario. but the average return might be 20% and the best case might be 100%. | |
| Jul 21, 2021 at 16:32 | comment | added | Severus Snape | In theory, would I lose something from the principal amount too? Say, the graph sloped upwards and right before the period is over, it sloped down. For example: during the investment it was at 100, it soared high but right before I finished the period it went down to say 99. In that case do I lose all of the principal amount or just some of it? | |
| Jul 21, 2021 at 16:28 | history | answered | D Stanley | CC BY-SA 4.0 |