Drip feed into ISA or all in lump sum
Discussion
I’m in a fortunate situation where I sold a property I own and have £120k in the bank doing nothing, I opened up a premium bonds account and put £50k in so down to £70k,
I’d like to open up a stocks and shares ISA, (any tips in which one is best would be appreciated, I don’t need the £20k for years)
My main question is how to put the money in. Should I put say 2k a month in just incase the market goes all to pot or just get in all in there now?
Also what else to do with the rest? I’d like to keep £15k cash just incase of emergencies but I’m saving £1k a month right now so I’m not short or money and the house is paid off. I’m not the money financial savvie person. Just frugal and live to my means over many years lol
Cheers lads!
I’d like to open up a stocks and shares ISA, (any tips in which one is best would be appreciated, I don’t need the £20k for years)
My main question is how to put the money in. Should I put say 2k a month in just incase the market goes all to pot or just get in all in there now?
Also what else to do with the rest? I’d like to keep £15k cash just incase of emergencies but I’m saving £1k a month right now so I’m not short or money and the house is paid off. I’m not the money financial savvie person. Just frugal and live to my means over many years lol
Cheers lads!
You could have put the money into a cash isa and then moved across as you want. I am in the same position as original poster. Don't watch any you tube videos on the coming crash is all that i will say. I want to invest but don't want to wake up next week seeing the s&p or dow jones has fallen by 50%!
Vanguard conducted a study of drip feeds vs lump sum:
https://static.twentyoverten.com/5980d16bbfb1c9323...
Simplifying hugely, about 2/3 of the time lump sum wins, the other 1/3 of the time drip feeding does. Drip feeding does avoid regret if the market falls after you've invested a lump sum.
@bunchofkeys - often you can put money into a S&S ISA without the requirement to immediately invest it - uses up the ISA allowance, but avoids putting the money into assets if you don't want to immediately.
https://static.twentyoverten.com/5980d16bbfb1c9323...
Simplifying hugely, about 2/3 of the time lump sum wins, the other 1/3 of the time drip feeding does. Drip feeding does avoid regret if the market falls after you've invested a lump sum.
@bunchofkeys - often you can put money into a S&S ISA without the requirement to immediately invest it - uses up the ISA allowance, but avoids putting the money into assets if you don't want to immediately.
I’m 36 years old, I have a pension with work, I pay 6% and they pay 11%. I am clueless about any other type of pension tbh. All my cash is now in the premium bonds and a Santander 123 account, I don’t have a isa currently as I’ve always needed the cash to pay the mortgage off and renovate my current house.
I have a young daughter with a junior isa that I put a little in from time to time but I don’t see much benefit of it and I don’t really want to stack it up and give her a loads of cash at 18. I’m not married but live with my partner.
I have a young daughter with a junior isa that I put a little in from time to time but I don’t see much benefit of it and I don’t really want to stack it up and give her a loads of cash at 18. I’m not married but live with my partner.
Old saying is "time in the market is more important than timing the market".
Like most things, not so simple. If by "drip" you mean over the next 12 months then that is a relatively short time so if you invest one twelfth each month you still have the chance to "time" investing on a dip (and equally a high!) whilst not holding cash for an extended period - £cost averaging.
Likely be a marginal difference one way or another unless there's a significant collapse of markets. However, if you're at all nervous of that happening there is emotional value in drip-feeding. Having said that you're already sitting on a lot of cash (%-wise) with the Premium Bonds.
Like most things, not so simple. If by "drip" you mean over the next 12 months then that is a relatively short time so if you invest one twelfth each month you still have the chance to "time" investing on a dip (and equally a high!) whilst not holding cash for an extended period - £cost averaging.
Likely be a marginal difference one way or another unless there's a significant collapse of markets. However, if you're at all nervous of that happening there is emotional value in drip-feeding. Having said that you're already sitting on a lot of cash (%-wise) with the Premium Bonds.
xeny said:
Vanguard conducted a study of drip feeds vs lump sum:
https://static.twentyoverten.com/5980d16bbfb1c9323...
Simplifying hugely, about 2/3 of the time lump sum wins, the other 1/3 of the time drip feeding does. Drip feeding does avoid regret if the market falls after you've invested a lump sum.
@bunchofkeys - often you can put money into a S&S ISA without the requirement to immediately invest it - uses up the ISA allowance, but avoids putting the money into assets if you don't want to immediately.
Good info! I suppose I am worrying over it to much really, I bet there’s people with 100s of k in stocks and shares isa’s so have a lot more to lose than me.https://static.twentyoverten.com/5980d16bbfb1c9323...
Simplifying hugely, about 2/3 of the time lump sum wins, the other 1/3 of the time drip feeding does. Drip feeding does avoid regret if the market falls after you've invested a lump sum.
@bunchofkeys - often you can put money into a S&S ISA without the requirement to immediately invest it - uses up the ISA allowance, but avoids putting the money into assets if you don't want to immediately.
