Investment timing- thoughts…?

Daleandnolan

Hello- newbie here. Hoping to gather some thoughts and ideas about when to invest.
i have a lump sum about (90k) and are looking for somewhere to invest it. I think that I may have settled on VUAG and / or an all world cap . Max out the ISAs first of course. The S&P 500 seems high at the moment and I am mindful of the coming budget over here as well as the election in November. What are people’s views on investing now? Do it now and beat the election- never mind the price, or wait… welcome your views. 

Thanks!

tacpot12

US Stocks are very overpriced. Their Cyclically Adjusted Price-Earnings ratio is up around 35 at the moment. It's 16 in the UK meaning that UK stocks are much better value. That doesn't mean that US stocks doing still have some momentum to continue their upward course. 

Will the US election change this? I doubt it. I suspect the market sentiments for US shares will be driven by factors other than who is President. Even if Trump screws up the US, firms there will still find a way to make progress. It's another way of saying that it's a mug's games to try to time the market. 

Linton

You are unlikely to get timing right enough times to make the exercise worthwhile.  After the current uncertainties are resolved there will be more about which you currently know nothing.   In my view you should decide what areas you want to invest in and start buying.

Bostonerimus1

There's no time like the present. Get your money working for you asap! Don't worry about macro-economics and politics that you can't control. For every negative or positive immediate scenario you can think of, there are far more in the future that you cannot know, so stop worrying and start investing now.

WindfallWendy

I have a windfall coming my way (£180k). My husband and I are going to chuck as much as possible into ISAs and premium bonds now, and then repeat on 7th April. And then each year move from premium bonds into ISAs.

This is because I don't want to have to to a tax return, and pay tax on interest and dividends. Neither do I want to have to pay attention to markets and instead will entrust my ISA provider to do that via S&S ISAs.

Is this (my way) a silly way to approach a windfall, then? Should I look at stocks directly like Daleandnolan???

masonic

Is your ISA provider an Independent Financial Adviser? With a sum that large, and a desire to have it managed for you, then using an IFA would likely be the way to go.

OldScientist

Daleandnolan said:

Hello- newbie here. Hoping to gather some thoughts and ideas about when to invest.
i have a lump sum about (90k) and are looking for somewhere to invest it. I think that I may have settled on VUAG and / or an all world cap . Max out the ISAs first of course. The S&P 500 seems high at the moment and I am mindful of the coming budget over here as well as the election in November. What are people’s views on investing now? Do it now and beat the election- never mind the price, or wait… welcome your views. 

Thanks!

Historically (see https://corporate.vanguard.com/content/dam/corp/research/pdf/cost_averaging_invest_now_or_temporarily_hold_your_cash.pdf) investing a lump sum in one go rather than in three instalments one month apart has led to higher returns in about 68% of cases (although not investing at all, i.e., leaving it all in cash is statistically the worst approach). Of course, whether the next few months will see one of the 68% cases or one of the 32% cases is impossible to predict (unfortunately, only hindsight will tell you what the best decision would have been).

Bobziz

@OldScientist is there any research which looks at how the results change at different p/e levels? 

masonic

Bobziz said:

is there any research which looks at how the results change at different p/e levels? 

A couple of years ago, someone with very strong and fixed opinions posted some research suggesting that the best time to drip feed was when in a bear market (market had dropped 20% below previous high). That would suggest, rather counter-intuitively, that it is better to drip feed at a lower p/e level than a high p/e level. However, the correlation was weak and the relationship hasn't held for any of the last three bear markets (2009, 2020 and 2023), all of which were brief in duration. Whereas markets spend so much time at relative highs, that at high p/e levels normal probabilities tend to hold.

Bobziz

So it doesn't matter that the p/e of the s&p has only been this high 3 or 4 times over the last 100 years or so ?

Albermarle

WindfallWendy said:

I have a windfall coming my way (£180k). My husband and I are going to chuck as much as possible into ISAs and premium bonds now, and then repeat on 7th April. And then each year move from premium bonds into ISAs.

This is because I don't want to have to to a tax return, and pay tax on interest and dividends. Neither do I want to have to pay attention to markets and instead will entrust my ISA provider to do that via S&S ISAs.

Is this (my way) a silly way to approach a windfall, then? Should I look at stocks directly like Daleandnolan???

Most S&S ISA's are just an administrative entity, and do not manage your investments for you. It is for you to pick the investments. Their websites may well offer some pointers/general info about investments in general, but they will not offer you any personal advice.

It is possible with a few S& S Isas by paying extra, to have some basic management of your investments, after you answer a few questions.

However as already mentioned to get proper financial advice that looks at every aspect of your financial situation, you need to pay an IFA.

You are right though that by investing via a S&S ISA you avoid some admin work and potential tax.
Same as with investments in a pension. You do not mention your pension position. Often this is a good place to invest lump sums, due to tax benefits.