When there is a correction in the market, the fund will also retreat, which will make many investors' funds suffer losses. What should I do if the fund loses money? The following are the reasons collected by Bian Xiao for the fund's losses. Let's have a look!
What causes the fund to lose money?
There are many reasons for the fund's loss. The following are some common causes of fund losses:
Market risk: There may be adverse fluctuations in the market where the fund invests, such as the decline in stock market and bond prices, which will lead to the decline in the value of the fund portfolio.
Individual investment risks: Some stocks, bonds or other assets invested by the Fund may face specific risks, such as poor company performance and bond default, resulting in related investment losses.
Interest rate risk: the fund invests in fixed-income products such as bonds, and there is interest rate risk. The rise of interest rate may lead to the decline of bond prices, which in turn will affect the fund's net value.
Operational risk: fund managers' investment decisions and operational mistakes, such as wrong industry allocation and stock selection mistakes, may lead to losses.
Redemption pressure: when a large number of investors redeem fund shares together, the fund company may face redemption pressure and have to realize assets at a lower price, resulting in losses.
If the fund loses money, will it lose all its principal?
The loss of the fund does not necessarily lead to the loss of the principal. The value of the fund is closely related to the fluctuation of the investment portfolio, and the net value of the fund may fluctuate. When the fund loses money, the net value of the fund will drop, but it does not mean that the investor's principal will lose money completely. However, unpredictable market conditions and fund risks may lead to fund losses exceeding the principal. Therefore, investors should make prudent investment decisions according to their own risk tolerance and investment objectives, and pay regular attention to the performance and risk status of the fund.
What if the fund loses money?
1. Switch fund mode
In order to meet the needs of different investment users, the same fund company will launch different types of funds according to the level of risk, and support business conversion between different funds. Therefore, if fund A loses money and feels that the risk of loss is high, it can consider switching to a low-risk fund.
2. Make up the position at the right time
If the investment fund is currently in a loss state, but there is a tendency to turn over in the future, it is best to cover the position at this low level and increase the investment amount. This method tests investors' vision and judgment, and is suitable for fund products with excellent historical performance and good operation.
3. Stop loss in time
Timely stop-loss method requires investors to set a stop-loss position, that is, when the fund loses money to the stop-loss position, it must sell decisively, switch to other funds or wait and see for the opportunity to buy again.
What should I do if the fund has lost a lot recently?
First, stop loss in time: stop loss is forward if the direction is wrong.
It is said that the fund takes profit and does not stop loss. Is that so? In fact, there are a series of preconditions for this statement, such as the fund that suits you, the optimistic prospect, and the fund itself. If any of the above three points are not satisfied, you can stop the loss in time. After all, stopping in the wrong direction means moving forward.
1, which is beyond your risk tolerance.
In fact, before buying a fund, everyone should think clearly about this problem. For example, the maximum loss you can bear is 40%, so when the fund falls by more than 40%, it is recommended to sell the fund in time or replace it with a stable fund.
Because different funds have different risks. If you buy a fund that is not suitable for your own situation and risk tolerance, then the fluctuation of the fund will definitely affect your normal life and investment mood.
The first step of any investment and financial management is to invest within your own risk tolerance. If you exceed your risk tolerance, to put it bluntly, 100% will not have a good end.
If your fund position exceeds your risk appetite, and it is a heavy position, even in Man Cang. Or holding dozens of funds without planning, it is better to cut meat and adjust positions early. Because when the market adjusts, you can't afford such a big adjustment. For example, you can only accept the adjustment of 10%, but your position is too radical. Because you didn't stop the loss in time, you may adjust it by 20% or more in a few days. Even more frightening is that this adjustment may not be over yet. Even if this round of adjustment is over, there will be more fierce ones behind, which will be thrown out sooner or later. It's better to get out early than to expect more losses. So do friends who hold dozens of funds. They are full of joy when they go up, but when they adjust, you will find it difficult to make up the position. With so much money, it is impossible to make up the position. After a few times, they will lose more.
2, extremely optimistic about the market outlook.
A major prerequisite for the fund to make money is to be optimistic about the stock market trend for a long time. Although funds can cross bulls and bears, the bear market falls less and the bull market rises more, but the overall trend is still similar to the broader market.
If the market is adjusted for a long time or there is no market, then the fund is likely to make no money or even lose money. So if you are bearish on the stock market for a long time, then the fund also needs to stop loss. Of course, no one can accurately judge the market trend. We only objectively analyze the overall operation strategy of fund positions from the perspective of ordinary fund investors. If you are pessimistic about the market outlook for a long time, then the stop loss operation at any time is correct, and the sooner the better.
Of course, for many experts, most of them think that what falls is a golden pit, and those with high returns dare to suck low, because the profit mechanism of the fund is to suck low and throw high, but only if they can hold it and see the multi-stage market.
3. Performance can't win the market for a long time.
No fund manager can outperform the market at every stage. A-share market is relatively good. It is normal for funds with partial debts and low stock positions to underperform the broader market. For industry theme funds or funds with distinctive styles, if they are not at the forefront, they will underperform the market. However, it has underperformed the broader market for three or four consecutive quarters, especially when the market style turns to the fund position style, and there is still no excess return. Such funds should be held carefully.
In addition, when the fund scale reaches the "ceiling" determined by investment strategy and investment ability, the continuous expansion of the scale may lead to the failure of strategy and mediocre performance, and it may be difficult to meet the high expectations of investors after buying.
Faced with these situations, it is better to sell them as soon as possible and convert them into funds with excellent historical performance and relatively stable performance, or simple and transparent index funds. Don't wait until the mud is deep. The more you lose, the more reluctant you are to come out.
Second, make up positions: make a good budget for making up positions and make a reasonable plan for making up positions.
Buffett has a famous saying: others are afraid that I am greedy. Many small partners will choose to make up their positions in the decline, making up less and making up more. There is no problem with this theory, but the reality is that most people have limited cash flow. In the long-term shock callback, it is easy to fall into the embarrassing situation of "I copy me, I copy me, and I also copy bullets". Jobs said, "Living is to change the world". But the first point is "live first".
No one can predict when the sun will rise again, so it is particularly important to make a good budget and make a reasonable plan to cover the position.
Filling position method
Prepare for 1-2 years for each replenishment. The next step is how to make a plan to cover the position.
You can add positions in a fixed proportion and strictly enforce discipline. Or according to the pyramid method, when the fund falls, with the decline of the net value, the position of each additional position is gradually increased, thus reducing the average investment cost.
For example, if the current net value of Fund A is 1.2 yuan, and the range of increasing positions we set is lightening positions 10%, then we will increase positions 1 1,000 yuan; When the net value drops by 20% to 0.96 yuan, add another 2,000 yuan; If the market outlook continues to fall, then add 3000 yuan until the net value rises.
With the decline of net worth, this method is a test for investors' cash flow. If the cash flow is sufficient, the cost of holding positions can be minimized.