How to handle the moment you put money into a tracker fund given the markets volatility?

jim_arm_chair

Ive opened FTSE 100 Index Unit Trust with Vanguard. As the FTSE is so volatile at the moment, the day and even hour that my cash is converted to shares will make a big difference to what I actually get. Is there a way to manage this? 

UPDATE
Sorry, based on the replies I don't think I've been clear. I'm investing for the long term and not looking to 'play the market'. My question is just about when I first put the money in. Once it's in I plan to leave it for 5+ years. 

Dh6

Yes, don’t look at it!

Albermarle

jim_arm_chair said:

Ive opened FTSE 100 Index Unit Trust with Vanguard. As the FTSE is so volatile at the moment, the day and even hour that my cash is converted to shares will make a big difference to what I actually get. Is there a way to manage this? 

It's not possible to closely manage timing with funds . For example if you purchased it next Monday afternoon the fund price that would be used to complete your purchase would be at 9pm on Tuesday evening.
If you want to try and time markets you need to buy in real time in the markets, which means buying shares/ETF's /Investment trusts etc.
Better to think of buying funds as  long term investments . In which case a few per cent difference when you buy them will make naff all difference in the long run. 

bostonerimus

You are thinking about investing on entirely the wrong time scale. Rather than days or months you should be thinking in years and decades. For example I am around 20% down from the peak of my investments a month ago, but I'm way up over the 30 years I've been investing and that's what matters. So don't try to time the market...especially in volatile times...make sure you have a solid emergency fund saved and then start investing. I think the importance of having at least 6 months cash saved should be clear right now.

dunstonh

Ive opened FTSE 100 Index Unit Trust with Vanguard.

What made you pick such a poor investment fund?    It is also poor quality investing to buy a single sector fund in isolation (regardless of region).

Is there a way to manage this? 

If you buy an ETF then you have more control over pricing.  If you buy an OEIC/UT then you get the price at the next dealing point (which is once a day).

Thrugelmir

Invest on a weekly basis. Markets are too volatile on a day to day basis to make rational decisions. 
Alternatively use an Investment Trust instead. Funds are priced daily and price movements reflect what's happening in the market. 

worldtraveller

Most people have very different investment strategies, which change (or maybe should) during their lifetime.

At the present time I have available cash, accumulated last year, when the markets looked toppy, in ISA cash funds and SIPP cash accounts & funds, now available to invest, as part of my overall investments.

I have a clear plan in place, which I plan to stick to, but, of course, nothing is 100% carved in stone, in these uncertain markets.

As I've said before, I DO intend to attempt to time the market now, for some investments, from cash back to equities. For these I have set investment parameters for basic percentage falls from peak in the markets, when I'll invest cash, back in to equities again. My next, current, re-entry level is around 40% from peak in the likes of the FTSE All Share index, where I have a fund available that tracks it +/-. If it doesn't drop that far, then that's just fine too. I have no issue with that, and will just ride the waves with my other investments, keeping those cash funds just as they are, in cash. DYOR

jim_arm_chair

Sorry, based on the replies I don't think I've been clear. I'm investing for the long term and not looking to 'play the market'. My question is just about when I first put the money in. Once it's in I plan to leave it for 5+ years. Thanks

Ceme3000

Buy an ETF for more pricing control rather than a daily priced OEIC.

Albermarle

jim_arm_chair said:

Sorry, based on the replies I don't think I've been clear. I'm investing for the long term and not looking to 'play the market'. My question is just about when I first put the money in. Once it's in I plan to leave it for 5+ years. Thanks

Yes and the answer was that for a long term investment, if you buy in one day and then it turns out that if you had waited another day you would have got a 5% better price , it will make very little difference in the long term .
The second answer was funds are valued once a day, and you have to have your purchase order in many hours before that valuation time . So when you purchase you do not actually know what the price will be ( you only know the previous price which you can no longer buy at and is used as an indication only ) Depending on timings, which can vary from fund to fund , the gap between placing the order and the deal going through can be as long as 36 hours , although usually more like 12 to 24 hours .
When you buy funds you can not buy them in the market in real time, like shares, So timing the fund investment to benefit from short term market movements is basically impossible.

dunstonh

Sorry, based on the replies I don't think I've been clear. I'm investing for the long term and not looking to 'play the market'. 

So, why have you picked the awful FTSE100 to track?  It is just about the worst major index in the world.      

Effectively, you have said that going forward for the long term that you expect around 10 British companies (half of which are not considered responsible/sustainable in their current form) to be better than the rest of the world.

Single sector funds are designed to be held in a portfolio of other single sector funds.  They are for people that are building their own asset allocation/sector allocation models.  They are not designed to be held by themselves.

on top of that you have chosen a niche single sector fund. i.e. UK Large cap.  Rather than a general UK market fund (like the FTSE all share).     Or if you really wanted a fund to reflect the UK economy itself rather than UK listed funds that may do more business elsewhere then a small or mid cap tracker fund would have been better.  

If you accept the high risk nature of 100% equities then you should be looking at a global (inc UK) tracker.