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  • FIRST POST
    • geeovana
    • By geeovana 11th Jan 18, 7:49 PM
    • 25Posts
    • 26Thanks
    geeovana
    To drip, or not to drip.
    • #1
    • 11th Jan 18, 7:49 PM
    To drip, or not to drip. 11th Jan 18 at 7:49 PM
    I am currently drip feeding £1500/month into the Vanguard FTSE All-Cap through a S&S ISA with HSD. I have been doing this for the past two months and so far the fund has gained around 3%. I have filled my 2017/2018 S&S ISA and so have the remaining £17000 sitting there as 'cash'. I am also in the process of transferring my 2016/2017 S&S ISA from IG to HSD. I filled the ISA (£15240) and currently sitting at nearly £18000, with around £12000 in Equities and the remaining in Cash.

    Once the transfer is complete I will have around £23000 in cash in my S&S ISA. Once the 2018/2019 ISA is open I will be drip feeding around £1000/month in the ISA and directly into the fund.

    Would people recommend just investing the £26000 into the fund in one fell swoop this month or continue drip feeding it in? My reasoning for drip feeding in the first place was due to the current high market valuation, to try and protect myself for any potential sudden corrections / large dips. However I now realise that should I have invested the £20000 I would have gained around £500 extra than the £100 I currently have. Obviously hindsight is a wonderful thing but I'm curious as to what others would do in a similar situation.

    I am investing for the long term (currently only 28) and I plan on filling my S&S ISA each year through regular drip feeding and occasional larger sums i.e. Bonuses etc.

    Obviously drip feeding is a technique I felt worth employing and I worry if I can't stick to this method when the markets are rising, what makes me think I will continue buying when the markets are falling.
Page 1
    • jimjames
    • By jimjames 11th Jan 18, 8:43 PM
    • 12,335 Posts
    • 10,916 Thanks
    jimjames
    • #2
    • 11th Jan 18, 8:43 PM
    • #2
    • 11th Jan 18, 8:43 PM
    If you're buying over a long period then I'd just put the lump sum in. If markets drop then the next purchases each month will get more units and be better value.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Audaxer
    • By Audaxer 11th Jan 18, 10:34 PM
    • 790 Posts
    • 403 Thanks
    Audaxer
    • #3
    • 11th Jan 18, 10:34 PM
    • #3
    • 11th Jan 18, 10:34 PM
    I am currently drip feeding £1500/month into the Vanguard FTSE All-Cap through a S&S ISA with HSD. I have been doing this for the past two months and so far the fund has gained around 3%. I have filled my 2017/2018 S&S ISA and so have the remaining £17000 sitting there as 'cash'. I am also in the process of transferring my 2016/2017 S&S ISA from IG to HSD. I filled the ISA (£15240) and currently sitting at nearly £18000, with around £12000 in Equities and the remaining in Cash.

    Once the transfer is complete I will have around £23000 in cash in my S&S ISA. Once the 2018/2019 ISA is open I will be drip feeding around £1000/month in the ISA and directly into the fund.
    Originally posted by geeovana
    If the cash is already in your S&S ISA you are just as well investing it. I can understand your hesitation, but as you're young and assuming you are in for the long term, you are best just investing it, as long as you don't panic and sell if there is an equity crash.
    • sixpence.
    • By sixpence. 11th Jan 18, 10:41 PM
    • 59 Posts
    • 16 Thanks
    sixpence.
    • #4
    • 11th Jan 18, 10:41 PM
    • #4
    • 11th Jan 18, 10:41 PM
    Hello, I actually asked a similar question quite recently and we are the same age Maybe this will be helpful to you:

