Newly managing parents accounts - annual losses normal in this market?

[Anonymous]

Hi, I just recently took over management of an ill parents accounts. They have a managed trust account that I was told takes a "protect the principal" conservative approach. This account has lost 12% yoy 21-22 and of course the year prior was also bad due to the onset of the pandemic. Is this unavoidable and should I just stay the course? Or should I be stepping in to prevent further loss? I am not exactly knowledgeable about any of this but the account appears to be structured at 33% equities, 41% fixed income (what is that?), 20% asset allocation.
Uh. IDK what that even means so clearly I need someone to help but anyone with more savvy than me have advice? Buckle up and ride it out?
There's also an IRA that's losing $ too.

Thanks for any advice.

[Anonymous]

Have you looked at the news? Everything is losing money these days

[Anonymous]

Anonymous wrote:Hi, I just recently took over management of an ill parents accounts. They have a managed trust account that I was told takes a "protect the principal" conservative approach. This account has lost 12% yoy 21-22 and of course the year prior was also bad due to the onset of the pandemic. Is this unavoidable and should I just stay the course? Or should I be stepping in to prevent further loss? I am not exactly knowledgeable about any of this but the account appears to be structured at 33% equities, 41% fixed income (what is that?), 20% asset allocation.
Uh. IDK what that even means so clearly I need someone to help but anyone with more savvy than me have advice? Buckle up and ride it out?
There's also an IRA that's losing $ too.

Thanks for any advice.

Your performance matches the Vanguard retirement Fund, and allocation is not too dissimilar.

https://investor.vanguard.com/investment-products/mutual-funds/profile/vtinx

I think let it ride, you seem fine.

[Anonymous]

Anonymous wrote:Hi, I just recently took over management of an ill parents accounts. They have a managed trust account that I was told takes a "protect the principal" conservative approach. This account has lost 12% yoy 21-22 and of course the year prior was also bad due to the onset of the pandemic. Is this unavoidable and should I just stay the course? Or should I be stepping in to prevent further loss? I am not exactly knowledgeable about any of this but the account appears to be structured at 33% equities, 41% fixed income (what is that?), 20% asset allocation.
Uh. IDK what that even means so clearly I need someone to help but anyone with more savvy than me have advice? Buckle up and ride it out?
There's also an IRA that's losing $ too.

Thanks for any advice.

Equities - Stocks
Fixed Income - Bonds
Asset Allocation -- WTH is that? you need to figure that one out, is that cash?

[Anonymous]

ok, I guess I'll let it ride. And to the pp who asked if I've looked at the news, yes I have, but there's people constantly in this forum saying their stocks are up, so I'm not sure why they'd be the exception to the narrative of everything losing for the last 2 years, except that I'd also love to be an exception.

[Anonymous]

Yeah that's fine. ALso, they have not lost money until you sell. At this point, it's just lost value.

[Anonymous]

Anonymous wrote:ok, I guess I'll let it ride. And to the pp who asked if I've looked at the news, yes I have, but there's people constantly in this forum saying their stocks are up, so I'm not sure why they'd be the exception to the narrative of everything losing for the last 2 years, except that I'd also love to be an exception.

Type this into Google

Chart for
Vanguard Total Bond Market Index Fund ETF

Look at 5 year chart.

Bond funds did badly for your parents.

[Anonymous]

Look into T bills instead of bond funds. Treasury bills earn close to 4% and no downside. Don’t understand how bond funds can keep going down. I thought old retirees had majority bond funds to be safe.

[Anonymous]

Traditional “conservative” approaches - which under normal market conditions provide downside protection against equities - have been very negative this year. It’s because of the interest rate hikes - in fact rates were hiked .75% today. When rates go up, the value of current bonds goes down - and you see negative returns for your bond holdings. Not fun, esp when you’re in a conservative portfolio. But in the big picture higher interest rates are good for savers and bond investors. New bonds being issued this year have higher coupons, as do new CDs and bank fund rates.

[Anonymous]

I also thought old retirees had bonds to be safe. Clearly they are no longer that way. Thanks for the responses.

[Anonymous]

Anonymous wrote:Look into T bills instead of bond funds. Treasury bills earn close to 4% and no downside. Don’t understand how bond funds can keep going down. I thought old retirees had majority bond funds to be safe.

The downside is that inflation is higher than 4%