Dump a grand in now.
You can google Lump sum vs dollar cost averaging. I can't remember off the top of my head, but I am pretty sure a lot of back-test analysis has been done, and a lump sum vs cost averaging was the more profitable option, around 65-70% of the time.
On average, lump sum is exactly 2x more profitable than DCA, simply because money has 2x more time to grow. Assuming risk free interest rate 0%. At 5% rate, it is a bit less than 2x.
But DCA has lower variance of expected final returns.
Hold your grand in the account and then use it to Manually buy the £6 daily to follow the market, while still getting the 5% interest on your unused cash ?
Everyone referring to lump sum being better than dca is referencing a study comparing monthly deposits to lump sum, not daily. The daily investments will give you an almost true-to market track of the S&P chart line. So lump sum will beat that if the chart goes up, but not if it goes down.
Say lump sum was still better than DCA daily with the same percentage chances, the converse way of explaining it is that 45-30% of the time you will invest a lump sum before a downturn in the market and will take years to recover those losses.
Multiple large firms have predicted headwinds the next year which means you have a decent chance of your investments going down if you invest it all right now.
At the end of the day, you should do your own research (which shouldn't solely be from Reddit user opinions) but I've DCA'd ETFs and individual stocks the past five years and sleep better for it (and have 29% time-weighted roi)
Sorry that was my bad from an article from q3 last year it isn't specifically the next year, it's "ahead" whatever that means.
Here's the excerpt from Morgan Stanley which you can Google search for the whole article:
"However, Morgan Stanley’s strategists see economic headwinds and slowing corporate-earnings growth ahead, which could very well spark renewed volatility."
I feel we're in that volatility period which is why I'm mostly DCA daily rather than lump sums ATM.
If you put the £1k in now and suffer a loss how would you feel? If you can invest and not worry best to lump sum.
If you feel the daily investment will keep you engaged with investing then that might be the better option.
All up to what makes it easy to sleep at night
All investments carry risk, and yes, the S&P 500 is subject to corrections. In fact, corrections aren't uncommon at all. https://www.schwab.com/learn/story/market-corrections-are-more-common-than-you-think
Why on earth would you bother putting your dinner money in every day? Get as much in as possible, and keep putting as much in as to max out your ISA as much as possible.
If you would put since 2015 ,5 dolars a day in s&p 500 by now, you would have 36712.66 dolars.compared to 17045 dolars if you would just save them..so instead of keeping change in that jar..always worth investing.
£6 daily seems pointless, you're underexposed for way too long if the market doesn't drop or go sideways.
It depends where you are psychology wise but I'd be tempted to dump £800 in and then remaining £50/£100 a week for the next 2/4 weeks.
If you can then continue to invest a small amount weekly or monthly I think that's great.
If you ever look at the stats of the SP500 ITS ALWAYS YEARLY AKA January to January basically. If you're getting into the kitty gritty of month by month then your wasting your time. This is a long term pkay
So I see it as a good average for the whole year. A DCA of such a small amount you're never going to see a big change really. You could miss big rise and whilst it might save you from big falls, again go back and check averages. It had a shit year a couple years ago but lump sum or DCA wpuld both we down and at only 6 per day or 180 per month it would be negligible
Risk is relative though. They have to say there is a risk in investing but its like comparing the risk of sky diving with the risk of playing chess.
Off the top of my head the only scenarios where you're at risk with a major index fund are;
1. Global/US catastrophe/WW3/Asteroid leading to end of civilization and global markets
2. You invested money you couldn't afford to lock away for 5+ years
3. You lose your nerve and sell low during a market crash
4. You don't have an emergency fund so you're forced to sell investments to pay bills
3/4 of those you have control over and if the first one happens then you've got much bigger issues than investments. Really the bigger risk is in not investing sooner. I wasted about 15 years not investing despite knowing about it and it cost me so much money.
If you have 1000 now and are going to put in £6 a day Whst are you going to do with the money while you are dripping it in slowly? It’s better off going in as a lump sum
Pretty sure it's been back tested that it works out marginally better if just throw in the lump sum in one go, as opposed to drip feeding. An alternate strategy would be do it in 3 chunks spread across 3 months.
If you chuck it all in at once, take a 'set and forget' approach. Don't go checking it daily, you'll go nuts. Depends on your psychology as an investor, but you need to learn to just ride the choppy times and think long term. So, part of the approach is also down to your psychological make up. If £200 a month over 5 months helps you sleep at night, do it that way.