I'm currently in the process of investing 100k after selling my parents house (they have died, I'm not making them homeless)
I'm investing it all in one go into an ISA feeder fund, so its all working for me, and the ISA figure will be automatically fed in annually. There'll be a tax implication from the non ISA funds, but I'd rather pay tax on the non ISA growth than not have the growth
I'm investing it all in one go into an ISA feeder fund, so its all working for me, and the ISA figure will be automatically fed in annually. There'll be a tax implication from the non ISA funds, but I'd rather pay tax on the non ISA growth than not have the growth
Gooose said:
Good info! I suppose I am worrying over it to much really, I bet there’s people with 100s of k in stocks and shares isa’s so have a lot more to lose than me.
The important thing is you are thinking about how to invest it. The timeframe is quite important; if it's going to be put away for more than five years then I'd put it in as a lump sum & not panic about weekliy rises & falls in value. ISAs are a powerful tool (alongside pensions of course) & time invested is vital. There are numerous ISA millionaires who started investing early & now live off the tax free income.Emergency cash - pension - ISAs are the things to think about. You should check how much you're putting into your pension as well as most pepole aren't putting away anything like enough.
Watch out for costs as these have a significant impact on your investment performance.
Mr Pointy said:
Gooose said:
Good info! I suppose I am worrying over it to much really, I bet there’s people with 100s of k in stocks and shares isa’s so have a lot more to lose than me.
The important thing is you are thinking about how to invest it. The timeframe is quite important; if it's going to be put away for more than five years then I'd put it in as a lump sum & not panic about weekliy rises & falls in value. ISAs are a powerful tool (alongside pensions of course) & time invested is vital. There are numerous ISA millionaires who started investing early & now live off the tax free income.Emergency cash - pension - ISAs are the things to think about. You should check how much you're putting into your pension as well as most pepole aren't putting away anything like enough.
Watch out for costs as these have a significant impact on your investment performance.
How do you check your pension? I mean how would I know how much I actually need and how much it would be worth in 30 years time. The time frame just confuses me really. And if I’m honest pensions worry me the most, I work with a few lads and their parents put money into pensions and lost loads, I remember being young and seeing debates in parliament about the scandal. I really need to educate myself tbh!
Biggest issue I have with chucking the whole years annual allowance in at once is,
if there is a drop in the market later in the year such that you'd like to take advantage of the cheap shares on offer and you've used up your entire allowance for the year then it's tough, you can't invest anymore so any gains you may have enjoyed will be lost.
there is of course a possibility that the share price will just keep going up, in which case investing it all in one lump sum would be the best course of action, but most funds tend to have a few highs and lows throughout the year and ime trying to time the market is much more luck than judgment.
Personally I would invest a lump sum to use up a good percentage of your allowance for the year ( whatever you're comfortable with ) but hold some back in case there are any drops so you can have the opportunity to buy at the lower price point.
At the end of the day unless you have a crystal ball to hand then trying to get the best return for your investment is always going to be a bit of a gamble.
If you're looking more at retirement timeframes, then definitely worth understanding the pros & cons of ISA vs LISA vs SIPP - and likely having a bit of each.
SIPP's can sit alongside your work pension & contain the same shares as your ISA if you like. Tax benefits & lock in periods are different to an ISA though.
SIPP's can sit alongside your work pension & contain the same shares as your ISA if you like. Tax benefits & lock in periods are different to an ISA though.
stichill99 said:
You could have put the money into a cash isa and then moved across as you want. I am in the same position as original poster. Don't watch any you tube videos on the coming crash is all that i will say. I want to invest but don't want to wake up next week seeing the s&p or dow jones has fallen by 50%!
I had the same attitude until about 2 yrs ago and said sod it, now doing pretty well and rode out Covid to come out fine.Half of me wonders if people wish these things into reality, some people have allot to gain from crashes!
https://www.reuters.com/business/more-money-poured...
It’s definitely a time to be more bearish than bullish.
Everyone buying means sky high prices.
And when the buying stops? No bids? How do you realise the gains?
Markets don’t go sideways in a straight line.
It’s definitely a time to be more bearish than bullish.
Everyone buying means sky high prices.
And when the buying stops? No bids? How do you realise the gains?
Markets don’t go sideways in a straight line.
Carbon Sasquatch said:
If you're looking more at retirement timeframes, then definitely worth understanding the pros & cons of ISA vs LISA vs SIPP - and likely having a bit of each.
SIPP's can sit alongside your work pension & contain the same shares as your ISA if you like. Tax benefits & lock in periods are different to an ISA though.
Just reading up about these now, what’s stopping the rules changing (who make the rules?) and then not being about to get your lisa out at 60 or your sipp at 55? Is that possible?SIPP's can sit alongside your work pension & contain the same shares as your ISA if you like. Tax benefits & lock in periods are different to an ISA though.
Gooose said:
Just reading up about these now, what’s stopping the rules changing (who make the rules?) and then not being about to get your lisa out at 60 or your sipp at 55? Is that possible?
Nothing will stop them changing.And nothing will stop them taxing them loads on the way out either.
Taxes have never gone down from what I can see.
Expect 65yrs and 40% taxes by the time you want to take it.
Though who’s to say they won’t just raid those ISAs in some wealth tax while pensions are left alone?
Which is why spreading them out makes a lot of sense. Diversify the investments and the vehicles.
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