Four years in index funds: from €125,000 to selling at a loss

€125,000 in index funds, and four years later, in the red

In 2015, with Draghi flooding the market with liquidity and interest rates at rock bottom, a saver decided that leaving his money idle in a current account was a bad idea. He split €25,000 into the IBEX, €25,000 into the EuroStoxx and €35,000 into the S&P 500, kept another €40,000 in cash, and promised himself he wouldn't check the portfolio for months. Almost four years later, he closed all three positions with a negative return. The chronicle of that journey — with its calculations, its swings and its temptations — says more about the Spanish retail investor than any product brochure ever could.

The starting point: fed up with the current account and afraid of a deposit haircut

The initial thesis wasn't technical, it was born of weariness. "I got tired of swimming against the tide," summarized the author of the post that started the discussion. With the ECB buying debt hand over fist, leaving money sitting still seemed like a punishment: if the bank doesn't pay, and on top of that there's the antiestéticar that one day they'll invent a haircut on deposits, better to have something that moves.

The choice was an ING fund with three legs: 25% into the IBEX, 25% into the EuroStoxx and 35% into the S&P 500. The remaining 15%, about €40,000, stayed in cash "just in case." The stated plan was to leave it for a year and come back to discuss it. Reality turned out to be considerably longer.

The replies weren't long in coming, and they weren't kind. Some warned that having dead money doesn't make the moment a good one to invest; others, that arriving after a rally usually proves costly. The most repeated criticism: the fund's fees are charged regardless, whether you gain or lose.

The first update: €10,000 in the red

The first assessment arrived soon and was blunt. Losses of 5% in the United States, 20% on the IBEX and 15% in Europe. In euros, around €10,000. The investor's reaction was like almost everyone's: thinking about moving money from one place to another. Specifically, transferring the US holdings into the IBEX.

That's where one of the classic vices of the small investor comes into focus: buying what has already fallen because "it has more room to rise." The response from those around him was the opposite: if you've lost €10,000, the sensible thing is to run. The protagonist's reply had a comic touch: "Run from whom? Is someone chasing me?"

The American pivot: exiting the S&P with a 4% gain

The only move that worked out was the United States one. After more than a year, he put €35,000 into the S&P and took out €36,200, a 4% return. He justified it with a textbook argument: everyone was saying the index was at all-time highs and could only go down. So he sold.

Meanwhile, the European positions were still awash in red: a 22% drop on the IBEX and 17% in Europe. His bet was to hold on. "I've already suffered the fall; in a couple of years I'll have recovered," he maintained. The phrase sums up the psychological trap of the passive investor: turning a loss into a thesis.

Two years later, finally in the green (and not knowing what to do)

The thread came back to life after a day of gains. For the first time, the balance was positive. The S&P was already liquidated; Europe and the IBEX were still being held. And the eternal doubt appeared: "I don't think it's the moment to jump on any train right now... or is it?" Nobody knows. That's the only honest answer.

At this point in the debate, alternatives the protagonist admitted he didn't know about came up: dividend distribution ETFs, with the warning that some don't pay them and others suffer withholding taxes at source. Low-cost fund managers' index funds also came up, with annual fees of around 0.30% versus the 1% or more of traditional banking products.

The end: three positions closed and a negative balance

The conclusion came almost four years after the first post. Positions unwound, all three. Overall experience, bad. Negative return. The IBEX money went into a US ETF (50%) and the rest was split into four individual stocks: Iberdrola, CAF, Valeo and Amper. "Off to sleep... I'll tell you all about it in another four years."

The story leaves several uncomfortable lessons. The first: geographic diversification doesn't protect against bad market timing. The second: management costs eat part of the return even when the market cooperates. The third: the temptation to rotate portfolios based on the latest headline is stronger than any written plan.

And a curiosity that hovers over the whole discussion: the investor confessed he didn't even pay for his ADSL, because he had "very nice neighbors." The detail, somewhere between a joke and a confession, portrays a generation that learned to invest through hard knocks and forums.

---

This article does not constitute financial advice. Investing in equities involves the risk of loss of capital.