What happened to those who still lost money after three years of regular investment?

In the blink of an eye, 2023 has come to an end. For the twists and turns of the market this year, I believe that most of the people are deeply touched.

Since the third quarter, the good news about A-shares has emerged in an endless stream, and the bull market that is said to be good has still not come, and every time I think that the inflection point has arrived, the market can always make you sober. This round of adjustments, which began in early 2021, still seems to need to wait for the baptism of time.

A friend asked the editor in the background: It's been three years, and the regular investment account is still losing money, is there any hope?

Judging from the data, if you enter the CSI 300 Index at 1,000 yuan every month from 3 years ago, and follow the current round of market bumps to the present, although the loss has been reduced compared with a single investment, it is still facing a loss of -18%.

(Source: Choice, with the CSI 300 Index as the simulated regular investment object, the regular investment time range is November 2, 2020 ~ November 2, 2023, the algorithm: according to the calculation period (daily) in the selected time period N intervals, annualized rate of return = [(1 + current rate of return) ^ (365 / number of days in the calculation period) - 1] * 100%, historical data does not predict future performance, does not represent investment advice. ）

You need to wait, but if you keep losing money, how should you boil this bowl of "chicken soup"? Don't worry, the editor uses data to speak, and will take you to take a good look.

1►

Those cases of regular investment for three years and still losing money,

What happened next?

The principle of regular investment of funds is to reduce the average cost through long-term investment in stages, but it should be noted that the regular investment of funds ≠ make steady profits without losses, the market tide fluctuates, and regular investment is not 100% profitable. The process from floating losses to positive profits is what we are familiar with as the "smile curve".

Of course, it is also a regular investment operation, and the timing of the start is not good, and it may indeed experience a period of pain.

Through backtesting, it was found that in the past ten years, the CSI 300 Index was opened on any day and insisted on for 3 years, and among the 1912 groups of fixed investment results available, a total of 566 groups suffered losses, accounting for 29.6%. In other words, there is less than a 1/3 chance that we have insisted on regular investment for three years and still haven't made any money.

(Source: Choice, with the CSI 300 Index as the simulated regular investment object, from January 4, 2013 to November 16, 2020, the CSI 300 Index will be opened on a monthly basis from each trading day (buy a fixed amount every 20 trading days) for 3 years.) Historical data is not indicative of future performance and does not represent investment advice. ）

As shown in the figure above, the time when these loss cases appeared was very concentrated, namely 2015-2016, when the ebb and flow of the "mad cow", and 2019-2020, when internal and external factors were intertwined and "trapped" many new people.

The end of the 15-year "mad bull" market is like cooking oil on fire, the Shanghai Composite Index once stood at the peak of nearly a decade of 5178 points, as the tide receded, the market also ushered in a violent adjustment, during which the CSI 300 index maximum retracement reached 47.6%.

In contrast, this round of shocks and declines that began in 2021 is more akin to "blunt knife cutting meat", the market has experienced the collapse of "core assets", the overall market shock and decline, and the bull market can not wait, during which the CSI 300 index has a maximum drawdown of 41.8%.

(Source: Choice)

The common point of these two waves is that the market has experienced a sharp fall after a big rise from bull to bear, and investors either entered the market at a high level or did not take profit in time, resulting in an "inverted smile curve" in regular investment.

The so-called "inverted smile curve" is roughly the situation of opening regular investment during the upward period of the market, increasing investment and increasing costs at high points, and then the market falls rapidly, resulting in regular investment losses, which is the opposite of the smile curve.

INTERVIEWER So, if we experience a similar situation, can we still hope to make a profit and return on investment? We still look to historical data for the answer.

When the net value of the fund has fallen all the way and you have not made any money for three years, will you feel hopeless? Will you begin to question the effectiveness of regular investment? For the people who are in the period, the answer is obvious.

However, after tracking the 166 cases of "regular investment that has not made a profit for three years" from 2015 to 2017, the editor found that:

If you insist on regular investment for another 1 year, the proportion of the total rate of return of regular investment can reach 100%.

