Drip feeding is a waste of time

bigfreddiel

george4064 wrote: »

I agree with you, this takes the assumption that the investor has a sum of cash sitting there ready to invest.

If that were not the case, it is better to make more regular smaller investments more frequently (and therefore earlier), than saving up a cash position and investing it all as a lump sum at a later date.

I just wanted to clear that up, because I think some people do get mixed up with the difference between drip feeding and regular investing.

I mentioned not having sufficient funds to make a lump sum investment in my post, and how to handle that situation. Cheers fj

masonic

bigfreddiel wrote: »

You shouldn't be investing if it's short term, anything less than ten years is short term.

Cheers fj

It may start of as a long term investment, but turn into a short term one if a nervous investor sees their lump sum fall in value by 20% in a short space of time.

bigfreddiel

kinger101 wrote: »

The reality most people drip-feed because they are making regular monthly contributions into an ISA or pension. If you do have a lump sum, presumably the cautious investor would spread the risk by not putting all their eggs on one basket.

Well of course you wouldn't just buy one fund or equity, it has to be a balanced portfolio, I would have thought that was obvious

Cheers fj

bigfreddiel

jimjames wrote: »

Unfortunately my employer has strangely chosen to pay me every month rather than my whole career salary in one lump sum so I have to invest monthly.

To me it seems a bit daft to not invest monthly and wait for a lump sum instead. Surely it's better to be in the market as soon as possible if the research you quote is correct.

Well I did say that, so you decide how to handle it, pay extra fees with regular investments, or reduce the costs with fewer lump sum investments.

Typical regular investment fees are £1.50, and one off fees vary from £5 to £12.50, so you could just calculate a the percentage your fees are for each strategy, and if you're happy with go with whichever you like, at the end of the day it won't make much difference.

And I understand most people don't have sufficient resources to make a large lump sum investment.

Cheers fj

bigfreddiel

enthusiasticsaver wrote: »

I have heard this but I invested a lump sum (£33k) in my Vanguard Lifestrategy fund last April when markets were high and it is now worth £2k less. The flip side is my £500 monthly drip feeding payment is now buying more units than it did in April or May. The general assumption that more time is better does depend on when you invest and when you withdraw. I do not intend to withdraw any time soon so it is not a problem for me though.


A number of people have said to me don't underestimate the power of dividend re-investing but as I am in an Acc fund of the Lifestrategy fund there are no dividends so I don't think that always applies.

Firstly two years is hardly any time at all, come back in eight years and let us know how it's going.

Secondly ACC funds do pay dividends but you never see them because it's rolled up into the fund automatically. You have picked absolutely the correct fund for a long term hold for growth. ACC funds eliminate the cost of reinvesting the dividend. Smart move.

Cheers fj

bigfreddiel

masonic wrote: »

It may start of as a long term investment, but turn into a short term one if a nervous investor sees their lump sum fall in value by 20% in a short space of time.

Very true, I'm even guilty of that when I started.

I've sorted things out now so, pension income rolling in, sp to come soon, so my investment portfolio is just for growth, and probably to pay for my care home if I live long enough. So I'm okay with the volatility now.

Cheers fj

enthusiasticsaver

bigfreddiel wrote: »

Firstly two years is hardly any time at all, come back in eight years and let us know how it's going.

Secondly ACC funds do pay dividends but you never see them because it's rolled up into the fund automatically. You have picked absolutely the correct fund for a long term hold for growth. ACC funds eliminate the cost of reinvesting the dividend. Smart move.

Cheers fj

Thanks. I actually have only been invested since April 2015 so less than one year and am looking to invest for 15-20 years until we need to draw income to subsidise pensions so certainly hope to see improvement by then. My main aims were to invest in well diversified fund to minimise risk and to use the acc fund for growth. Over the next few years I will have more lump sums to invest due to property sale and maturing investments so will be building my portfolio further.

atush

enthusiasticsaver wrote: »

I have heard this but I invested a lump sum (£33k) in my Vanguard Lifestrategy fund last April when markets were high and it is now worth £2k less. The flip side is my £500 monthly drip feeding payment is now buying more units than it did in April or May. The general assumption that more time is better does depend on when you invest and when you withdraw. I do not intend to withdraw any time soon so it is not a problem for me though.


A number of people have said to me don't underestimate the power of dividend re-investing but as I am in an Acc fund of the Lifestrategy fund there are no dividends so I don't think that always applies.

An ACC fund means that dividends are automatically reinvested- this is why there is no dividend paid?

jimjames

bigfreddiel wrote: »

Well I did say that, so you decide how to handle it, pay extra fees with regular investments, or reduce the costs with fewer lump sum investments.

Typical regular investment fees are £1.50, and one off fees vary from £5 to £12.50, so you could just calculate a the percentage your fees are for each strategy, and if you're happy with go with whichever you like, at the end of the day it won't make much difference.

And I understand most people don't have sufficient resources to make a large lump sum investment.

Cheers fj

I'm a little puzzled by some of your comments here.

With many (most?) platforms there is no difference between monthly and lump sum investments and most have no fees at all for funds. Maybe some differ (iii?) but I've never paid any more to invest monthly than a lump sum and currently pay nothing for investments other than an annual fee.

Suggesting people save in cash to build lump sums rather than investing monthly seems very odd advice although if you believe that it costs more I can understand why you might say it - but I think you're making incorrect suggestions based on invalid assumptions.

As there is no cost difference in most cases I personally think it's better to invest as soon as you can as it also avoids the danger of repeatedly holding off because the market is too high / about to drop lower.

george4064

bigfreddiel wrote: »

I mentioned not having sufficient funds to make a lump sum investment in my post, and how to handle that situation. Cheers fj

You go in further to say that if the investor doesnt have sufficient capital to make a lump sum investment, they should save as cash and then invest as a lump sum at a later date.

That is something I disagree with, it would be better to invest the money saved each money as soon as possible rather than holding it back until you have a larger sum. Time in the market is important, especially if investing in income yielding investments.

@jimjames, with HL they charge zero fee for fund dealing and zero for regular investment into funds. £11.95 for share/IT dealing and £1.50 for regular investment into shares/ITs. Irrespective of that, I still strongly believe its best to invest money as soon as possible than holding it back to invest at a later date with a larger sum.