Investing large sum - drip feed or all-in?

TBC15

All in and get on with life.

ChilliBob

I'm dripping stuff in over a longish time horizon. I'd have been better doing it all in one go, however, I don't think I could Jane mentally done it. 

If you think you can sleep better doing it in dribs and drabs go for that. Yes, it might hurt your returns a bit, but it's probably less stressful.

Watch what you are dripping into though, I was dripping into a global index, which a little while back was the cheapest it had been for 6 months or more, so my dripping became more like a miniature flood! 

Albermarle

sebtomato said:

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?

Your comments are a good rational argument.
However human beings are a mixture or rationality and emotion . In many different proportions .
If most people invested in £250K in one go and it went down 25%, they would be sick as the proverbial parrot . No amount of rational argument about long term growth would console them . So drip feeding would lessen any potential pain and anxiety , although in reality it wouldn't make that much difference one way or the other .

P933alilli

I suppose it also depends on the amount invested? I just lump summed my remaining 18.5k to reach the isa allowance for the year and thought about the possibility of a crash and being immediately 5k poorer but would hope it would plough the loss back and more in the remaining 9.75 years. I dont think i'd be as willing to risk it with 62.5k.

Albermarle

Collyflower1 said:

I suppose it also depends on the amount invested? I just lump summed my remaining 18.5k to reach the isa allowance for the year and thought about the possibility of a crash and being immediately 5k poorer but would hope it would plough the loss back and more in the remaining 9.75 years. I dont think i'd be as willing to risk it with 62.5k.

In this thread, some are saying go all in, and some saying stay in cash.
I would agree with your compromise approach . Nobody really knows whether it would be better to invest today or stay in cash , so why not go somewhere inbetween .( although of course it depends as well on your overall financial situation )

Thrugelmir

DoctorStrange said:

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.

Equities (as a whole) can underperform in periods of high inflation. Inflation hurts companies in the same way it hurts individuals. Don't underestimate the risks that equities carry either. 

DoctorStrange

What would you do it not equities?

NedS

sebtomato said:

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?

Yes, of course, but equally it's not unreasonable to take a view that prices may also have the potential to fall in the short term too, and a better entry price will give better returns.

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

This concerns me. If you are worried about it being a bad choice, you should probably not be making the investment in the first place, regardless of drip feeding or not. Once you are sure it's the right investment for you (given your tolerances for risk and investment horizon), then as you say whether you go all in or drip feed is unlikely to make any significant difference in 20 years time. Drip feeding would likely help smooth out the current volatility, but there's always volatility in equity markets - nature of the beast.

k6chris

Which approach would help to to sleep best at night?  In the short term (say next 12 months) no one on this forum can tell you if the value of any investment will go up or down.  Therefore no one can tell you if dripfeeding is a good or bad idea. In 10 years time you won't care.  I would drip feed, just because I would sleep better missing out on some gains, rather than seeing my one off investment go down in the short term.  No logic, just how I sleep!

JakeHyde

Never bet more than you are happy to lose!

I took my first step into investing the other month, when FB stock took a 28Bil dive!
So I bought £1k of stock via Lightyear, thinking it was easy money.  My £1k slowly turned into £820 🤢
But it's now back up to £980.  It was a learning experiment. But even that small amount made me ill!  haha

I'm wanting to max out my ISA by the end of this year, and the the thought of it makes my anxious, but I feel like I have to do it.  
I know Warren Buffett is holding onto his cash, but I guess he can afford to! haha

I don'y want to miss my Tax allowance!