The Lemon Fool

Hi there,
I intend to invest on a monthly basis into a world tracker (VWRP) within an ISA wrapper, but I already have a lump sum in cash. Would you suggest investing all of my lump sum to start with and then continue with my lower monthly deposits, or invest a higher monthly sum until that initial investment is invested and then reduce to my ongoing monthly value. For example, invest 12K now and then invest £400 pcm, or invest £1400 pcm for 12 months and then reduce to £400 pcm. I intend to invest for 20 years.

Thanks,
Tim.

No one knows which approach will turn out better, so you choose the one that is more likely to or if that makes you uncomfortable you choose the one that makes you comfortable.
https://www.kitces.com/blog/dollar-cost ... s-returns/

I believe you mean PCA.

Vanguard did a study on this but I can't find the paper on a quick search*, only this brief summary https://www.vanguardinvestor.co.uk/articles/latest-thoughts/how-it-works/what-is-pound-cost-averaging

Of course, that's based on history; the future may be different.....

* Maybe someone has a link? I think it's been reported on these boards before.

You are likely to be richer with a lump sum of course. It depends on your psychology and loss aversion. But if you get that strongly the stock market is not for you.

Best thing with investments is only look at them once a year, less if they are truely long term

Historically getting on with it as soon as possible-leaving it alone for as long as possible has worked the best
As long as you don’t invest in the middle of a downturn/upturn you should be OK
Investing is risky and you make your choices according to your ability to cope with stockmarket volatility -very personal thing
xxd09

If you cannot decide, how about investing £6,000 now, then £900 p/m, followed by £400 p/m?

timski wrote:Hi there,
I intend to invest on a monthly basis into a world tracker (VWRP) within an ISA wrapper, but I already have a lump sum in cash. Would you suggest investing all of my lump sum to start with and then continue with my lower monthly deposits, or invest a higher monthly sum until that initial investment is invested and then reduce to my ongoing monthly value. For example, invest 12K now and then invest £400 pcm, or invest £1400 pcm for 12 months and then reduce to £400 pcm. I intend to invest for 20 years.

Thanks,
Tim.

Whatever you do, over 20 years it will make little difference, a fractional percentage point differences in 20 year annualised rewards. For comfort (lump sum regret reduction) I'd probably go with half the lump sum in now and the other half after a year - with the optionality to revise that i.e. if during the year stocks drop a lot and you opine that could be the low, then perhaps inject the other half then - rather than waiting until the end of 12 months.