    http://forums.moneysavingexpert.com/showthread.php?t=5766395

    The conclusion was basically that the market might be in a bubble but it could keep going that way for years, and then we would lose money not investing, so best to invest now. But read through and see what you think...
    • ColdIron
    • By ColdIron 11th Jan 18, 10:57 PM
    • 3,744 Posts
    • 4,574 Thanks
    ColdIron
    • #5
    • 11th Jan 18, 10:57 PM
    • #5
    • 11th Jan 18, 10:57 PM
    However I now realise that should I have invested the £20000 I would have gained around £500 extra than the £100 I currently have.
    Originally posted by geeovana
    I wouldn't beat yourself up about it, it could have gone the other way and you'd be patting yourself on the back. Statistically you're better off if you invest in one fell swoop but you need to be comfortable with what you do so if you do decide to drip feed, you shouldn't beat yourself up about that either
    • Filo25
    • By Filo25 11th Jan 18, 11:19 PM
    • 1,253 Posts
    • 1,870 Thanks
    Filo25
    • #6
    • 11th Jan 18, 11:19 PM
    • #6
    • 11th Jan 18, 11:19 PM
    As it is for the long term I would just view each annual contribution as a long term drip feed and pay it at the start of each year.
    • BananaRepublic
    • By BananaRepublic 11th Jan 18, 11:28 PM
    • 1,052 Posts
    • 774 Thanks
    BananaRepublic
    • #7
    • 11th Jan 18, 11:28 PM
    • #7
    • 11th Jan 18, 11:28 PM
    If you're buying over a long period then I'd just put the lump sum in. If markets drop then the next purchases each month will get more units and be better value.
    Originally posted by jimjames
    I believe studies have shown that what matters is time in the market, so usually you are better investing a lump sum all at once rather than gradually. But drip feeding is better than saving up money to invest as a lump sum. Of course this advice is not always true, it all depends on the markets which you cannot predict.

    I keep a cash sum for a rainy day, but if a crash occurs, I invest it. So I suppose I am a hypocrite.
    • firestone
    • By firestone 11th Jan 18, 11:36 PM
    • 108 Posts
    • 40 Thanks
    firestone
    • #8
    • 11th Jan 18, 11:36 PM
    • #8
    • 11th Jan 18, 11:36 PM
    You could have been £500 better off or drip feeding/pound cost averaging could have worked if the market had dropped over that time-Hindsight can be a terrible thing so stick to a a plan and hopefully reap in the rewards in years rather then worry about months (and you can almost bet if you change it will go the other way -hindsight needed again)
    Last edited by firestone; 12-01-2018 at 8:35 AM.
    • darkidoe
    • By darkidoe 12th Jan 18, 1:48 AM
    • 906 Posts
    • 1,054 Thanks
    darkidoe
    • #9
    • 12th Jan 18, 1:48 AM
    • #9
    • 12th Jan 18, 1:48 AM
    My reasoning for drip feeding in the first place was due to the current high market valuation, to try and protect myself for any potential sudden corrections / large dips. However I now realise that should I have invested the £20000 I would have gained around £500 extra than the £100 I currently have. Obviously hindsight is a wonderful thing but I'm curious as to what others would do in a similar situation.
    Originally posted by geeovana
    With a Lump Sum, I think you will find most people recommending lump sum investing rather than drip feeding, to maximise 'Time in the Market' because
    1) Markets tend to rise more than they fall historically
    2) Dividends paid for Time in the market
    Of course you are right to wonder if you would be able to tolerate a short term loss or ride out the short term volatility. Part of your self assessment is to make sure you are able to psychologically avoid having to make short term sale on your investments, ie Emergency Cash fund as a buffer, avoiding short term debts repayments etc. If you still think that worries you, drip feeding is a valid option to help yourself ease into the market. Being comfortable to be able to sleep at night is important.

    For regular contributions, I tend to think more for how much are trading costs. If there are no trading costs for the fund you are investing in, it might be fine to buy into the fund monthly. If there are, I might do it either quarterly/Twice per year/annually. to minimise trading costs.

    Save 12K in 2018 #31 0/15 000
    Save 12K in 2017 # 9 £15,848.84/15 000 (105.65%) Achieved!
    Save 12K in 2016 # 8 £19 721.58/12 000 (164.35%) Achieved!
    • firestone
    • By firestone 12th Jan 18, 8:46 AM
    • 108 Posts
    • 40 Thanks
    firestone
    its also probably true that most people have a pot at the start and then may have a bonus or inheritance later which may be better invested at that time but don't have loads of lump sums to invest (think some platforms will even feed that it in over 6 months if you want) But then doing monthly/quarterly gets you in the saving habit and saves the time waiting for a new lump sum to build.
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