You know how Batman is a superhero without any superpowers? How he’s just a smart dude with loads of money?
Well he probably earned a chunk of that money through pound-cost averaging – the superpower for smart dudes.
Okay, work with me here…
You may not be feeling like much of a hero right now. The stock market has been smashed, and the global pandemic is unfolding like the first act of a horror movie.
There’s some whispered talk about this being a buying opportunity.
But it’s hard to buy when you’re frozen with fear.
An average winner
However there’s a simple technique that turns you into a buying badass without lifting a finger.
If you’re already investing then you’re probably doing it already. You just gotta keep doing it during the meltdown.
Yes, it’s pound-cost averaging and it will work just so long these aren’t the End Times*.
Picture the scene. The markets are convulsed with panic. Equities go down 20% in a flash. They keep sinking like a submarine with a hole in its hull. They hit bottom 50% down from the peak. That’s up there with some of the worst bear markets in history.
Eventually though, dawn breaks. The world overreacted. Optimism returns. The market climbs. It keeps climbing.
Here’s the story told through the medium of pound-cost averaging:
You’re up 30% on your new money! £10,000 in cash contributions turns into £13,000.
Anything you had in before the crash is back to evens.
If you stopped investing dead at £10 per share then no profit for you. You’ll only break even when the market returns to £10 per share.
If you sold during the market swan-dive then you’re likely still under water.
But if you pound-cost average through the crisis then your portfolio breaks even sooner. Your new money registers a profit just as soon as share prices rise above your average buying price – £7.69 a share in the example above.
Buying on sale
If you don’t believe the end of the world is nigh and your emergency fund is in order, then keep calm and carry on investing.
We don’t need to do anything clever here. We don’t need to guess when the market’s hit bottom. We simply admit that we don’t have an edge.
Just keep drip-feeding the cash in by monthly direct debit. Buy your usual investments. Wait for the market to recover. Do not sell.
How long might it take for the market to get back to where it was?
- Peak to trough to recovery takes a little over three years on average, according to a Vanguard review of global equity bear markets.
- Hold up! More like five to seven years, according to a deeper analysis by Early Retirement Now that factors inflation into the equation.
Both studies assume you don’t move a financial muscle – that you’re paralysed like a poor church mouse in the face of the crisis cobra.
But recovery needn’t take quite so long if you pound-cost average through the crisis. It’s the auto-pilot program that makes you look like a daredevil.
Take it steady,
* Pound-cost averaging doesn’t work if the market never recovers. If this is the end of capitalism as we know it then all bets are off. I don’t believe that it is. Do you?
Yes, that and rebalancing, not much else to be done for the passive types.
Unfortunately pound averaging is going to come up far short of a superpower for me as my contributions are now small in comparison to pot size, but thats a first world problem for sure.
I think rebalancing will be more potent for me.
Is it a good time to bed and ISA some funds in the new tax year.
The aim of this would be to (1) use any capital losses from the sales of funds against any gains in other parts of the portfolio (shares) (2) move more into an ISA so these gains would be tax free.
Any advice on this please.
@Alan – it is, and at the same time it isn’t, the theory is good, but in practice the extreme day to day volatility we’re seeing at the moment is problematic for funds where trades take a few days to process. Out-of-market losses could be a bit too high to warrant it?
I’d be tempted to wait until things stabilise a little? You’ve got a whole year to play with.
Not a problem if mucking about with ETFs or ITs as you haven’t got the lag to contend with.
Might as well start re-balancing now, after all a journey of a thousand miles must begin with a single step (ardent capitalist, Mao Tse Tung)
The ‘extreme volatility’ you are talking about will be invisible in a decade
Cost-averaging implies that you have a chunk of money available that you drip feed into the market over a period of time.
Lump buying implies that you put in all of your available funds in straight away
What you have outlined is regular lump buying, because you do not have the money available that you are planning to put into the market right up front at this time. You are just buying with all the funds you have available at the time.
