Investment timing

colmel16

Looking for a general opinion on market conditions at the moment. If all your pension pot was out of the market and held as cash right now would you be more likely to wait and see where the market might go? or jump back in and ride out any corrections if there are any?

El_Torro

If I were in that position I would go all in straight away. I have almost 20 years until I plan to start accessing my pension though so any short term losses will be pretty much irrelevant by then.

Let's not forget as well that the market generally rises so chances are going all in now will give you a better long term return than drip feeding it back in.

I've been investing in the stock market since 2003 and I don't see a strong reason not to invest now.

dunstonh

If all your pension pot was out of the market and held as cash right now would you be more likely to wait and see where the market might go?

That is an ever-ending delay then which would see you never investing.

or jump back in and ride out any corrections if there are any?

Not "if" there are any.  They are always coming.  Every 3-5 years on average.  Sometimes multiple years in a row.   

Thrugelmir

Which market is the first question. As there are many. Not just one. Where are you intending to invest the money. 

[Deleted User]

On average, markets trend up.  Looking back at investors’ net worth, invariably its time in the market that matters rather than timing the market. Ups and downs look as meaningless blips over decades of investing. 

If you are really concerned, you can spread the risk by entering your money slowly (eg put 1/12th every month over a year). Its called dollar cost averaging. This will likely lose you some money vs biting the bullet right away, but the damage would be far smaller than staying on the sidelines

colmel16

I am edging towards global multi asset funds but with only probably 4 years to go b4 early retirement the question then becomes how much bonds and how much equity? I understand that will depend on risk appetite but i would rather not take a big hit in the near future and then have to play catch up for the next 10 years.

cfw1994

2/3rds of the time, you are best to chuck it all in at once.  
1/3rd of the time, you're better of dripping it in over time....
See https://www.fool.co.uk/investing/2019/07/27/for-saturday-the-surprising-truth-about-lump-sum-vs-drip-feed-investing for 'proof'
So: your call!

[Deleted User]

colmel16 said:

I am edging towards global multi asset funds but with only probably 4 years to go b4 early retirement the question then becomes how much bonds and how much equity? I understand that will depend on risk appetite but i would rather not take a big hit in the near future and then have to play catch up for the next 10 years.

Good question. Its tough for people like us because normally “safe” bonds are quite risky. Right now. That pushes you towards higher equity allocation and staying at that level for longer than you normally would. 

I am at 70/30 and the fixed income portion is a mix between specialized FI vehicles, cash, etc...  I stopped buying bonds from governments in developed countries. 

JohnWinder

No one knows the answer that will turn out to have been right at the end of the period you're considering, but some guesses will turn out to have been right. So don't expect to get it perfectly right, even the experts don't achieve that frequently.

How quickly you put it in also depends a bit on what the stock/bond mix is, as they vary in price volatility; so you've got two interlocking moving parts in your decision.

Lastly, what does 4 years to early retirement mean to you? To me, it means you're investing for another 30 years potentially, if you only draw down 4% of it each year in retirement. That has a big impact on your decision making, or would mine.

shinytop

colmel16 said:

Looking for a general opinion on market conditions at the moment. If all your pension pot was out of the market and held as cash right now would you be more likely to wait and see where the market might go? or jump back in and ride out any corrections if there are any?

When I faced a similar conundrum I did it in three tranches a month apart.  Had there been a big drop after tranche 1 or 2, I would have waited. There wasn't, so I probably lost out on a bit of growth.  My view is that I paid a little to reduce the chances of losing a lot and, more importantly, I didn't worry about it as much.  

I use mostly multi-asset funds so equties and bonds went in together.   

cfw1994

cfw1994 said:

2/3rds of the time, you are best to chuck it all in at once.  
1/3rd of the time, you're better of dripping it in over time....
See https://www.fool.co.uk/investing/2019/07/27/for-saturday-the-surprising-truth-about-lump-sum-vs-drip-feed-investing for 'proof'
So: your call!

Reflecting on this....maybe lob 2/3rds in NOW, then drop the remaining 1/3rd in over a 12 month period....win-win 

(seriously.....that is probably what I would do!)