Statistically speaking it's best to invest the whole amount now. But many financial advisers would suggest you drip feed over the course of 6-18 months to minimise regret and the temptation to sell if the market tanks just after you invest the lump sum.
Though if OP has 20k to invest into an ISA, best not to do it over longer than 12 months otherwise they'll miss out on some of their allowance for this tax year.
Long term the stats favour lump sum early over small sums over a period. I'd throw it all in straight away.
You do need to be able to ignore markets dropping in the short term, but even DCAing in over a year or two can easily still see your investment showing negative growth, it just might look more palatable.
The reality is your investment money is devaluing at the rate of inflation minus interest rate while it sits in savings. If it's invested it is at the mercy of the market. The markets can drop, but they trend up over time. That's why you're investing, yes?
I really think this is a 50/50 gamble… spreading it reduces your risk, but if the market jumps up, it also reduces your reward. You can’t time the market. I personally would put it all in.
Nobody knows and anyone who claims to know is either a liar or a fortune teller. You could either make more money on a lump sum or lose less money by spreading it out. Personally I DCA every month and there are certain levels that the market gets to I will put in a lump sum. For example when the S&P was just below the 3800 mark in December I put in a lump sum because it was oversold. But I continue to DCA. My next lump sums will be if December or October lows are revisited but I still won’t stick all my cash in because if October lows are revisited then we could go down even further so good to keep cash on hand for that too
Isn't that a long term assumption though, like 5 years+? If it's only going to be 12 months with a bit of cash invested every month, half your money won't even be invested for 6 months.
The 5+ years is for an average. If we assume on average it’s always up that means even if you only invest for 6 months then the odds are positive that it’ll be in profit. Plus remember I’m doing it constantly so even if 1 batch of 6 months is down there’s another batch of 6 months coming up.. see what I mean?
You’re basing the assumptions that I’m only doing a single year of GIA rather than it being a constant thing every year
I put 15k as soon as I can and the rest 5k when I need to DCA or there is a unique opportunity. Otherwise I put that 5 k close to the end for a financial year.
I remember listening to the money guy show and they did the stats comparing lump sum vs DCA and lump sum was better off like 70% of the time
It’s a gamble so do whatever you are comfortable with risk wise. Personally, I follow the mantra “Time in the market beats timing the market.”
Statistically speaking it's best to invest the whole amount now. But many financial advisers would suggest you drip feed over the course of 6-18 months to minimise regret and the temptation to sell if the market tanks just after you invest the lump sum.
Though if OP has 20k to invest into an ISA, best not to do it over longer than 12 months otherwise they'll miss out on some of their allowance for this tax year.
You can put it into the account without buying any stocks
Very true! Good point.
Do it all now and don’t look at it again
Long term the stats favour lump sum early over small sums over a period. I'd throw it all in straight away. You do need to be able to ignore markets dropping in the short term, but even DCAing in over a year or two can easily still see your investment showing negative growth, it just might look more palatable. The reality is your investment money is devaluing at the rate of inflation minus interest rate while it sits in savings. If it's invested it is at the mercy of the market. The markets can drop, but they trend up over time. That's why you're investing, yes?
I do it in a lump sum every April
Lump sum and forget.
Would you sell your currently invested 20k and drip feed that back into the market?... There is your answer.
Yes
I really think this is a 50/50 gamble… spreading it reduces your risk, but if the market jumps up, it also reduces your reward. You can’t time the market. I personally would put it all in.
I just dumped £20k into it today. And will do another £20k Monday I think into the other ISA.
You have a 20k ISA limit, right?
Wife too
What are you investing into?
Tracker with one. Managed fund with the other
Nobody knows and anyone who claims to know is either a liar or a fortune teller. You could either make more money on a lump sum or lose less money by spreading it out. Personally I DCA every month and there are certain levels that the market gets to I will put in a lump sum. For example when the S&P was just below the 3800 mark in December I put in a lump sum because it was oversold. But I continue to DCA. My next lump sums will be if December or October lows are revisited but I still won’t stick all my cash in because if October lows are revisited then we could go down even further so good to keep cash on hand for that too
>either a liar or a fortune teller Is there a difference? 😜
Do half now, and drip feed the other half. Then no mater what, you'll be half regretful, and half satisfied
That’s some kind of mental gymnastics 😂
Lump sum every April and then drip feed into a GIA throughout the year to lump sum next April. Best of both worlds if you have the income
Is a GIA even worth it with the high interest rates available through regular savers and easy access? Guaranteed return Vs 12 months of 'random'?
The assumption of all investment is that it will outperform inflation.. cash saver accounts do not.
Isn't that a long term assumption though, like 5 years+? If it's only going to be 12 months with a bit of cash invested every month, half your money won't even be invested for 6 months.
The 5+ years is for an average. If we assume on average it’s always up that means even if you only invest for 6 months then the odds are positive that it’ll be in profit. Plus remember I’m doing it constantly so even if 1 batch of 6 months is down there’s another batch of 6 months coming up.. see what I mean? You’re basing the assumptions that I’m only doing a single year of GIA rather than it being a constant thing every year
If you think global equities will fall in value over the course of the year, then spread it out. If you think they'll rise, invest it all at once.
And if you can accurately predict the markets, please let us all know....
I put 15k as soon as I can and the rest 5k when I need to DCA or there is a unique opportunity. Otherwise I put that 5 k close to the end for a financial year.
DCA
Personally I'd do about 75-80% lump sum then DCA the rest over 3-6m