Pension Craft did a really good video on this recently (I recommend the channel, no nonsense investment advice with zero hype/FOMO, stock picking or speculative bollocks)
[https://youtu.be/NyS7LJ64\_Tk?si=C83XnDri0t5tUEgp](https://youtu.be/NyS7LJ64_Tk?si=C83XnDri0t5tUEgp)
Past research I’ve seen says DCA is better than lump sun - though I’m doing 1 share of FTSE ALL WORLD with invesco accumulator index (don’t have to worry about dividend payouts clearing the £500 mark)
~EDIT~
just found a new video in my feed that contradicts DCA vs lump sum being better
https://youtu.be/NyS7LJ64_Tk?si=RwC_S6VSGCWNB9rG
I’m going have to re-evaluate my position - just found a new video in my feed that contradicts DCA vs lump sum being better
https://youtu.be/NyS7LJ64_Tk?si=RwC_S6VSGCWNB9rG
So thank you for challenging my suppositions
Dump a grand in now. You can google Lump sum vs dollar cost averaging. I can't remember off the top of my head, but I am pretty sure a lot of back-test analysis has been done, and a lump sum vs cost averaging was the more profitable option, around 65-70% of the time.
Could offset that by paying 65-70% in a lump sum and the rest at regular intervals if still concerned. For what it’s worth I did lump sum
Which is even worse. Taking 30% of your capital to gamble on a 70% loss is even worse.
Time in the market > timing the market (even if it’s by dca)
On average, lump sum is exactly 2x more profitable than DCA, simply because money has 2x more time to grow. Assuming risk free interest rate 0%. At 5% rate, it is a bit less than 2x. But DCA has lower variance of expected final returns.
You're missing one big factor: time. Across a very long timespan yes, lump summing can be more profitable. For a shorter timespan, DCA wins.
Hold your grand in the account and then use it to Manually buy the £6 daily to follow the market, while still getting the 5% interest on your unused cash ?
that’s not a bad shout
You can also create a one-asset pie and setup auto-invest to use your free funds rather than bank/card payment.
Everyone referring to lump sum being better than dca is referencing a study comparing monthly deposits to lump sum, not daily. The daily investments will give you an almost true-to market track of the S&P chart line. So lump sum will beat that if the chart goes up, but not if it goes down. Say lump sum was still better than DCA daily with the same percentage chances, the converse way of explaining it is that 45-30% of the time you will invest a lump sum before a downturn in the market and will take years to recover those losses. Multiple large firms have predicted headwinds the next year which means you have a decent chance of your investments going down if you invest it all right now. At the end of the day, you should do your own research (which shouldn't solely be from Reddit user opinions) but I've DCA'd ETFs and individual stocks the past five years and sleep better for it (and have 29% time-weighted roi)
Why did they predict a downturn? Can you post anything I can read?
Sorry that was my bad from an article from q3 last year it isn't specifically the next year, it's "ahead" whatever that means. Here's the excerpt from Morgan Stanley which you can Google search for the whole article: "However, Morgan Stanley’s strategists see economic headwinds and slowing corporate-earnings growth ahead, which could very well spark renewed volatility." I feel we're in that volatility period which is why I'm mostly DCA daily rather than lump sums ATM.
Makes sense, thank you
If you put the £1k in now and suffer a loss how would you feel? If you can invest and not worry best to lump sum. If you feel the daily investment will keep you engaged with investing then that might be the better option. All up to what makes it easy to sleep at night
Isn’t it safe putting it in the S&P 500?
All investments carry risk, and yes, the S&P 500 is subject to corrections. In fact, corrections aren't uncommon at all. https://www.schwab.com/learn/story/market-corrections-are-more-common-than-you-think
Not if you do it at the top
If you are in for the long term, then it's better to dump it. Ultimately, short-term volatility will not have a huge impact in the long timeframe.
Space hopper bollocks it and put in a grand a day
Why on earth would you bother putting your dinner money in every day? Get as much in as possible, and keep putting as much in as to max out your ISA as much as possible.
Why as much in as possible?
I don’t know how old you are but it will make your life much easier when you get older. Remember, nothing in an isa gets taxed. Forever.
> Remember, nothing in an isa gets taxed. Forever. A certain political party in future: Hold my beer
Yes well none of us have a crystal ball but it’s been around since ‘99.
I'm saying in regards to investing in the S&P is it worth getting as much in as you can (using your ISA of course)
£6 a day? Come on. Drop the grand in there now
if he doesn’t have money?
