Investing large sum - drip feed or all-in?

Audaxer

eastmidsaver said:

Audaxer said:

eastmidsaver said:

i think when you google this question,  appears studies have shown lump sum was best over long term, even when the lump sum was invested just before a crash.

If you were unlucky enough to invest a lump sum just before a crash which took several years to recover, it would have been more advantageous to drip feed the lump sum or invest it in chunks over a couple of years.

True,  but same goes the other way,  if you keep drip feeding and each month the unit cost goes up,  and then the market drops...  you would be disadvantaged.   I guess the point is, nobody knows what will happen as many above have pointed out.   It just depends how long term you really are and if you will to accept the risks.

Yes, it could go either way. The point I was trying to make is that investing the full lump straight away will not always work out best over the long term, although statistically it is more likely to. I personally would prefer to drip feed or invest large chunks over say 6 months or a year.

DoublePolaroid

We will shortly be in this position - half as much as the figure quoted in the OP but close enough to be relevant. We already have a decent sum invested 100% in equities via S&S ISAs.

I’ve been considering for a while what to do; drip feed vs lump sum; passive index vs actively managed funds; defensive investment vs 100% equities. 

My plan, which is in no way a recommendation and is not evidence based, is to max out our ISAs to the tune of £40k this year and save the rest in easy access accounts with the aim of maxing out our 23/24 and 24/25 allowances with that cash, via £40k lump sum investments. So I guess that amounts to lump-sum drip feeding with a longer temporal interval than is usual. In the interim, were there to be a large market correction or crash, I’d plan to pile in with the remainder when the “sale” were on, via GIA if necessary depending on the timing. If that didn’t happen, plan A would be in effect. 

Yes I know that that constitutes trying to time the market, that I can’t time the market successfully other than through good fortune and that the cash will be losing out to inflation - potentially to the tune of thousands - over that time period. I believe the rational, evidence-based approach for somebody like myself with no edge or expertise would be to max the ISA and lump the rest immediately into a GIA. However, much as I aspire to total rationality, it remains an aspiration for me, at least when it comes to investing.

Freecall

Timing the market is a fools game.

Look at it this way, if you were fully invested already (maybe had been for several years) would you move some into cash now "just in case"?

Of course not, so why is it different just because you are not already invested.

chucknorris

dunstonh said:

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

I often have this decision to make dunstohn, and I respect your opinion. I mainly tend to do what you suggest based on the fact that if I drip feed, my remaining investment capital is falling in real terms (i.e. a pathetic return less inflation). But I wondered are there other factors that I missed? Obviously sometimes there is the need to adjust my portfolio ratio between various investments to consider.

P933alilli

Ive been reading a Morningstar report from 2019 on drip-feeding v lump sum investing during particular turbulent decades.
   It shows that investors who invested either a lump sum or used DCA before the 2008 financial crash both increased returns after 10 years but the lump sum outperformed the DCA  for both the S&P500 and a 60/40 portfolio! 
   If investors got in after the financial crash a lump sum outperforming DCA was even more accentuated for both S&P550 and 60/40!
   In the 1970's with stagflation and high interest rates, lump sums outperformed DCA by 23% (S&P500) and 33% (60/40)
 The first decade of the 2000's was different and two bear markets during the period meant that stocks were down for the whole period! Here, drip feeding outperformed a lump sum investment by the end of the decade for the equity based portfolio whereas for the 60/40 portfolio the lump sum still beat DCA at the end  by 6%!