Levinal,

I am not sure if you have bought unit trusts through a bank which is still trading or a bank which has failed already as your question is very short therefore 2 answers listed beow.

1 Unit trusts are investments, not deposits and the risk is advertised on any literature, they are basically groups of shares bought and traded by Financial companies and thus will most probably lose value in a bear market / crash as we are suffering from right now.

It is no good selling now as you wil lose any chance of regaining any of your loss so far when the stock market recovers.

I have been out of my Unit Trust Investments for a year now but I am just about to start a new monthly savings plan into Unit Trusts and Investment Trusts, Yes the market may fall a bit more but saving monthly can help even out the prices and risk as can having Unit Trusts in different sectors.

2 Your only compensation is that if the company/institution holding the units for you went down - you would receive the current value through another scheme. If you could furnish further details or search the net you should find the answer.

I AM NOT A FINANCIAL ADVISER, AND AM ONLY EXPRESSING MY OPINION.

We have a "locked" in retirement scheme (ie we arent allowed to take the money from the scheme until we are 65). It operates as a unit trust. Even though we are locked in we can change to varying risks ie a cash unit trust, part cash part shares, all shares.

We are advised by all the experts to keep it in the chosen plan and stay with it in the long term.

What I can't get my head around is this:

If I choose all shares and they go up when I draw the money out at 65 I have done well, but it is goes the other way then on retirment I have basically lost money when I am real need. Wouldn't it be better to move the money I have in the unit trusts in line with the trend in the economy? that is shift any new money into a cash fund until the sharemarket improves and then into shares and then pull it out when the shares trend downward again?

I am wondering if Unit trusts are really what they crack up to be, as it seems the many who have had them have had really poor returns and they say they would have been better to just have the money in the bank (a safe one!) earning interest.

Purple Heby,

Yes, if you can correctly assess when the stock market is going to dip into a bear market or a crash as this one looks like now. The it would be great to sell your units and hold as cash until the market stars to recover BUT if you miss out on the best 10 days of the year (ie) the early part of the recovery then you will end up worse off.

It is too late to pull out now, if anything buying low is a good way to go but sticking to your monthly investments is worth it. I only pulled out a year ago as I felt a bear market was going to happen but also I was getting ready to move out of the UK.

Currently, I do day trading (riisky though) for a little exposure to the stock market, mostly selling the FTSE and GB Pound but am going to start a monthly drip feed back into recovery unit trusts this week. Any investments into the market has to be minimum 5 years, especially Unit & Investment Trusts but if you can't take a risk then stick to a "safe" bank account if you can find one.

Also, more importantly if you can spend a couple of hours a week learning about investments and reading financial magazines and websites you can soon make decisions to switch from one unit trust to another or when to switch into cash unit trusts. Since 1998 I have made 140 times my original investment using unit trusts, Investment Trust Warrants and Property.

I never took any advice from professionals, until last year when I went on a short seminar to learn charting. I was probably very lucky in the first 2 years and went against other people's views sometimes so it shows that individuals can make their way through the "financial maze" as I used to think it was in 1998.

If you have a good few years to retirement, your unit trusts should prove better than a bank from now on (as long as they are not invested in banks)

Finally, I was making a rather large deposit into CD's (term deposits) in a bank in Las Vegas back at end of July. They tried to get me to see their finacial adviser as he was in the branch at that time so I listened to him spout off about the fact that I should be investing a third of my cash in Bank Stocks and Energy Stocks!!! He was working for WACHOVIA INVESTMENTS but his portfolio has dropped by well over 50% in just over 2 months. My deposit is also with Wachovia but fully guaranteed and now being looked after by Wells Fargo. Just an example of what can happen if you trust someone else to manage your investments, but their are many great advisers out there so just do you homework.

Good Luck.

Hi,

I have a selection of unit trusts in the UK and European markets. They've lost a lot of value over the last few weeks and I'm wondering what to do. I held on to them during the last crash around 8 years ago and they slowly recovered to their original value in 2-3 years. This time I don't know whether to jump out and deposit the cash in a bank for a couple of years or just hold on to them again. Either way it's going to be a rough ride.

All help would be appreciated!

Cheers...

More importantly (for many of us) - what about GUARANTEED BONDS from banks/building societys that are still running (Nationwide for example) - are you trying to say that these are at risk if the bank runs in to trouble ?

PAC,

Example figures here, FTSE & DOW have lost 40% in the last year and if you had £10,000 in unit trusts at that time they are now worth approx £6,000 (average figure).

If cashing in, how many years of 5% interest compounded would it take to get the 66% growth that would bring your units back to £10,000. No one can predict future stock market growth only assume it. do you remember the big dip in the market of 1997/1998, that recovery just took a few months. I was invested in warrants then and the previious growth was wiped out along with a bit more, all financial articles were pointing to a quick recovery so I invested double my original investment in the same warrants and quadrupled my money in those few months.

Investment Trust Warrants are highly geared and almost as risky as an Icelandic Bank so don't get the wrong idea,(there aren't many left anyway) I am just giving an example that recoverey can be a few months or as you said 2 to 3 years. The initial recovery when it happens is amazingly quick and couldmean 2 years of bank interest in a few days

Twee,

I had a guaranteed equity bond back in the high growth days in the 1990's with 130% of rise in the FTSE or capital back if the index lost less than 30%.

Now, I looked at these last week to invest into again but nothing good on the market at the moment.

To answer your question, the GUARANTEE of your original capital back if the index or indices your bond is linked to does fall below the level at which you invested is either down to the bank or to an insurance company.....

Nationwidw look very steady as they were not silly with their lending practises but if the literature that came with your bond says it is insured by AIG or another insurance company which is a subsidary of AIG or another troubled insurer then the shortfall part of your investment could be at risk (ie the percentage fall in the index) The Guarantees are only as strong as the issuer of that Guarantee. I hope this answers your question

When markets are strong, the GEB offers are attractive but when the markets weaken as of this week the offers are very tight. Also are you aware that GEB's do not give you the dividends that the shares themselves would do.

My personal opinion is that I will be investing in a mix of unit and investment trusts on a monthly basis consisting of UK recovery, UK income & Growth Unit trusts and a Generalist Investment Trust which covers mainly UK & US markets. Yes I agree the markets may not be at an absolute bottom yet but buying more units when prices are low does help with the returns. Over the next 3 years I should have a healthy profit but only invest what you can afford to lose.

ATM,

I know you're right and I'll just hold on to these investments - maybe even add to them when they're very low. I am slightly nervous though as I had some single shares a few years back (Baltimore) that almost doubled their value in a couple of months, then they plumeted. I held on to them thinking they would eventually recover, and now they're literally worth nothing. I also bought BT shares at a similar time and we all know what happened to those. These were expensive mistakes that I don't want to repeat. I know my unit trusts are so widely spread that this is really unlikely to happen. Still a bit nervous though...

PAC,

Yeah, I remember the tech & telecom stocks too well as lots of colleagues lost big money with some folding altogether, one friend lost his business over dealings in Nasdaq, Mr Buffett stayed out of those because there was o value in them.

Steady monthly investing on the long term should even out, there aren't too many 10 year periods when they don't produce a better return than a bank, but the current crash has shown the bank deposits to be on a winner this time.

I am going to feed a grand a month into the trusts mentioned (split evenly) over the next 3 years minimum, as they are low now and could go lower the markets normally start to gain an upward momentum around half-way through a technical recession.