How to get back into the market: how many drips?
Discussion
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
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
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.
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? 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.
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 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.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?
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.
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.
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.
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.....
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.....
All things considered, I'm going to stick it back into the market with the help of my friend Claude. It has been hefpful in sorting and categorising the available funds on AJ Bell, giving Chrome browser access makes pulling the data very simple.
I am going to press go on monday to allow Operation Fury to declare total victory/deny it ever happened over the weekend
I needed some nudges to make this happen, thanks all
I am going to press go on monday to allow Operation Fury to declare total victory/deny it ever happened over the weekend
I needed some nudges to make this happen, thanks all
I'm in a similar position albeit with considerably smaller amounts.
Started an S&S ISA in February and watched it drop 5% in the last month. I've put the cash in to use my allowance and this morning 'dripped' in another grand. But part of me thinks just dump the rest in. After all I have a Sipp which is invested and I haven't worried about that.
Started an S&S ISA in February and watched it drop 5% in the last month. I've put the cash in to use my allowance and this morning 'dripped' in another grand. But part of me thinks just dump the rest in. After all I have a Sipp which is invested and I haven't worried about that.
fat80b said:
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.....
This is profoundWith 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.....
Simpo Two said:
Magic919 said:
Get it invested.
Yep. £500K in cash assuming 0% interest and 4% inflation is losing the OP £1,666pcm in real terms. I would say now is a pretty good time to invest. You may see a short term fall but things always recover.A Sipp with A J Bell should pay 2.4% interest but I would suggest moving the cash to a money market fund tracking the Bank of England SONIA rate (about 3.7%) with virtually no increase in risk.
I'm surprised the markets haven't fallen further given the situation in the Gulf. With the Strait of Hormuz effectively closed, I can only see markets going down, certainly in the short term. There doesn't seem to be any easy off ramp for Trump.
I have this same problem, as I managed (completely by accident) to time the market by selling out of the majority of my investments in the week leading up to the start of the US/Iranian war. This was so I can transfer SIPPs, S&S ISAs and LISAs between providers, which has all now been completed - and has earned me about £5k cashback in the process.
As a result of this lucky timing, I sold at the very top of the market and have missed most of the slide over the last two weeks. I have some residual investments which are down, but the damage is considerably less than it could have been.
My challenge now is when to reenter the market.
Generally, getting it invested in one go outperforms a drip feeding approach. However, psychologically this can be a challenge when there is significant volatility. Trying to identify a dead cat bounce vs a genuine rebound is difficult, and I do not have the knowledge or skills to do this.
In the end, I have placed a series of limit orders which will by tranches when they hit certain prices. However, I will need to review this as if the market starts consistently improving, I will probably need to act quite quickly. However, perhaps because I'm a bit of a pessimist, I think we've still further to slide before things start to look better.
As a result of this lucky timing, I sold at the very top of the market and have missed most of the slide over the last two weeks. I have some residual investments which are down, but the damage is considerably less than it could have been.
My challenge now is when to reenter the market.
Generally, getting it invested in one go outperforms a drip feeding approach. However, psychologically this can be a challenge when there is significant volatility. Trying to identify a dead cat bounce vs a genuine rebound is difficult, and I do not have the knowledge or skills to do this.
In the end, I have placed a series of limit orders which will by tranches when they hit certain prices. However, I will need to review this as if the market starts consistently improving, I will probably need to act quite quickly. However, perhaps because I'm a bit of a pessimist, I think we've still further to slide before things start to look better.
I had a lump sum that came into my AJ BELL SIPP at the start of Feb.
Picking where to put it, mixing it up, I picked the funds on 18 Feb.
I had 1 week where it was positive .... now it's down ave 5.5% .....
I kept 10% aside and asked my teenage son to pick some funds. Apathy kicked in and he hasn't picked any.
That seems the best investment when I bother to look at it.....
I'd be more inclined to drip feed it £100k a month whilst the ME conflict continues. Not really seeing any good news upcoming at the moment.
Picking where to put it, mixing it up, I picked the funds on 18 Feb.
