The short version
- A fall in price is a paper loss. Your investment is worth less on screen, but you still own exactly what you bought.
- It becomes a real loss when you sell for less than you paid. After that, a recovery can't help you.
- £1,000 put into a FTSE 100 tracker on 11 March 2020 was worth about £865 a week later. Held for a year, it was worth about £1,146.
- One company's shares swing much further than a fund, both up and down. These figures leave out fees, and holding on doesn't guarantee a recovery.
Part of Worries and myths. For the big picture, see how often UK shares have lost money since 1871.
- −11%sold the next day: £1,000 became £891
- −14%sold a week later: £1,000 became £865
- +15%held for a year: £1,000 became £1,146
Paper losses and real losses
When you buy a fund, you own a number of units. Their price changes every day the market is open, and your account shows what they’re worth at today’s price.
If the price falls, the number on screen falls. That’s a paper loss, sometimes called an unrealised loss. You still own exactly the same units, and if the price climbs back, the loss disappears.
A loss becomes real, or realised, when you sell for less than you paid. You get back fewer pounds than you put in, and you no longer own anything that could recover.
A simple illustration: you buy 100 units at £10 each, so £1,000. The price falls to £8, and your account shows £800.
- Sell now and you get £800 back. The £200 loss is real.
- Keep the units and the £200 is a paper loss. If the price goes back to £10, you’re back to £1,000. If it falls further, the paper loss grows.
Gains work the same way. A rise is only a paper gain until you sell.
The 2020 crash: selling after a day, a week or a year
As Covid-19 spread in early 2020, stock markets around the world fell sharply. The FTSE 100, the index of the 100 biggest companies on the London Stock Exchange, fell by about a third between 19 February and 23 March.
Its worst day was Thursday 12 March, when it fell 10.9%. That was its worst day since 1987.
Imagine you’d put £1,000 into a FTSE 100 tracker fund at the close of trading the day before, Wednesday 11 March. A tracker fund follows its index, so its value moves by almost exactly the same amount.
Sold after a week, £1,000 became £865. Held for a year, it became £1,146.
£1,000 in a FTSE 100 tracker, bought at the close on 11 March 2020, the day before the index's worst day since 1987
- What you paid
- Sold at a loss
- Still held
Source: FTSE 100 daily closing levels from Yahoo Finance, consulted 15 October 2026. Based on the index, so it leaves out the dividends a tracker would have paid and all fees. Chart: Invest in ETFs.
Show the data
| Sold on | FTSE 100 close | £1,000 became | Change |
|---|---|---|---|
| Bought: 11 March 2020 | 5,876.5 | £1,000 | – |
| 12 March 2020 | 5,237.5 | £891 | −11% |
| 18 March 2020 | 5,080.6 | £865 | −14% |
| 11 March 2021 | 6,737.0 | £1,146 | +15% |
- Sold the next day, you’d have got back about £891. That’s a real loss of about 11%.
- Sold a week later, on 18 March, you’d have got back about £865: a real loss of about 14%.
- Held for a year, to 11 March 2021, the same units were worth about £1,146, about 15% more than you paid. The dividends the fund passed on along the way would have added a little more.
Nothing about the fund was different in those three cases. You owned the same slice of the same 100 companies. The only difference was when you sold.
The price fell for everyone who owned the fund. The loss only became real for those who sold.
Holding on isn't a guarantee
This example flatters holding on, because by 11 March the market had already fallen a long way. Buy at a different moment and the year looks different.
If you’d bought on 19 February 2020, just before the falls began, you’d still have been down about 11% a year later. The FTSE 100 didn’t close back above its February level until 4 January 2022, almost two years on, not counting dividends.
So waiting gave the price time to recover, but not on a timetable. In any single year, UK shares have fallen in value about one year in four. Will I lose money investing? shows how those odds change the longer you hold.
That’s why money you might need within a few years is usually kept out of shares. If you have to sell while prices are down, a paper loss becomes a real one.
One company's shares swing much further
A FTSE 100 tracker spreads your £1,000 across 100 companies. When some fall hard and others hold up, the fund moves by roughly the average. A single company’s shares have nothing to balance them.
