SIPP lump sum or regular invest

EthicsGradient

dunstonh said:

Yes, that is how many (most?) people think; this is, for instance, why some people buy bonds, or keep more than emergency amounts of money in interest-bearing accounts. There has been a lot of research into risk in investing; it's not always about "do whatever gives the highest likely return, regardless of risk". In practice, we also see that market falls can be sudden, whereas rises tend to be steadier over a longer period. People don't like the thought of being the guy who put it all in at the highest price just before the crash.

In over 30 years, hardly anyone has done it that way.     It comes up occasionally but when you are looking at being invested for 30-50 odd years, then is up to 12 months at the start really going to make any difference?

During that time, there are going to be many crashes.   So, best get used to it.

Plus, not being the guy that put it all in at the highest point could still be you if you phase.  e.g. if the market increases over year 1, you have bought less units that if you had bought in one go.    Then in month 13 there is a crash.    Those that phased over the 12 months will have a lower balance than those that did not phase.

Psychologically, I understand it.  But when you look at it logically with very long-term investing, it doesn't make sense and with long term investing where there are annual contributions, it really doesn't make much difference in the scheme of things.

Yes, it could make a difference; for instance, buy 2 units when at the top of the market, it then drops 20%, and then grows from then on. Or buy 1 unit at the top of the market, it drops, you then buy another 1.25 units, and you have 1.125 times the amount - however long you keep the investment.

And yes, loads of people buy bonds, keep money in cash, or use "dollar/pound" cost averaging; and they also stagger moves into bonds or cash. 

Psychology is one thing to take into account; people don't want to worry, and lowering risk helps that. And lessening the chance of a significant loss is something many people will gladly take along with lessening the chance of a significant gain.

"With long term investing where there are annual contributions" - that's a different matter. This is about a lump sum.

dannybbb

Good points from everyone and im aware  that there will be ups and downs

  i guess aside from happening on the concept of staggering  contributions , i take the point that  its a 10-15 year investment and  that its difficult to predict but I just wanted to get  a more educated opinion - incase it was quite obvious to the more educated investor that now was a terrible time 

brucethefish

Depending on your company year end, you could split it over two years, then once in your SIPP drip feed if preferred into your chosen fund? Just thinking aloud here