I had 1 week where it was positive .... now it's down ave 5.5% .....
I kept 10% aside and asked my teenage son to pick some funds. Apathy kicked in and he hasn't picked any.
That seems the best investment when I bother to look at it.....
I'd be more inclined to drip feed it £100k a month whilst the ME conflict continues. Not really seeing any good news upcoming at the moment.
There is lots of research about lump sum vs drip feed and various videos on YouTube
What the ones I have watched say statistically you are better off putting the whole lot in 2/3 of the time and visa versa
As always easy to say and more difficult to do when its taken a lot of earning
Good luck
What the ones I have watched say statistically you are better off putting the whole lot in 2/3 of the time and visa versa
As always easy to say and more difficult to do when its taken a lot of earning
Good luck
Simpo Two said:
Yep. £500K in cash assuming 0% interest and 4% inflation is losing the OP £1,666pcm in real terms. I would say now is a pretty good time to invest. You may see a short term fall but things always recover.
I hadn't done this calc. Brings it home as this is a meaningful amount in anyone's bookthebursar said:
I have this same problem, as I managed (completely by accident) to time the market by selling out of the majority of my investments in the week leading up to the start of the US/Iranian war. This was so I can transfer SIPPs, S&S ISAs and LISAs between providers, which has all now been completed - and has earned me about £5k cashback in the process.
As a result of this lucky timing, I sold at the very top of the market and have missed most of the slide over the last two weeks. I have some residual investments which are down, but the damage is considerably less than it could have been.
My challenge now is when to reenter the market.
Generally, getting it invested in one go outperforms a drip feeding approach. However, psychologically this can be a challenge when there is significant volatility. Trying to identify a dead cat bounce vs a genuine rebound is difficult, and I do not have the knowledge or skills to do this.
In the end, I have placed a series of limit orders which will by tranches when they hit certain prices. However, I will need to review this as if the market starts consistently improving, I will probably need to act quite quickly. However, perhaps because I'm a bit of a pessimist, I think we've still further to slide before things start to look better.
You are more eloquently describing my exact situation. I'm glad it is a bit more considered than just stick it back in. I am still committed but will research more approachesAs a result of this lucky timing, I sold at the very top of the market and have missed most of the slide over the last two weeks. I have some residual investments which are down, but the damage is considerably less than it could have been.
My challenge now is when to reenter the market.
Generally, getting it invested in one go outperforms a drip feeding approach. However, psychologically this can be a challenge when there is significant volatility. Trying to identify a dead cat bounce vs a genuine rebound is difficult, and I do not have the knowledge or skills to do this.
In the end, I have placed a series of limit orders which will by tranches when they hit certain prices. However, I will need to review this as if the market starts consistently improving, I will probably need to act quite quickly. However, perhaps because I'm a bit of a pessimist, I think we've still further to slide before things start to look better.
For me this is mind boggling amount of money.
To avoid losing any of it (i would personally care more about not losing it thank making return) I would:
- make a plan to put into the market on monthly or even weekly basis over 5 years (depends on trading charge's as well); perhaps accelerate if I feel certain dips. Lets say at 5% market down i double at 10 more than this, at 20% i chuck all in
- rest of money in money market fund that invests in short term deposits. Then release monthly
Also be careful with currency exposure. On the forum so many people trade etfs in dollars. I get the mutual fjnd with gbp swap.
I think pound cost averaging is great tool to manage risk (at expense of reduced volatility) and no one mentioned
To avoid losing any of it (i would personally care more about not losing it thank making return) I would:
- make a plan to put into the market on monthly or even weekly basis over 5 years (depends on trading charge's as well); perhaps accelerate if I feel certain dips. Lets say at 5% market down i double at 10 more than this, at 20% i chuck all in
- rest of money in money market fund that invests in short term deposits. Then release monthly
Also be careful with currency exposure. On the forum so many people trade etfs in dollars. I get the mutual fjnd with gbp swap.
I think pound cost averaging is great tool to manage risk (at expense of reduced volatility) and no one mentioned
Edited by Blue_star on Friday 13th March 21:52
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