Invest now or wait

adindas

Audaxer said:

barnstar2077 said:

As there is no way of knowing if things are going to be better or worse at a given point in the future the logical thing would seem to be to invest everything now (assuming you are investing for over ten years and especially if someone has a bit of flexibility when it comes to needing the money.)

There is no way to know if things are going to get better or worse. However someone that decided to put a huge lump sum in at the end of last year would probably be wishing they had drip fed over the last 7 months. If investing a large lump sum all at once I would be more confident about doing it now than at the end of last year when most markets were at all time highs.

People put their money where their mouths are. Look at recent  numerous threads in this MSE, There is no evidence that those who have been telling people in this MSE forum to throw their hard earning cash £300k (say like in this case) in one go randomly are doing that themselves. At least they have not shown any screenshot of what they have been doing.

In fact many who suggest people to throw in one go do otherwise, e.g doing DCA.

Many people are doing DCA naturally without realising it, as many people will need to wait for the following month before getting extra cash to invest.

DCA in the bear market has been recognised as one of a smart strategy by authoritative sources. This is just one of a few examples: Smart Strategies for a Bear Market - Accumulate With Dollar Cost Averaging  (DCA) By The Investopedia Team

https://www.investopedia.com/8-ways-to-survive-a-market-downturn-4773417

Throw your hard earning cash £300k (say) blindly randomly in one go. If you are very unlucky, you might need to wait 20yr+ before you see a single penny profit. Observe this graphic

Audaxer

barnstar2077 said:

Audaxer said:

barnstar2077 said:

As there is no way of knowing if things are going to be better or worse at a given point in the future the logical thing would seem to be to invest everything now (assuming you are investing for over ten years and especially if someone has a bit of flexibility when it comes to needing the money.)

There is no way to know if things are going to get better or worse. However someone that decided to put a huge lump sum in at the end of last year would probably be wishing they had drip fed over the last 7 months. If investing a large lump sum all at once I would be more confident about doing it now than at the end of last year when most markets were at all time highs.

Yes, but you are looking back on events now, when in reality you wouldn't know, so it could also have gone the other way.  We didn't know a year ago what the future holds, and no one knows what will happen a year, five, or thirty years from now, so the logical thing to do is just to invest as soon as the money becomes available.

Drip feeding is perhaps psychologically easier for people because they would rather miss out on some potential growth than take a perceived loss to their capital, even if it would prove inconsequential in the long run.

Yes, it could have gone either way. The only thing I knew for definite at the end of last year, was that at that time, my portfolio was the highest value it had been to date. At present the value of my portfolio, and most portfolios, are lower in value that they were at the end of last year.  So although we didn't know it at the time, anyone that did invest in chunks over the last 7 months would have bought funds at cheaper prices than someone who invested their full lump sum in the same funds at the start of the year. 

tigerspill

We are in a similar position in the sense we have inherited a large sum.
We invested it as we received the distribution.  I took the view that I have no real idea where markets are going (just like everyone), and I am in for 10+ years, so no point in waiting.  
If you are waiting - what is it you are waiting for and how do you know it will happen?

flopsy1973

ChilliBob said:

I'm in a similar position and also dripping in. I have been for over 12 months, and some of the last drips have been the cheapest. 

Out of interest what have you been dripping it into passives or actives ?

k6chris

Come up with a plan that will enable you so sleep at night.  For me, something like "I will invest 10% of the original sum, each month, for the next 10 months.  If the market falls, my later purchaces will be at a lower unit cost, if it rises I will have made some gains."  Without the benefit of hindsight, there is no 'right' answer.

Albermarle

There is also the halfway house compromise of say investing one third now, one third in 3 months and one third later.

ChilliBob

flopsy1973 said:

ChilliBob said:

I'm in a similar position and also dripping in. I have been for over 12 months, and some of the last drips have been the cheapest. 

Out of interest what have you been dripping it into passives or actives ?

A passive core of global equities and some actives around the side. More recently some more sensible and Conservative ones, early days (actually time flies, more like 18 months) it was more into the growth stuff that's dropped like a lead balloon.

I'm probably about 80% passive global core, 20% active, half of which is sensible the other half less so. Invested capital is sbout 30-40%, rest is cash. 

aroominyork

tigerspill said:

We are in a similar position in the sense we have inherited a large sum.
We invested it as we received the distribution.  I took the view that I have no real idea where markets are going (just like everyone), and I am in for 10+ years, so no point in waiting.  
If you are waiting - what is it you are waiting for and how do you know it will happen?

I will in the same position in a few months time and might invest the money in a few tranches over 12-18 months. I realise this can be seen as illogical since the funds are currently invested in assets that will be liquidated (mostly a life assurance policy, ie lower risk) so I will essentially be pulling funds out of the market before gradually reinvesting them. Maybe I will keep the uninvested balance in wealth preservation funds which are not too dissimilar to a life assurance policy. As the OP will see, you can argue it many ways so, for me, it comes down to what seems a justifiable process and lets you sleep best.

flopsy1973

ChilliBob said:

flopsy1973 said:

ChilliBob said:

I'm in a similar position and also dripping in. I have been for over 12 months, and some of the last drips have been the cheapest. 

Out of interest what have you been dripping it into passives or actives ?

A passive core of global equities and some actives around the side. More recently some more sensible and Conservative ones, early days (actually time flies, more like 18 months) it was more into the growth stuff that's dropped like a lead balloon.

I'm probably about 80% passive global core, 20% active, half of which is sensible the other half less so. Invested capital is sbout 30-40%, rest is cash. 

Do you mind sharing some of your PF to compare against some of what I have been looking at

Michael121

flopsy1973 said:

ChilliBob said:

flopsy1973 said:

ChilliBob said:

I'm in a similar position and also dripping in. I have been for over 12 months, and some of the last drips have been the cheapest. 

Out of interest what have you been dripping it into passives or actives ?

A passive core of global equities and some actives around the side. More recently some more sensible and Conservative ones, early days (actually time flies, more like 18 months) it was more into the growth stuff that's dropped like a lead balloon.

I'm probably about 80% passive global core, 20% active, half of which is sensible the other half less so. Invested capital is sbout 30-40%, rest is cash. 

Do you mind sharing some of your PF to compare against some of what I have been looking at

Don't touch active. If you are asking these types of questions you will be questioning yourself if you made the right picks in a market not going up.

Where people use active for say small cap or value won't make a huge difference anyway.

RR #198 - Gerard O’Reilly: Deep Dive with Dimensional’s co-CEO & CIO - YouTube

In this vid a guy from dimensional actually tells ben his custom made portfolios wont capture the premium from value, momentum, profitability or size. He don't say by how much, but if i remember correctly dimensional funds were looking for 2% premium, maybe he gets 1% over 20 years but he already changed his original portfolio so no good copying him. 

Shame those dimensional funds are not available in the UK.