Started thirteen months ago, contributing monthly into two broad index funds. Total is up about 1.8% including all contributions, which after fees and inflation feels like less than nothing. I understand this is meant to be a decades thing but I genuinely expected to see something by now. Is a flat first year common or did I pick a bad starting point?
Stop checking the balance monthly. Genuinely. Quarterly at most, and set a calendar reminder to look rather than opening the app when you feel like it. The emotional cost of watching a flat line is real and it's the main thing that makes people abandon a plan that was working.
Check one practical thing: what are you actually paying in fees and platform charges? On small balances a flat monthly platform fee can be a meaningful percentage. A £5/month charge on £6,000 is 1% a year, which really would eat your return. Percentage-based fee platforms are usually better until balances get large.
A flat first year is arguably the best training you can get. The people who quit are the ones whose first year was great, who then assumed that was normal and got badly rattled the first time it wasn't. You're learning the boring part early.
Mine did almost exactly this in year one, then two flat-ish years, then the fourth year did more than the first three combined. The returns don't arrive evenly and there's no version of this where they do.
@exdiv_eli · 2mo ago · 3 replies
Completely normal, and the maths of why is more encouraging than it sounds. When you're contributing monthly, your average pound has only been invested for about half the period — so after thirteen months, your money has an average holding time of around six or seven months. A flat-to-slightly-up result over that window is well within ordinary.
The more important thing: at year one your returns are dominated by contributions, not by growth. £6,000 contributed and £110 of growth feels bad, but at year fifteen the growth is the story and the contributions are noise. There's no way to skip that first stretch, and everyone who's been at this a decade went through exactly the same year feeling exactly what you're feeling.
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@exdiv_eli · 2mo ago
Very common error. If you want a fair comparison, look at money-weighted return rather than the headline index number, or just compare a single early contribution against the index over the same dates.
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@treadmill_tara · 2mo ago
The average holding period point is genuinely reframing. I was comparing my total against the index's annual return like they were the same thing.
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