£100k - Lump sum or drip?

Bravepants

My partner has £100k sitting in two separate cash ISAs (I know!)

We have discussed this morning transferring to a S&S ISA, and actually put her dosh to work for a change!

It's a huge amount of money and the question I have is whether she should transfer as a lump sum, or take it out and drip feed say £20k per year to pound cost average?

All advice welcome as it's such a big decision!

Thank you.

kidmugsy

"put her dosh to work for a change": I dislike talk of putting money to work. It suggests that she has some sort of puritanical duty to invest it. If she doesn't need the reward she needn't take the risk. If she can't find any financial assets that look good value, she needn't take the risk. Heavens, if the spirit so moves her she could bung £50k into Premium Bonds and £50k into gold sovereigns.

Without wishing to intrude, may I enquire whether you are ready for the consequences if you persuade her to invest £100k and the market drops 40% or 50%?

Bravepants

kidmugsy wrote: »

"put her dosh to work for a change": I dislike talk of putting money to work. It suggests that she has some sort of puritanical duty to invest it. If she doesn't need the reward she needn't take the risk. If she can't find any financial assets that look good value, she needn't take the risk. Heavens, if the spirit so moves her she could bung £50k into Premium Bonds and £50k into gold sovereigns.

Without wishing to intrude, may I enquire whether you are ready for the consequences if you persuade her to invest £100k and the market drops 40% or 50%?

Why not "put her dosh to work for a change"? Fair enough that she might not be up for the risk/reward thing, but at the moment she is earning next to no interest; she is in the realm of inflation risk.

I'm sorry if my question offended you, but I'm sure many others would not take offence. I stated that it is a very difficult decision and I have been talking with her about investments for a while, and she has started to do her own research.

The risk of 40% to 50% drop is precisely why I asked about drip feeding rather than lump sum...that is the theme of my question. If I didn't care or think to take that into account I would not have asked the question.

El_Torro

Time in the market is more important than timing the market.

When will she need to access the money? If it's in 10 years time or more then the value of the investment will most likely be worth more then if you invest it all now, rather than drip feeding. Of course that involves holding her nerve when the markets crash (and subsequently recover).

Eco_Miser

Personally, I would be moving as much as possible into 3% and higher bank accounts (current and regular saver), and the rest as a lump sum into S&S ISA.

But that's me now; and in actuality I invested over 30+ years as the money became available. If I'd never invested before I might not be as sanguine with £100k.

bostonerimus

Anyone who can save 100k is doing a lot of things right. There's no rule that says it has to be put into the stock market. Be carful as money "discussions" between partners can be minefields.

There's a lot to be said for keeping a a substantial emergency find in the bank and saving accounts and only then investing what's left over in something like the stock market with comes with risk.

So I would not be putting all of the 100k into the stock market and as I don't know what the market will do in the next few years I don't know if it will be better to drip fee into it or deposit a lump sum, so choose one and do it, but many people think that it's just best to get into the market asap. Whatever you choose come up with an ongoing plan to save or invest regularly.

Bravepants

Thank you all for your comments. I think our conclusion is that she needs to preserve her capital and not risk it. £100k is a lot of money to invest all at once! I shall suggest that, if she wants to invest, she drips feeds a few hundred from her salary.

bostonerimus

Bravepants wrote: »

Thank you all for your comments. I think our conclusion is that she needs to preserve her capital and not risk it. £100k is a lot of money to invest all at once! I shall suggest that, if she wants to invest, she drips feeds a few hundred from her salary.

Does she have access to a workplace pension?

Audaxer

Bravepants wrote: »

Thank you all for your comments. I think our conclusion is that she needs to preserve her capital and not risk it. £100k is a lot of money to invest all at once! I shall suggest that, if she wants to invest, she drips feeds a few hundred from her salary.

I'm in the same position and it is a difficult dilemma. I've invested some to date and about to invest another large lump sum, but as I will still have more to invest I hope if there is going to be a large drop it comes sooner rather than just after I am fully invested.

If she was thinking of investing it all in equities I definitely wouldn't invest it all at once as a 50% fall would be hard to take. If she is planning something like a 60/40 equity/bond split then an equity crash wouldn't be quite as bad, although I think still worth considering lodging large sums, maybe over a couple of years.

I'd be interested to know if she investing for income or growth, going active or passive, and what equity/bond split is she thinking of?

bostonerimus

Audaxer wrote: »

I'm in the same position and it is a difficult dilemma. I've invested some to date and about to invest another large lump sum, but as I will still have more to invest I hope if there is going to be a large drop it comes sooner rather than just after I am fully invested.

Don't let some idea that you can market time stop you from following your plan.

JustAnotherSaver

kidmugsy wrote: »

"put her dosh to work for a change": I dislike talk of putting money to work. It suggests that she has some sort of puritanical duty to invest it. If she doesn't need the reward she needn't take the risk. If she can't find any financial assets that look good value, she needn't take the risk. Heavens, if the spirit so moves her she could bung £50k into Premium Bonds and £50k into gold sovereigns.

Without wishing to intrude, may I enquire whether you are ready for the consequences if you persuade her to invest £100k and the market drops 40% or 50%?

Personally i don't know how you received a thanks for your post.

You seem to be implying the OP is forcing (or trying to persuade) his partner to put it into a S&S ISA.

Why?

OP only said they were discussing it.

Or was you at the breakfast table to see how the conversation went?