Start investments now or wait?

rundmc-k

This tax year I am planning to get stuck into S+S investments, by opening an ISA, LISA and SIPP. My query is, when?
My plan is to open a SIPP and LISA first. I missed the boat with the last tax year (started researching about 2 weeks too late), so really the only imperitive is to open and add my desired lump sum before April next year (full lump sum is available to go in any time).

I am aware that nobody knows if/when the stock market may fall/crash again, and that there is no point in trying to time entry to perfection, and that if I am saving for 20+ years in the SIPP/LISA then the entry point is not ultra significant, and if I would have been comfortable investing in Jan, then why not now, etc

I guess my question is, is there potentially more to be gained by just 'waiting to see' if there's a big dip in the coming 9 months, and putting lump sums in at that point, than there is to be lost? i.e. not "will the market go up or down", more "is there more chance of a dip/crash within 9 months than it soaring"? I think those are different questions, but if not, sorry! Hopefully you can help as for the last month I feel like I've been standing on the edge of the diving board, not knowing if waiting making the inevitable jump easier or worse.

Thrugelmir

If you feel uncertain. Drip feed the money in on a monthly basis. The difficulty for markets is that they cannot price the unknown. Argubably the greatest danger is when all is calm and complancency has set in. Volatile markets have the impact of focussing the attention. 

aroominyork

Thrugelmir's advice seems good. Received wisdom is that markets go up more than down so, since we don't know when falls will happen, the sooner you get in the better for long-term gains. But if recent volatility makes you nervous (understandably) then drip feeding might make you feel more comfortable with the risk you are taking. 

steampowered

There's just been a "big dip". The FTSE went from about 6,500 to 6,100 this week.

If you have been waiting for a dip, your timing couldn't be better. If you were waiting for a bigger dip, that may never happen - you could be waiting years.

The question as to whether there is more chance of the market crashing than it soaring is a question which nobody can answer. If it was objectively true that the market was more likely to crash than soar, prices would drop until balance was restored.

Albermarle

My plan is to open a SIPP and LISA first

You can invest the lump sum in a SIPP , without having to immediately invest it .

Your lump sum will go into your SIPP cash account , to be invested when you wish . So no reason to delay opening the SIPP as a first step. Presume you are earning enough to get tax relief on the size of SIPP contribution you are thinking about ?

dunstonh

I guess my question is, is there potentially more to be gained by just 'waiting to see' if there's a big dip in the coming 9 months, and putting lump sums in at that point, than there is to be lost?

At any point in time, there will be potential negatives that could impact on the markets.   You will always be waiting to see and will never end up investing because today's issues will be replaced with tomorrows issues.

i.e. not "will the market go up or down", more "is there more chance of a dip/crash within 9 months than it soaring"?

So despite you saying "I am aware that nobody knows if/when the stock market may fall/crash again, and that there is no point in trying to time entry to perfection", you are actually trying to do that.

rundmc-k

Thrugelmir said:

If you feel uncertain. Drip feed the money in on a monthly basis. The difficulty for markets is that they cannot price the unknown. Argubably the greatest danger is when all is calm and complancency has set in. Volatile markets have the impact of focussing the attention. 

Thankyou, that does seem a logical and sensible way to do it.

There's just been a "big dip". The FTSE went from about 6,500 to 6,100 this week.

If you have been waiting for a dip, your timing couldn't be better. If you were waiting for a bigger dip, that may never happen - you could be waiting years.

That's a good point, sooner rather than later definitely seems wise

rundmc-k

Albermarle said:

You can invest the lump sum in a SIPP , without having to immediately invest it .

Your lump sum will go into your SIPP cash account , to be invested when you wish . So no reason to delay opening the SIPP as a first step. Presume you are earning enough to get tax relief on the size of SIPP contribution you are thinking about ?

Yes, for sure I will go ahead and get the SIPP opened immediately, and probably start to drip invest the lump sum. Thankyou

rundmc-k

dunstonh said:

At any point in time, there will be potential negatives that could impact on the markets.   You will always be waiting to see and will never end up investing because today's issues will be replaced with tomorrows issues.

This is true. I guess it's just "first time investor hesitancy", wanting to be certain. Thankyou

dunstonh said:

So despite you saying "I am aware that nobody knows if/when the stock market may fall/crash again, and that there is no point in trying to time entry to perfection", you are actually trying to do that.

Well, I was essentially trying to ascertain if there was a difference in my question compared to the above statement, and I acknowledged there may not be. I shall be sure to flagellate myself for my impertinence and inexperience. Just joking, I appreciate the candidness. Thankyou

Bobziz

I guess most people that try to time the market get it wrong to some extent, and that time in the market is more important etc, but does this not assume that all crashes are similar? Is what we're experiencing now different ? I.e. predictions about the worst recession in history etc. Does it not make sense to even try and time the market even if you get it wrong ?

Notepad_Phil

Bobziz said:

I guess most people that try to time the market get it wrong to some extent, and that time in the market is more important etc, but does this not assume that all crashes are similar? Is what we're experiencing now different ? I.e. predictions about the worst recession in history etc. Does it not make sense to even try and time the market even if you get it wrong ?

The market professionals have plenty of resources to come up with their estimates of fair value, so to me it makes little to no sense for me to attempt to figure out whether the current value is wrong.

The only timing that does make sense is the amount of time than I can leave anything invested in the market, which to me means that I won't need to cash it in for at least 10 years. So if the market professionals have got it wrong and the market does plummet shortly afterwards, then there's plenty of time for the market to recover.