How to get back into the market: how many drips?

[seapod]

I need some thoughts on how best to get back into the market with the minimum of stress. I have recently consolidated pensions from various providers onto AJ Bell. Process started before Christmas and the last transfer completed a week ago. Now I have the majority of my pension sitting in cash.....and the world markets are behaving like a 19 year on their first trip to Xanthe. Or perhaps I am simply more conscious/sensitive due to circumstance

I have 1/3rd invested in a simple global tracker (HSBC FTSE All World Index) which I invested in February and watched go backwards since - not the end of the world but obviously playing on my mind.

I have 2/3rd sitting as cash (500k)

I am 49 and I will draw at 57

I am growth orientated and risk tolerant genrally but the current markets (AI bubbles, Middle East) have me clutching my pearls to an unfamiliar extent. I am normally fully signed up to the 'time in the market, not timing the market' mantra.

Diversification is obviously key, with perhaps more of a tilt to Europe than previously. The rest in low cost trackers, a little commercial property ETF, etc. This part is less of a concern, its more about being brave enough to press the button to invest.

Would you go for a drip feed - if so over how long? Any thoughts appreciated

[Jon39]

seapod said:

... perhaps more of a tilt to Europe than previously. ...

One word caught my attention.
If you are referring to mainland Europe, then of course Gernany and France are the dominant economic drivers.

Germany has traditionally been so reliant on their motor manufacturing industry and until recently that has been hugely successful for decades.
All that is now changing. VW have now announced 50,000 redundancies, the first time since WW 2.
Porsche, also very successful is experiencing sales problems.
Mercedes-Benz has seen their biggest market (China) decline sharply and their entry into EVs has been a disaster.
Lastly, 'cheap' Chinese EVs are heading west, because of over production in their home market.

I could of course be wrong, but those are my concerns.

[simon800]

seapod said:

I am normally fully signed up to the 'time in the market, not timing the market' mantra.

Diversification is obviously key, with perhaps more of a tilt to Europe than previously. The rest in low cost trackers, a little commercial property ETF, etc. This part is less of a concern, its more about being brave enough to press the button to invest.

Rather than playing fund manager yourself, why not just stick it in a multi asset fund aligned to your risk appetite?

There are various options, usually risk rated (1-5 or 6) and actively managed (using underlying trackers).

So the fund managers are deciding whether they should have more in property than they should in high yield bonds next year, rather than you deciding.

You mention you are on AJ Bell, they have their own range of funds which have performed extremely well - with massive underweights to the US (for example).

This year they changed their US weighting further, reducing the amount held in market cap weighted and increasing the amount in sector specific ETFs (Healthcare and Energy);

https://www.ajbell.co.uk/group/news/aj-bell-strate...

Aberdeen also have a range, so MyFolio Index IV gets you (for now) this kind of diversification;



The way I see it is you can pay them a small fee to do all this for you, or you can try to outwit them doing it yourself...

I'd set it up, chuck it in, and then not look for a long time personally.

[seapod]

Thanks both - agree on the multi-asset approach, I don't want to be a fund manager.

Its more about the timing.

If I 'chuck it in' - do it in one go and forget about it or break it up into, say, 3 chunks and phase over the next 3 months for example?

[simon800]

seapod said:

Thanks both - agree on the multi-asset approach, I don't want to be a fund manager.

Its more about the timing.

If I 'chuck it in' - do it in one go and forget about it or break it up into, say, 3 chunks and phase over the next 3 months for example?

I think I'd go with whatever makes you feel comfortable.

On one hand, if all of the money was invested before, then there's not really any treason it shouldn't all be invested now....i.e. if not for the pension transfer, this wouldn't even be a discussion.

But alternatively if you'd sleep better at night drip feeding then perhaps that's the route to go.

Sorry that's a bit on the fence - it's a dilemma that comes down to how it makes you feel personally I think, so only you can truly answer.

[alscar]

I don’t think anyone other than you and your own comfort factor can answer the timing q.
Fwiw in March 2020 I started to transfer both my CETV DB and also a smaller DC Pension into funds.
DC I put in 100% from the get go.
DB I put in 50% on day 1 and then over the next 18 months or so dripped in the vast majority of the balance which had been in money market funds.
In hindsight ( it’s a wonderful thing ) I could and should have transferred 100% on day 1 but with the sum involved I wasn’t prepared to be that brave and indeed my FA suggested over 12 months transfer.

[Magic919]

Get it invested.

[fat80b]

It's easy to stare at the daily/weekly/monthly movements and think that now isn't the right time to push the button. But unless you have a number at which it would be the right time (and a good reason that it will do what you think - which you probably don't), then what are you actually waiting for?

With a time horizon of 8 years, every month not invested is a month not invested.

I'd be thinking the pullback after Operation Epic Fury is as good-a-time as any to get it in and then don't look back.....