Montlhy deposts or buy when low?

Gibb0

Hi, for those of you who have a stocks and shares ISA, do you make a monthly deposit or do you just wait until prices are low and then make one large deposit?

So far I've done £700 a month but now I'm thinking perhaps I should put that money aside and make one large deposit when the fund prices are lower so as to make slightly more money.

Not sure which is better.

george4064

If you can afford it, definitely do the frequent monthly deposits. Time in the market gives you a better chance of success than trying to time the market.

I don't do monthly deposits to my S&S ISA simply because I cannot afford to, if I could I definitely would be doing frequent monthly deposits to invest.

Dird

Every Google result seems to argue with george4064's opinion http://monevator.com/lump-sum-investing-versus-drip-feeding/

george4064 wrote: »

Time in the market gives you a better chance of success than trying to time the market.

Your own statement agrees with lump sum (although not waiting for a drop which may or may not arrive). Better to have it all in now than £250 this month, £500 next month etc

Freecall

Gibb0 wrote: »

......or buy when low?

I am intrigued to find out how you will know when the markets are low?

bxboards

I use timing so essentially when everyone is panicing and selling I tend to buy, I use tracker funds for this, so when there is a big slump (ie Japan Tsunami, Greek debt crisis etc) I tend to get in then the tracker funds tend to track right back up, then when I feel it's hit somewhere close the peak sell back to cash and hold for a while.

I've never felt putting in monthly savings or any sort of money in when markets feel like they are at the peak are a good idea, buy low to me tends to work well.

I think this would only work with low cost tracker funds with close to zero fees.

This goes against conventional wisdom, but it has worked well for me.

cloud_dog

Gibb0 wrote: »

Hi, for those of you who have a stocks and shares ISA, do you make a monthly deposit or do you just wait until prices are low and then make one large deposit?

Yes, one huge deposit, because everyone can time the perfect point to enter the market. Investing is all about psychology. If you can master your own then you may stand a chance.

Gibb0 wrote: »

So far I've done £700 a month but now I'm thinking perhaps I should put that money aside and make one large deposit when the fund prices are lower so as to make slightly more money.

Not sure which is better.

As an example (I have mentioned this in a previous discussion).... I used my many years of skilful investing knowledge to buy in to a company, making a number of purchases at the 'ideal' time. In addition, I also set up a regular investment for my DD account for the same stock.

The outcome was that my investment holding had an average buy price of 5p and my DD had and average buy price of 3.5p.

It could easily have worked out the other way round but there are no guarantees. I am an active investor but still use regular investments (RI) (when the circumstances warrant).

What you could do is continue to use the RI route until a holding becomes substantial or you want to re-balance / invest in another stock and use all your newly found investment skills.

Good luck either way.

atush

Dird wrote: »

Every Google result seems to argue with george4064's opinion http://monevator.com/lump-sum-investing-versus-drip-feeding/

Your own statement agrees with lump sum (although not waiting for a drop which may or may not arrive). Better to have it all in now than £250 this month, £500 next month etc

Most of those are based on you having 100% of the money upfront so it is Lump sum over monthly.

George (and I) believe that investing monthly is better. Because of poundcost averaging, and time in t he market (not waiting to save up a LS and maybe missing some price drops).

If you are investing from income, and not a LS, then monthly savings is the way to go. Also reduces investor emotions as you are less likely to be looking daily to see what it is worth today.

ViolaLass

Dird wrote: »

Your own statement agrees with lump sum (although not waiting for a drop which may or may not arrive). Better to have it all in now than £250 this month, £500 next month etc

Chucking it all in now was not one of the options in the OP.

jimjames

Dird wrote: »

Your own statement agrees with lump sum (although not waiting for a drop which may or may not arrive). Better to have it all in now than £250 this month, £500 next month etc

That's fine if you have a lump sum. But if you don't then you're actually agreeing that the OP's (and Georges) post is correct that paying in as soon as you have the money is best rather than saving up a lump sum in cash first.

george4064

jimjames wrote: »

That's fine if you have a lump sum. But if you don't then you're actually agreeing that the OP's (and Georges) post is correct that paying in as soon as you have the money is best rather than saving up a lump sum in cash first.

What jimjames said, I can how some might see it as countering its own point.

Essentially, one should invest cash as soon as they can. So if they have a lump sum, then invest it as a lump sum.

If one doesnt have a lump sum, it would be better to invest smaller amounts more frequently (and earlier) rather than building up a cash pile and investing larger amounts less frequently at a later point in time (within reason).

atush

Well that was what I saw from t he Op.

For those like Dird

So far I've done £700 a month but now I'm thinking perhaps I should put that money aside and make one large deposit when the fund prices are lower so as to make slightly more money.

So saving up to have a LS is not the same as investing a LS you already have