Investment timing

stephenadarglas

Personally, my Sipp (103K) is invested in two global multi asset funds 60:40 equity/bond split.  One of which has a uk bias.  18.2k is sitting as cash which is the total return since I retired in 2017.  This cash shall be used as monthly income for the next 27 months until I reach SP age.  My point being is that you need to be 'in it to win it' so to speak.  It feels as if I'm spending someone else's money not my own which is a comfort however I've been investing a long time to be able to do this (over 25 years).

MK62

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!

Though that stat omits to mention how much better off you'd have been lump sum investing two thirds of the time vs how much worse off you'd have been the other third........ie what if you are, on average 2% better off 2/3 of the time,  but 5% worse off, on average, for the other third?........
I'm not saying that's the way it is though, just saying that, as seems to be the case with a lot of the stats bandied about over finance, many only tell a part of the story.......often the part the stat creator wants you "know".

cfw1994

MK62 said:

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!

Though that stat omits to mention how much better off you'd have been lump sum investing two thirds of the time vs how much worse off you'd have been the other third........ie what if you are, on average 2% better off 2/3 of the time,  but 5% worse off, on average, for the other third?........
I'm not saying that's the way it is though, just saying that, as seems to be the case with a lot of the stats bandied about over finance, many only tell a part of the story.......often the part the stat creator wants you "know".

Well....in short, there is NO 'right' answer, until after the event: 20:20 hindsight!
I prefer 'drip-feeding' money in over the long term, but at the same time I realise I am probably more often wrong than right!!

[Deleted User]

MK62 said:

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!

Though that stat omits to mention how much better off you'd have been lump sum investing two thirds of the time vs how much worse off you'd have been the other third........ie what if you are, on average 2% better off 2/3 of the time,  but 5% worse off, on average, for the other third?........
I'm not saying that's the way it is though, just saying that, as seems to be the case with a lot of the stats bandied about over finance, many only tell a part of the story.......often the part the stat creator wants you "know".

Here you go. Take any two points on the total return plot. Do your own calcs.  Although you don’t actually need to if you look at the plot. https://justinczyszczewski.com/a-total-return-index-for-the-sp-500-since-1950/

The future could be different. Or not. 

MK62

Nice chart.......but it doesn't reveal anything about lump sum investing vs cost averaging (drip feeding).

[Deleted User]

You need to do some maths. Pick any starting point and have a go. Skills required: addition, subtraction and division. That last one is a bit tricky. 

Or you could just take a look at it and think. 

MK62

 So perhaps you could tell me from that chart, what the value of the index was on say Feb 1st 2003, and then the value on the 1st of each month for the following 11 months......oh, and don't overlook the logarithmic scale on the vertical axis.....it makes the volatility look a lot less than it actually was.

In any case, the chart is unnecessary......that data is readily available at places like Yahoo finance......and in a much easier to use format......try it...

[Deleted User]

Sure. It was a hell of a lot less than yesterday.

MK62

Deleted_User said:

Sure. It was a hell of a lot less than yesterday.

Good to know....but what does that tell anyone about lump sum investing vs cost averaging?

[Deleted User]

MK62 said:

Deleted_User said:

Sure. It was a hell of a lot less than yesterday.

Good to know....but what does that tell anyone about lump sum investing vs cost averaging?

That, on average, its far better to put everything in as quickly as you can. 

Look, everyone should have an investment policy statement. The statement should say how much you should have in fixed income, and how much in equity. If you have a lot of cash to invest, it should be allocated pro rata as soon as possible. Otherwise you are deviating from you allocations. 

Attempts at market timing (which the author is considering) are generally harmful.