Drip feed or lump sum

TDS_2

I have a small lump sum (3k) and am saving £250 per month toward a retirement fund, which will not be required for 35 yrs.

I am interested in investing a portion of this into a S&S ISA.

I am aware of the benefits of drip-feeding into investments that are considered to be near to the bottom of their cycle rather than trying to predict the absolute bottom. I intend to invest £50/month into a few funds that fit this catorgory. I had been thinking of UK, US and Japanese equity, and perhaps property. Is the general opinion that these sectors will be low in 2008 before taking off again?

As far as lump sum investing is concerned, should I be looking for areas that are on the uptrend already? I had thought about 1k in Russia, any thoughts?

I may also invest 1k lumps into index linked bonds...

Thanks for looking!

CLAPTON

if you're thinking of investing 50 per month for the next 35 years why does it matter what the market is doing at the moment?

MrMicawber_2

For what it's worth I think your long term plan is spot on. £50 into a good range of say 5 funds sounds excellent. I'm personally a fan of global funds as core holdings, though I'm aware there are plenty here who are not. If I was doing what you are doing I would have at least one global fund and possibly two. UK equity income has a great track record, and emerging markets / far east make a very compelling argument. Japan seems to be a perpetual false dawn but one day................ Many IFA' seem to be suggesting 20% - 25% in emerging markets for long term investors now, and at 35 years you certainly qualify for that.

You could always have a chat with an IFA. No doubt you have worked it out but if you get a 6% annual return on your money you will have £345,205 or £399,414 at 7%.

I would also do some reading around. Hargreaves Lansdown have the Wealth 150, Chelsea Financial Services have their preferred funds on their website in their magazine, there is the Advisor Fund Index on Trustnet, and Citywire has rated managers and fund performance.

Don't just go for funds which have done well over the short term though. A good start is to go for managers who have a decent track record (often they have a Citywire rating) over a long term and preferably with a top company where they have been for some time eg 5 years. Not infallible but a good starting point).

When you have got a few thousand in your first few funds you might consider putting new money into some further funds to diversify.

Hope this helps and makes sense.

TDS_2

Thanks MrM. Lots of useful info there. I was a bit unsure about how to choose a particular fund once the sector had been decided, so your comments were particularly useful. As you say, I'll probably not have the ultimate diversification until I can afford that sort of spread, but that time will come.

Clapton, thanks for posting. I'm not sure I understand what you mean, though. Obviously it's the long-term that will decide what growth is achieved, but at the stage where I'm at (very few funds) surely buying into under-valued areas is the best option until a proper spread is achieved?

Are there any areas where people think a lump sum would be well spent, or is it generally better going down the drip-feeding route? Clearly 1 or 2k isn't gonna set the world alight, but it'll be a large chunk of my portfolio for a year or two.

Thanks again!