I am a newbie investor in general and I bought index funds a few months ago and I contribute regularly.

I've read that many advise keeping index funds even during depression or bear markets and continue contributing.

I've also seen analysis on this very forum to sell index funds based on ROC (Rate of Change) indicator.

I'm becoming a little nervous as a newbie as my investments are in the red at the moment due to down market movements for the last weeks (or maybe even months?)

As an experienced investor, can you advise me how should I act under these circumstances?

Edit:

Sorry for the confusion. I should have mentioned also I'm planning to invest long-term 10+ years.

I own 4 index funds:

  • Fidelity Index US Fund P-Acc - 40% of my investments
  • iShares UK Equity Index Fund D Acc - 40% of my investments
  • Vanguard Emerging Markets Stock Index Acc - 10% of my investments
  • Vanguard Global Small-Cap Acc - 10% of my investments

All of them went significantly down.

I am UK based by the way.

up vote 3 down vote accepted

You need to ignore past performance when making a decision to keep or sell investments. That is the sunk cost fallacy that imperils many investors encouraging them to sell when the price is low out of fear.

The real question you should ask is if you had never invested before in these funds would you invest in them at today's price, because that is what you are doing if you hold them. If they answer is no, then sell them and buy something else, but don't weigh the fact that they are "down" into the decision.

  • I would also add that if you're a long-term investor, you should accept that your investments can go down, sometimes dramatically. If you don't think you have the stomach to see your investments go down 30%, 50%, or 70% in value and not sell, you might want less stock risk and more bonds. – wide.writing.immediately Oct 15 at 23:35

The fact that a fund is an index fund doesn't automatically make it good choice for your situation, or even this investing environment. An index fund is a fund that is designed to match a benchmark. Because the fund doesn't need a staff of analysts to make investing decisions it has lower expenses. The index fund will also only make changes in the makeup of the fund when the index making team decides to make a change to the benchmark.

There are dozens of known indexes. Some follow national markets; some international, some are indexes of a sector, or even a sub-sector. Indexes can be for things besides stocks. There are also bonds indexes.

So asking should I sell my index funds isn't the right question. You need to make decisions on time frame for your investments, and the risks you can accept. Then you can decide what investments meet your needs.

I am in generell a fan of steady and long investment, the stock market is very volatile so in a relativ short scope and usually the roc is used like that you get some extreme movements - sadly those movement has few impact on the next days since if this would be a fact the value will reach that prognostet point immidiate.

I wouldn't go for patern or roc, maybe take a look at price/profit ratio but this is also just telling half of the truth because it doesn't reflect an outlook for the future of the buissnes.

If you stay invested long, you have good chances to get more money back since your money is working in the enterprises you are invested in. If you just invest short term, i would say it is gambling since even broker with good market knowledge ain't performing well when doing it.

PS: On the choosen fund, look out to invest in different markets (country, tech/cars ...).

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