First-time investment strategy 💹

cohedja

Hi 😀,

I 33 and am planning to invest in the stock market for the first time (mortgage will be paid off), and have no other debt except four figures in a plan 1 student loan. I have a pension plan through my employer with them making a very good contribution.

I have a lump sum of £30k (currently held in a cash ISA) and want to invest £1666/month from future salary (making use of the £20k annual ISA allowance).

What is the best entry strategy? I was thinking of pound cost averaging for the £1666 but want to get the £30k in too asap without a lot of risk. Would value averaging be better for that amount and at what rate? Fund will probably be Vanguard LifeStrategy 80 initially as I am looking long-term (20 years + ).

Thanks in advance for your help! Any and all advice much appreciated 🤑

xylophone

You intend to transfer the cash ISA to a stocks and shares ISA?

If you have no experience of investing, do some reading first

A Guide to Simple but Effective Low Cost Investing by John Edwards

https://monevator.com/low-cost-index-trackers/

https://monevator.com/using-vanguard-lifestrategy-funds-life/

Vanguard offer their own ISA.

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa?cmpgn=PS0617UKPABIS0001&gclid=EAIaIQobChMI14yh-8OX5wIVh6ztCh3J1AXVEAAYASAAEgJzSPD_BwE&gclsrc=aw.ds

See also

https://moneytothemasses.com/saving-for-your-future/investing/compare-cheapest-best-investment-isa-platforms

cohedja

Hi,
Thanks very much for your response!
Yes that's right - I will transfer the existing Cash ISA into a Stocks and Shares ISA (I will have my emergency fund in current accounts still!).
I have done a fair amount of research already and will definitely check out those links - thanks!
My question is more about the best strategy to get the £30k into the stock market but in a safe way (i.e. probably not as a lump sum?). I am aware that the sooner it's in there the sooner it can get to work though!

xylophone

My question is more about the best strategy to get the £30k into the stock market but in a safe way (i.e. probably not as a lump sum?). I am aware that the sooner it's in there the sooner it can get to work though!

https://forums.moneysavingexpert.com/discussion/5975727/drip-feed-or-lump-sum

And if you google the subject it tends to come up as "six of one......."

NedS

cohedja wrote: »

Hi,
Thanks very much for your response!
Yes that's right - I will transfer the existing Cash ISA into a Stocks and Shares ISA (I will have my emergency fund in current accounts still!).
I have done a fair amount of research already and will definitely check out those links - thanks!
My question is more about the best strategy to get the £30k into the stock market but in a safe way (i.e. probably not as a lump sum?). I am aware that the sooner it's in there the sooner it can get to work though!

There is no safe way as investing always has risks. Savings are safe because there is no risk to your capital (other than the effects of inflation).

You need to figure out what level of risk is appropriate for you and what level of risk you are happy with.

If it makes you sleep better at night, drip feed the money in monthly (or weekly), and view it that when the market goes up that great as your investments are worth more, and when the market goes down that's great as those shares/funds etc you are going to buy will now cost you less money so you can but more of them for your pound. Psychologically a win-win.

Research has shown that ~2/3rds of the time it's better to invest a lump sum straight off and 1/3rd it better to drip feed, as on average markets go up more than they go down, which is a good thing otherwise there would be no point investing. That said, we have had quite a good run lately, so you pays your money and make your choice. The important thing is to have a plan and stick to it, so don't get spooked and sell when you see your investments have dropped 10%.