Thanks for link.Yes. There has been a few back testing studies that have shown that on average lump sum investing comes out best. This assumes you have a lump sum which was what JB has and was asking about. Regular payment to invest is a good idea if you on a regular salary and the vehicle has low costs such as an ISA or pension with a low cost FTSE tracker or ETF. Just don’t do it based on pound cost averaging.
I looked into this recently as investments and encouraging people to invest is my job.
Regular investing only slightly underperforms lump sum over the long term and de-risks - i.e. the fluctuation/volatility is lower. So if you might need to take out your investment in an emergency you might want to consider regular investing vs lump sum.
Also, regular investing supports a strong habit of putting money away and building it over time (based on a regular salary), and discourages people from trying to time the markets, or overtrading. So much evidence that people sell when markets fall, which is generally the opposite of what you should be trying to do.
In terms of trackers, I totally agree. What's very convenient now is that many fund managers do multi-asset multi-jurisdictional trackers. So you are tracking indices across geographies, the blend of which is then overseen by the manager
...based on their strategic assessment of the markets and asset allocation (which is the primary driver of returns vs stock picking). This takes the hassle out of trying to build a portfolio matched to your risk level etc.
Actually facing similar situation with some inheritance money of my daughters which she (with my advice) needs to decide what to do with.
Quote from: Rocksteady on February 01, 2019, 02:22:03 pmI looked into this recently as investments and encouraging people to invest is my job.I wont hold it against you QuoteRegular investing only slightly underperforms lump sum over the long term and de-risks - i.e. the fluctuation/volatility is lower. So if you might need to take out your investment in an emergency you might want to consider regular investing vs lump sum.I''ll take your word for it but the interim volatility is irrelevant if you are committed to the long term (ie 10 years+) as JB is with a pension. QuoteAlso, regular investing supports a strong habit of putting money away and building it over time (based on a regular salary), and discourages people from trying to time the markets, or overtrading. So much evidence that people sell when markets fall, which is generally the opposite of what you should be trying to do.Agree and I said as much but not if that means sitting on a lump sumQuoteIn terms of trackers, I totally agree. What's very convenient now is that many fund managers do multi-asset multi-jurisdictional trackers. So you are tracking indices across geographies, the blend of which is then overseen by the manager Actively managed funds that buy trackers are not trackers. They will come at a higher cost (sometimes hidden internal costs as well as fees). Also actively managed funds on average do worse than comparable lost cost trackers such as the ones provided by Vanguard . I'd always advocate people of average intelligence getting stuck in and taking control of their own finances rather than leaving it to experts. Quote...based on their strategic assessment of the markets and asset allocation (which is the primary driver of returns vs stock picking). This takes the hassle out of trying to build a portfolio matched to your risk level etc.Sounds like a sales pitch. In English please
Quote from: Rocksteady on February 01, 2019, 02:22:03 pmSo you are tracking indices across geographies, the blend of which is then overseen by the manager based on their strategic assessment of the markets and asset allocation (which is the primary driver of returns vs stock picking). The assertion in bold is very questionable. I have seen catastrophically stupid asset allocation decisions made by allegedly smart people. Many London-based managers, for example, had a huge bias against the US throughout the 1990s, which was disastrous for returns. In the early 2000's there were similar excessive biases toward emerging markets, especially the "BRICS", which ended badly.
So you are tracking indices across geographies, the blend of which is then overseen by the manager based on their strategic assessment of the markets and asset allocation (which is the primary driver of returns vs stock picking).
I think people should take control of their investments but having done this myself through self-select investing from a position of relative knowledge I have found it quite a time consuming hassle. Plugging everything into a FTSE 100 tracker might be low cost but it is also relatively high risk in terms of the concentration into one region. Eg. Brexit risk.So ideally what you'd look to do is spread your investments around right? Say 20% UK, 30% US, 20% China, 10% Europe, 10% Japan, 10% Emerging Markets.But how do you know what the best split between geographies is?
Quote from: Rocksteady on February 01, 2019, 04:50:24 pmSo ideally what you'd look to do is spread your investments around right? Say 20% UK, 30% US, 20% China, 10% Europe, 10% Japan, 10% Emerging Markets.But how do you know what the best split between geographies is? A couple of points.- I dont think investing needs to be as complicated as you are making it- FTSE100 is largely composed of multi national organisations some of which even trade in dollars (Miners, Oil companies)- Saying "best split" implies you have to make a decision. Why do you feel compelled to be so geographically diversified - particularly with such exactitude? I can understand the merits of business sector diversification but not specific geographical diversification.IMO an investment should stand or fall on its own criteria whether its a buy to let or some complicated financial instrument. I personally prefer to pick UK listed stocks largely on traditional value metrics. If something is compelling I'll bet the farm on it. Those that take an active interest in investing tend to gravitate to an investing style or specialism that they find works for them.
So ideally what you'd look to do is spread your investments around right? Say 20% UK, 30% US, 20% China, 10% Europe, 10% Japan, 10% Emerging Markets.But how do you know what the best split between geographies is?