In the same week in March 2020, while the FTSE 100 fell about 14%, Barclays shares fell about 29% and Ocado’s rose about 36%. Over the full year, the gap was wider still.
Two things stand out. The range is far wider: from nearly doubling to losing almost a fifth, against a 15% rise for the index. And the first week told you little. Barclays fell furthest at first, then ended the year up about half. HSBC barely moved in the first week, then ended the year down about 12%.
That’s the trade-off with a single share: bigger possible gains, and bigger possible losses. The evidence suggests the extra risk isn’t rewarded on average. A study of more than 64,000 shares worldwide from 1991 to 2020 found that most did worse than cash, in the form of one-month US government bills. Just 2.4% of companies produced all of the stock markets’ net gains.
A fund that owns the whole market owns those few big winners, along with everything else. Buying a single share is a bet that you’ve picked one of them.
A single share can also become a real loss without you selling. If a company goes bust, its shares can become worthless, with nothing left to recover. In a tracker of 100 companies, one failure is a small slice. In a single share, it’s all of your money.
Single shares can cost more to buy, too. Buying shares in a UK company usually costs 0.5% in stamp duty, and ETFs are exempt, as What does an ETF really cost? explains.
What these figures leave out
- Fees. We haven’t taken any fees into account. A tracker fund takes a small yearly charge, your platform may charge an account fee, and you may pay a dealing charge and the spread (the gap between the buying and selling price) each time you trade. Buying and selling within a week means paying those trading costs twice. What does an ETF really cost? covers each one.
- Dividends. The figures are prices only. A tracker passes on the dividends its companies pay, either paying them out or reinvesting them, so a holder would have done a little better than shown.
- Tax. Inside a stocks and shares ISA there’s no tax on gains. Outside one, you may owe capital gains tax when you sell at a profit. Investing outside an ISA has the basics.
- Exact prices. These use each day’s closing level. A real fund trades at slightly different prices during the day, and its value can differ a little from its index.
Common questions
- If I don’t sell, can I still lose money?
- Yes. A company can go bust, making its shares worthless. You might need the money while prices are down and have to sell. And over longer periods, inflation can mean your money buys less even when the number on screen is back where it started.
- So is a paper loss imaginary?
- No. It’s a real fall in what your investment is worth today. It just isn’t locked in: the price can still recover, or fall further.
- How long do prices take to recover after a crash?
- It has varied a lot. The FTSE 100 was back at its February 2020 level within about two years, before dividends. UK shares have had 8 falls of 20% or more after inflation since 1871, and each took between 3 and 13 years to recover. What happens to my ETFs in a crash? lists them.
- Should I sell if prices fall?
- This site can’t tell you that. It depends on when you’ll need the money and on your circumstances. MoneyHelper offers free guidance, and a regulated financial adviser can give personal advice. You can check an adviser on the FCA register.
This page describes what has happened in the past. It isn't a forecast or advice about what you should do, and naming a company or fund isn't a recommendation to buy or sell it. Investments can fall as well as rise, and you may get back less than you put in. Read the full disclaimer.
Sources
- FTSE 100 daily closing levels, Yahoo Finance (^FTSE), 2020 to 2022. Downloaded 15 October 2026. The closes for 11, 12 and 18 March 2020 match the market reports below.
- Daily closing share prices for Ocado Group, Barclays, HSBC Holdings and GSK, Yahoo Finance (OCDO.L, BARC.L, HSBA.L, GSK.L). Downloaded 15 October 2026.
- "FTSE 100 crashes 10.9 per cent in worst one-day fall since 1987", City AM, 12 March 2020 (specialist press).
- "Market Beatdown Continues As Covid-19 Lockdown Widens", Mondo Visione, 18 March 2020 (specialist press).
- "Do stocks outperform Treasury bills?", Hendrik Bessembinder, W. P. Carey School of Business, Arizona State University, including the global evidence on more than 64,000 stocks from 1991 to 2020.
- Tax when you buy shares, GOV.UK.
Prices downloaded and facts checked 15 October 2026.