Sense Check on Investing in Shares

[PanicBuyingBogRoll]

I'm not at all familiar with investments or shares in any way. So please forgive me if this is a stupid question. I think I know the answer anyway but thought it worth checking.

I've got a small pot of money in a General Investment Account on Moneybox.

It's currently sat at -16.5%. It was down at -19.8% at its lowest and was at a high of 6.5% pre covid crash.

I've also got some money in a savings account with an interest rate that might as well be 0.

My question is. If I put the money from my savings account into the investment account, and the value rises from where it is now at -16.5% back up to 0. Will I earn 16.5% interest on the money I put in? So £100 would become £116.5.

Obviously I understand it could also go down.

Thanks

[Benbay001]

If a value is 84% of what it was and goes up 16%, it doesnt return to the original 100%, because you are making 16% on a lower amount.
If you bought more units of whatever you already have and they unit price returns to its original price, the new units would have gone up by more than 16%.
From some quick maths i believe it would be 19%. Im sure someone will confirm.

I think the important thing is to point out that prices have dropped for a reason, and putting more money in expecting prices to return to where they are in a short period, is missing the point of why they have dropped. Prices have dropped because corporate earnings are expected to be much lower.

[PanicBuyingBogRoll]

Thanks. That makes sense.

I'm not expecting a quick return. But in the medium term I think the shares would provide a better return than a general saving account.

[Oldscottishgit]

Benbay001 said:

If a value is 84% of what it was and goes up 16%, it doesnt return to the original 100%, because you are making 16% on a lower amount.
If you bought more units of whatever you already have and they unit price returns to its original price, the new units would have gone up by more than 16%.
From some quick maths i believe it would be 19%. Im sure someone will confirm.

I think the important thing is to point out that prices have dropped for a reason, and putting more money in expecting prices to return to where they are in a short period, is missing the point of why they have dropped. Prices have dropped because corporate earnings are expected to be much lower.

If I understand correctly (ignoring adding any new money to the account), you are looking for a 19.76% return, since 100 * (1 - 16.5%)* (1 + 19.76%) = 100.

Does that help?

If you're adding money, then the return will depend on how much money you added and how much money you originally invested.

Edited by Oldscottishgit on Saturday 4th April 11:51

[PanicBuyingBogRoll]

There really isn't much in there. I've only put in something like £400 which has been from the roundup function over a couple of years.

I started just to see what would happen to the money and just let it hopefully grow.

[BlackG7R]

This may give you a rough idea. I wouldn't know the equation to work it out exactly, without sitting down and playing with the numbers for a while.