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Market Timing & Lump Sum Investing

Discussion in 'Other Asset Classes' started by Banawarra, 18th Aug, 2016.

  1. Banawarra

    Banawarra Member

    Joined:
    28th Jun, 2015
    Posts:
    19
    Location:
    Rural NSW
    As a long time reader and a very rare poster I am greatly indebted for all the knowledge that I have gained from the other asset classes area of the forum. I started my SMSF 15-16 months ago with the aim to purchase the premises my business operated from. After a change of direction that resulted in the sale of my business I have now switched my SMSF direction to a long term dividend focused style with the majority invested in LIC's & ETF's. At the start of my SMSF journey I did go down the direct share path with a few shares but all recent purchases have been LIC's - MLT, BKI, ARG, QVE, WHF, PMC & FGG. I also own some VAS & VGS.
    In regard to the title of my thread I have been buying on dips & bad news etc. As Peter Thornhill preaches the benefits of this are huge. The shares I purchased in January this year in the market downturn are up 40%, 80%, 15% & 13%. In Peter Thornhills words I would love another GFC, I still have another 24 years before I can touch my super so I will sit back and let time and compound interest work their magic.

    The above background brings me to my question on market timing. As a result of the sale of my business I have a substantial lump sum that I have to invest. I am planning on going down the same investing road as my Super and as we already have a family trust it will be invested in the family trust. I am envisaging still working for another 8-10 years. Having seen the benefits of market timing with my SMSF do I sit and wait for the next market correction/GFC (be it 2-5 years) and jump all in, or do I dollar cost average in each month? If I remember correctly from reading A random walk down Wall Street he favours the market timing argument.

    Any and all opinions greatly appreciated!!!!!
     
  2. ErYan

    ErYan Well-Known Member

    Joined:
    10th Jul, 2015
    Posts:
    98
    Location:
    Sydney
    This is not advice.

    Statistically it is proven that for long term investing you should go all in. Basically the earlier you get the money working the better, remember the market might head north from here. However, that doesn't mean that the market won't tank the next day and take a decade to return to the level at which you bought.

    There is plenty of noise about a correction and @austing has given what I consider good advice about waiting for a downturn to invest. That is, when everyone is selling and market sentiment is at its lowest then buy.

    Unless you know the future there is no right answer.

    This is not advice.
     
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  3. The Falcon

    The Falcon Well-Known Member

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  4. OscarBravo

    OscarBravo Well-Known Member

    Joined:
    3rd Aug, 2016
    Posts:
    68
    Location:
    Sydney
    ErYan's advice is correct of course, on average. You should probably do whatever you are most psychologically comfortable with.


    Also not financial advice
     
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  5. Anne11

    Anne11 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    64
    Location:
    Brisbane
    I asked this question on a popular financial blog once and was told not to time the market. So the answer you would get is invest when you have the money. I know it is the right thing to do but i find it hard to follow. So for the time being i put the spare cash in the high interest saving account. Citibank Online saver currently have an offer at 3.4% for 4 months.

    What I did previously was to buy a certain amount regularly and on days the market tanked I bought a lot more. I think this strategy only work when there is a downturn, in a boom market, I would be waiting for a long time and miss the upswing.