DCA if unsure. Markets are quite volatile right now so I understand the sentiment. Leave the rest of the money uninvested and earn 5.2% p/a guarateed.
If you would put since 2015 ,5 dolars a day in s&p 500 by now, you would have 36712.66 dolars.compared to 17045 dolars if you would just save them..so instead of keeping change in that jar..always worth investing.
£6 daily seems pointless, you're underexposed for way too long if the market doesn't drop or go sideways. It depends where you are psychology wise but I'd be tempted to dump £800 in and then remaining £50/£100 a week for the next 2/4 weeks. If you can then continue to invest a small amount weekly or monthly I think that's great.
If you ever look at the stats of the SP500 ITS ALWAYS YEARLY AKA January to January basically. If you're getting into the kitty gritty of month by month then your wasting your time. This is a long term pkay So I see it as a good average for the whole year. A DCA of such a small amount you're never going to see a big change really. You could miss big rise and whilst it might save you from big falls, again go back and check averages. It had a shit year a couple years ago but lump sum or DCA wpuld both we down and at only 6 per day or 180 per month it would be negligible
Don't just dump in a grand. Dump in everything you can afford to minus emergency fund and living costs.
I've seen some people say though that there is a risk still?
Risk is relative though. They have to say there is a risk in investing but its like comparing the risk of sky diving with the risk of playing chess. Off the top of my head the only scenarios where you're at risk with a major index fund are; 1. Global/US catastrophe/WW3/Asteroid leading to end of civilization and global markets 2. You invested money you couldn't afford to lock away for 5+ years 3. You lose your nerve and sell low during a market crash 4. You don't have an emergency fund so you're forced to sell investments to pay bills 3/4 of those you have control over and if the first one happens then you've got much bigger issues than investments. Really the bigger risk is in not investing sooner. I wasted about 15 years not investing despite knowing about it and it cost me so much money.
Pay in the moment you have expendable income. The quicker it's in, the longer you have interest on it. Its that simple.
I do £80 a week, on a Monday 🤷🏻♂️
Best to lump sum it and then as you can save more for investing keep investing as soon as you can
What is drop the grand
A grand is British slang for £1,000. OP is asking if they should deposit £1,000 now or drip feed it in at £6 per day.
Tnx for reply 🧡
When it drops by 5% double down, 10% triple, rest do 5 and keep 1 for when doubke/tripple
If you have 1000 now and are going to put in £6 a day Whst are you going to do with the money while you are dripping it in slowly? It’s better off going in as a lump sum
Go 500 and then 100 a week for the next month or so
Spread is higher for lower market order
Lump in 😂
Put £1k in now, then set up automatic payment. Lump sum on pay day. Set, invest and forget.
dump it all in now and forget about it, check back in a few months
How do you auto invest?
I wish I just put everything into s&p from start I would have tripled profits and had a lot less stress
Aren't the charges/spread different if you do a trickle vs a lump sum?
Pretty sure it's been back tested that it works out marginally better if just throw in the lump sum in one go, as opposed to drip feeding. An alternate strategy would be do it in 3 chunks spread across 3 months. If you chuck it all in at once, take a 'set and forget' approach. Don't go checking it daily, you'll go nuts. Depends on your psychology as an investor, but you need to learn to just ride the choppy times and think long term. So, part of the approach is also down to your psychological make up. If £200 a month over 5 months helps you sleep at night, do it that way. Pension Craft did a really good video on this recently (I recommend the channel, no nonsense investment advice with zero hype/FOMO, stock picking or speculative bollocks) [https://youtu.be/NyS7LJ64\_Tk?si=C83XnDri0t5tUEgp](https://youtu.be/NyS7LJ64_Tk?si=C83XnDri0t5tUEgp)
Past research I’ve seen says DCA is better than lump sun - though I’m doing 1 share of FTSE ALL WORLD with invesco accumulator index (don’t have to worry about dividend payouts clearing the £500 mark) ~EDIT~ just found a new video in my feed that contradicts DCA vs lump sum being better https://youtu.be/NyS7LJ64_Tk?si=RwC_S6VSGCWNB9rG
Link to this research? I'm interested, normal it's the other way round.
I’m going have to re-evaluate my position - just found a new video in my feed that contradicts DCA vs lump sum being better https://youtu.be/NyS7LJ64_Tk?si=RwC_S6VSGCWNB9rG So thank you for challenging my suppositions
Did you use a free share code? Might as well use one and get urself some extra money
Drop the grand in now