Investing large sum - drip feed or all-in?

DoctorStrange

If you had £250k to invest into (a) diversified fund(s) today, would you still stick to the advice it's better to invest it all in one go?

Or given current equity valuations and global volatility, would you spread things out a little? If so, what would that look like?

I appreciate in 5/10 years or whatever it'll likely make little difference but it's hard not to worry about making a bad choice as it's a lot of money, so just looking for feedback really

dunstonh

If you had £250k to invest into (a) diversified fund(s) today, would you still stick to the advice it's better to invest it all in one go?

Statistically, investing on day one is better than phasing in over two thirds of time periods.

Or given current equity valuations and global volatility, would you spread things out a little? If so, what would that look like?

What about the current situation makes you think this period is any different from the norm?

InvesterJones

DoctorStrange said:

If you had £250k to invest into (a) diversified fund(s) today, would you still stick to the advice it's better to invest it all in one go?

Or given current equity valuations and global volatility, would you spread things out a little? If so, what would that look like?

I appreciate in 5/10 years or whatever it'll likely make little difference but it's hard not to worry about making a bad choice as it's a lot of money, so just looking for feedback really

For me, it would depend on several factors.

Firstly, what are you doing with the cash you aren't investing on day one, if drip-feeding? These days there's an inflationary 'price' to pay so that'd be taken into account during any risk/benefit thoughts which is a bit different for drip feeding from a lump sum vs drip feeding as you earn.

Secondly is there a tax year timing that would benefit from investment date? Splitting over two tax years when it's only a few days may give some benefit depending on your situation.

Thirdly I'd look at what's going on with the funds I was interested in. It's impossible to predict the future so it's often better to take the view of funds based on their current pricing/quality rather than hoping you've spotted some kind of undervaluation that the market hasn't noticed and that will correct upwards. That said, if you are going for an unfashionable sector in the hope of buying at best value then drip feeding averages out the risk of hitting/missing it.

Fourthly it depends on your own psychology - you seem to have a good attitude about it not likely making any difference in the long run, but if you would worry about making a bad choice then hedging for your own lack of worrying could be worth it - stress is always best avoided!

Nebulous2

You can spread it out in many different ways, from dripping it in at a few k a month, to bunging most of it in and keeping a modest proportion. You might also want to consider the availability of any tax vehicle to wrap it in.

We found ourselves with a six figure sum for the first time in our lives just over a year ago and had the same dilemma.  While investing it all may have offered the best return it seemed very final with real money which isn't really needed, but could not readily be replaced.  We went 50 / 50 investment / cash filling 4 ISAs between us and putting the rest in premium bonds. 

The ISAs are mainly in global trackers, and have come through a turbulent few months okay so far. They were 10.9% up on 1/1/22, 2.3% up on 1/3/22 and 7.4% today. 

Nothing so far has persuaded me that I made a mistake in splitting it. 

Daliah

Have you used your ISA allowance? If not, I'd pay £20k into an ISA before Wednesday (but not leave it to the last minute), and then another £20k on the 6th. Potentially repeat this for your partner, and may be children.

Then I'd look whether I could do similar for my pension(s). And then the rest into a general investment account.

I would do all this over the next week to be in the market as swiftly as possible.

DoctorStrange

The ISA is full this year and I'll be filling next year's with savings from salary. My emergency cash is already in premium bonds and the pension is being maxed out too, so it's just a question of timing really.

I've known the funds were coming for a while and thought I'd be happy just sticking it all into a Vanguard or BlackRock fund and forgetting about it for a while, but the war in Ukraine, high inflation, current valuations, rising risks of recession etc. has made me pause for thought.

I just get the feeling global markets are going to be choppy for a while and that's making me think drip feeding is better, despite the stats.

Ideally I'd want less risk I think but then I'm losing out to inflation, so I feel I've got to be in equities.

Maybe I just need to push the button and then delete the app for a few years - checking every other day seems to be more stressful than helpful

GeoffTF

Drip feeding may not help. The market may hold up while you are drip feeding and then crash. Decide what proportion of your money you are prepared to risk, and put that proportion into equities right away. Keep the remainder safe. A ladder of fixed term savings accounts with one maturing every year should do the trick.

sebtomato

DoctorStrange said:

If you had £250k to invest into (a) diversified fund(s) today, would you still stick to the advice it's better to invest it all in one go?

Or given current equity valuations and global volatility, would you spread things out a little? If so, what would that look like?

I appreciate in 5/10 years or whatever it'll likely make little difference but it's hard not to worry about making a bad choice as it's a lot of money, so just looking for feedback really

If you assume the long term trend is upward, then putting everything is one go is the way forward.

If you assume the long term trend is flat or might go down, then drip feeding is the way forward.

If you are worried about investing over the next 5/10 years, then don't.

Albermarle

I've known the funds were coming for a while and thought I'd be happy just sticking it all into a Vanguard or BlackRock fund and forgetting about it for a while, but the war in Ukraine, high inflation, current valuations, rising risks of recession etc. has made me pause for thought.I just get the feeling global markets are going to be choppy for a while and that's making me think drip feeding is better, despite the stats.

I can fully understand that when it comes to the crunch, you do not want to put £250K on the nose. I would personally stage it as well, but just because that would reduce the worry. However I would not do that because of todays particular situation , as markets are always potentially choppy for one reason or another and will be so in future .

sebtomato

Albermarle said: I would personally stage it as well, but just because that would reduce the worry. 

It's a bit of a contradiction TBH. If you invest money on the stock market, you are betting your funds will increase in the long term.

If you believe that's the case, zero reason to drip feed.

If you don't believe that's the case, why invest at all?

Notepad_Phil

DoctorStrange said:

I appreciate in 5/10 years or whatever it'll likely make little difference but it's hard not to worry about making a bad choice as it's a lot of money, so just looking for feedback really

If you're worried about making a bad choice then maybe do 50% now and then drip feed the rest. It's what I'll frequently do when I'm indecisive between 2 options.