At the end of the fourth year, the average total rate of return of the case was 12%.

(Source: Choice, with the CSI 300 Index as the simulated regular investment object, from January 4, 2013 to November 16, 2020, the CSI 300 Index will be opened on a monthly basis from each trading day (buy a fixed amount every 20 trading days) for 3 years.) During the period from 2015 to 2017, 166 data with a negative total return on regular investment for 3 years were selected, and 12 periods of fixed investment were continued to be fixed on a monthly basis to observe the total rate of return. The proportion of the total number of positive returns to all cases is the ratio of turnaround. Historical data is not indicative of future performance and does not represent investment advice. ）

This also tells us that if we give up regular investment because of a temporary "inverted smile curve", we may also miss the subsequent market rise again. A-shares are always like this, there is no lack of ups and downs in the plot, what is lacking is the heart that keeps the clouds open and sees the moon.

2►

Regular investment continues to lose,

Should I stop my loss or continue?

We may all understand the truth, but for many investors, this situation still makes them feel very anxious, especially in the face of a continuous decline in the market, should they stop the loss or continue to invest?

To answer this question, we need to clarify the core philosophy of regular investing – to capture more shares at a lower cost, and then strive for strong returns as the market enters the second half of the smile curve.

Therefore, when there is a loss in regular investment, we should not stop the loss arbitrarily immediately, but first look at the overall environment, and we can compare the rise and fall of the fund in hand with the market market:

If the position is relatively resistant, it means that regular investment may have helped us avoid some risks. In this case, it may be wiser to stick with regular investments and wait patiently.

If the decline of the fund greatly exceeds the overall market, similar products and performance benchmarks, investors can further observe whether there is a problem with its fundamentals, whether the investment direction of the fund has changed, whether the investment style has "drifted", whether the fund manager has changed, etc., or directly through the corresponding financial APP and financial manager for health diagnosis.

If the fund itself fluctuates greatly, and the fund manager is more familiar and trusted, or the investment is a broad-based index fund that is expected to rise for a long time, you can observe for a period of time and wait for the gift of time.

Because, arbitrarily terminating the regular investment plan during the "trough period" will reduce long-term returns.

Let's take the Wind Partial Equity Mixed Fund Index as an example.

In the more than five years from May 2015 to January 2021, the index has experienced a relatively complete round of regular investment smile curve, but there are also many twists and turns during the period, and it needs to go through three more difficult market bottoms: July 2015 - October 2015, January 2016 - February 2017, April 2018 - June 2019.

Wind Partial Equity Mixed Fund Index Trend

Data source: Choice, statistical period: 2015.5.29 to 2021.1.29, the historical performance of the index is not indicative of future performance and does not constitute investment advice.

Suppose there are two sets of regular investment schemes:

(1) During this period, we have insisted on investing 1,000 yuan at the end of the month, without stopping and uninterrupted;

(2) Suspend the regular investment during the above three trough periods, and resume the regular investment after the market reverses.

Partial stock hybrid fund index: has always insisted on regular investment VS low point fixed investment

The results of the calculations show that:

Data source: calculated according to Choice, statistical interval: 2015.5.29-2022.1.29, regular investment date: the end of each month, with partial stock mixed fund index as the simulation of fixed bidding, ignoring fees, monthly regular investment m yuan, regular investment income formula: R = [(m/x1+m/x2+...... m/xn）*Xt – b】/b =【（m/x1+m/x2+...... m/xn)*Xt]/b–1;(R=cumulative rate of return, m=monthly investment amount, x=buying price, n=number of regular investments, Xt=transaction price on the redemption date, b=cost);Among them, the monthly investment amount of "always insisting on regular investment" is 1,000 yuan;"Low point suspension of regular investment" in the following months - July 2015 to October 2015, January 2016 to February 2017, From April 2018 to June 2019, the fixed investment amount is 0 yuan, and the regular investment amount in other months is 1,000 yuan. This data is a historical simulated return, and the simulated return does not represent the real return of history, nor does it represent the expected return in the future.

