Shall I pay a lump sum of 4K into my LISA or 4 x £1000 every three months?

Sam3007

Hi,
I have a LISA acconut with AJ bell with an HSBC Global Equlity index 
I have invested 8K last year and I was luck that the market went up, so my current balance is around 13K with the bonus.

I maxed out my S&S LISA ; 4K in March 2023 and 4K in April 2023 because I felt the market was going up.
Correct me if I am mistaken, but I have noticed that the market goes up one year and then down the following year and then up again .. 
2021 = +27% / 2022 = -16%  / 2023= +26% . Does this mean that there is a big chance the index will go down in 2024?
Based ib thism Is it advisable not to invest all 4K as one lump sum and try to spread it over this tax year ?
Thanks

eskbanker

Sam3007 said:

Correct me if I am mistaken, but I have noticed that the market goes up one year and then down the following year and then up again .. 

Yes, you're mistaken, there is no such predictable repeating pattern of good and bad years alternating like that!

The usual adage is 'time in the market, not timing the market', i.e. invest as much as you can as soon as you can, on the basis that the whole reason for investing is the expectation that, over the long term, value will increase.

Alexland

Nobody knows what will happen over the short term so just invest the money whenever you have it available and over the long run you will get a dollar cost average entry price effect - no need to distort your contributions within the tax year. Once the account gets big enough the unit price you pay on new money makes negligible difference anyway.

Albermarle

Correct me if I am mistaken, but I have noticed that the market goes up one year and then down the following year and then up again .. 
2021 = +27% / 2022 = -16%  / 2023= +26% . Does this mean that there is a big chance the index will go down in 2024?

You are only looking over 3 years. Financial markets have been going up and down for a LOT longer than that.

So the up and down is unpredictable, but the long term trend is up.

masonic

If you are investing every year for the foreseeable future, then you will be spreading out your contributions already. Holding back money to invest £1000 per quarter is going to give you very little additional benefit vs £4000 once per year (plus investing the bonus when it is credited).

Nurse2047

Why don’t you just invest £333 per month!

Alexland

Nurse2047 said:

Why don’t you just invest £333 per month!

Because if the OP already has the contribution available then on average they are more likely to get a better result (and lower trade costs as a side benefit) investing it now rather than waiting. If the reverse was true then everyone would keep selling their existing investments to drip-feed back in again.

They are probably just a bit nervy in fear of the market crashing after making their annual contribution but it could equally crash just after they complete the process of investing the money slowly. It's like getting into a cold swimming pool - you can spend the whole session slipping into the pool very slowly or just accept the situation and jump in to maximise the time having fun.

If you have confidence in the investment choice then there is nothing to worry about long term so do the action that is most likely to generate the highest return and don't regret it or learn the wrong lesson if markets move against you as over enough years investing as soon as possible in a growing but volatile market should work better than holding back on making contributions.

Generally the less illogical decisions you make as an investor the better.

j_netprofit

If you have it, invest it all now. The best time to invest was yesterday, second best is today.

Not sure how old you are but even if you're 39 now thats still a long enough horizon to ride wave.