As shown in the chart above, if you suspend your regular investment during the trough period and resume your regular investment after the market rebounds and stabilizes, the income of your regular investment will be discounted.

The reason behind this is that, on the one hand, in a long-term regular investment process, the key to winning is actually "buying cheap shares at a low place", trying to avoid the falling range by terminating regular investment, in fact, it is also missing the best opportunity to increase positions. If you only buy at a high level and stop at a low price, it will be difficult to reduce the cost, which will naturally destroy the principle of regular investment of the fund.

On the other hand, "income = principal * rate of return", the absolute return of regular investment is not only related to the rate of return, but also related to the amount of principal invested. During the trough period, the regular investment was suspended, the share accumulated by the regular investment decreased, the principal invested decreased, and when the right half of the smile curve was raised, the cumulative profit obtained was relatively small.

At the end of the article, the editor would like to say that about investment, its essence is three things, finding value through research, finding price through tracking, and then waiting patiently.

To a large extent, the art of investment is the art of waiting and keeping, and in the process of waiting and keeping, it will inevitably go hand in hand with risks. Regular investment does not help us avoid risks, but it is a high-quality tool to help us establish investment discipline, overcome investment losses caused by impetuousness, and stick to long-term investment.

If you are ready for long-term regular investment at the beginning, you don't need to panic too much in the face of market twists and turns, because this is a "advance can be attacked, retreat can be defended" plan:

Gradually accumulate more fund shares at a low level, and do not miss the highlight moments that may come to the market in the future;

Replace "single investment" with "multiple investments", even if the market falls further, do not panic, and continue to buy cheaper fund shares according to discipline.

At present, we have witnessed the economic bottom, policy bottom, profit bottom, valuation bottom, and emotional bottom of A-shares in turn, and after the "five-fold bottom", the spring of emotions is ready to rebound violently to the mean at any time, and will inevitably return all the accumulated momentum in the process. As the saying goes, the market is often brewing a turnaround at the most pessimistic moment, and at such times, vague correctness is better than precise error.

More often, you might as well see regular investment as planting a seed, throwing away impetuousness, believing that "slow is fast", there are seeds, care, twists and turns, and waiting, when the market falls, it is as solid as a rock, and it is time to take profit when decisively exiting. When the sun is shining, nature will eventually give you abundant fruits.

Speaking of this today, I wish you all smooth investment and financial management~

disclaimer

The article is reprinted from the public account "Teach you to dig the base", the cover picture of the article comes from the panorama network, the above views are from relevant institutions, do not represent the views of the Tiantian Fund, and do not make any guarantee for the accuracy and completeness of the views. Yield data is for reference only, past performance and trend style are not indicative of future performance and do not constitute investment advice. The relevant views quoted are from relevant institutions or public media channels, and do not represent the views of Tian Tian Fund. Tian Tian Fund does not make any guarantee for the accuracy and completeness of the views, and investors operate accordingly at their own risk. The market is risky, regular investment is risky, and investment needs to be cautious. The above content is for reference only, the article involves individual stocks, does not constitute stock recommendations and investment advice, the stock market is volatile, please operate cautiously before purchasing. The mainland fund has been operating for a short period of time and does not reflect all stages of the development of the stock market. The fund manager does not guarantee the profitability and minimum return of the fund, and the performance of other funds under its management does not constitute a guarantee of the performance of the fund. The past performance of the fund and its net value are not indicative of future performance, and the full performance can be found on the product details page. There is a risk of income fluctuation in fund products, and investors should agree to the principle of "buyer bears their own responsibility" when making fund investment decisions, and the investment risks and losses caused by changes in the operation status of the fund and the net value of the fund shall be borne by the fund investors after making the fund investment decision. Investors should carefully read the Fund Contract, Prospectus and other legal documents of the fund to confirm that they know and understand the product features and related risks, and have the corresponding risk tolerance. The market is risky and investors should be cautious.

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