You may ask what is the difference, but psychologically there is all the difference in the world.
Probably because I’m far too “active”, I have a bit of a dilemma with re-balancing at moment, my investment policy statement says I should re-balance if an asset has moved by 25% from its target allocation and once per quarter to target allocations. Also I’m “de-risking” (I wish I had done more of this earlier!) by moving an additional 2% per year from equities to cash / bonds, at end of each tax year.
In Jan I decided markets were high and took the 2% a bit early. However with volatility at moment I’m loathed to sell from “safer” asset allocations which are now overweight, when later in year I’ll want another 2% into them. I have turned off regular investments into bonds and all new money (and dividend reinvestment) is going into equities. But I have decided not to do a rebalance this quarter, so I am breaking my own investment policy statement. Should I go straight to the “naughty step”?
It’s worth considering also that you can Bed and ISA a much greater “quantity” of shares when the market is down – it’s a far more efficient use of your allowance limit. This likely outweighs the volatility disadvantage over the long term. Sounds dangerously like market timing though!
I had wondered if you had, say, a spare 20k in cash then you could do the buy and the sell part of the bed and isa on the same day, rather than having to sell outside the ISA, wait for it to clear, then buy inside the ISA over several working days.
This approach would mean the buy and sell would prob get executed on the same day – and I believe funds are only priced once a day?
Downside is you temporarily need a spare 20k in cash, but upside is you wouldn’t lose out on an unpropitious price move..
It’s kind of interesting isn’t it. For me, at the moment, we are not generating surplus income that could go into investments (we’re actually decumulating, slowly). So any money that goes to purchase investments is essentially just shuffling money around and should be guided by my existing asset allocation and rebalancing rules.
For someone who is adding to investments from current earned income, I think I would want to check my liquid cash reserves first. If they were inadequate for a ‘reasonable worse case scenario’ – which will depend on your job sector, job security and innate optimism, but I’d say a year of basic expenses wouldn’t be excessive – then I’d prioritise shoring up my cash reserves above investing.
Interesting idea re 20k and possibly and option. Thanks I never though of that.
The money is currently in 37.5% equities and 62.5% in funds ( 50% in HL wealth 50 and 50% in other funds)
@Vano — I don’t disagree with that, but the point of the article is basically to convey to people that they shouldn’t be afraid to keep investing through these volatile times and they may even benefit long-run compared to stable markets.
Obviously I don’t know your circumstances, but I personally have fielded perhaps 8-10 calls/emails from friends saying should they (or stating they have) pulled money out of the market and/or stopped contributing, often stating they’d prefer to wait for ‘better times for the market’. This is on top of the many dozens of comments/emails re: Monevator over the past few weeks.
Through that lens perhaps it’s clearer why we’d want to get this view out there for consideration. 🙂
For an article specifically on lump sums, we’ve done this:
I’ve just lost a third of a house off the back of that article 😉
Not that I’m bitter or anything..
Sic transit gloria mundi
(That is a joke, not a dig)
HL tells me the £ is at about $1.18. I think if I was buying, even through rebalancing, I would bias to the UK or at least hedge to some degree at present. If I was drip feeding I would carry on as per the article and feel at least some warmth from the fact the ‘pound in my pocket’ was going further.
Funnily enough, I was thinking the opposite, maybe selling half my holding in Vanguard’s whole world etf VWRL and buying the iShares near-equivalent pound-hedged IWDG, which has fallen 7% further from its high. Swapping back when £ recovers and VWRL falls. Naughty, I know.
At least that third of a house you lost was considerably smaller than FireVsLondon’s
People voted for red blooded capitalism in December now they are getting it it looks like
I’ve reduced my monthly contributions to the minimum to get the maximum employer contribution and stopped paying a drip feed into my private SIPP in order to bolster my 3-4 month emergency fund. It will possibly go back in at some later stage and the NIC hit has been somewhat lessened by the recent budget.
An accidental landlord, my wife’s BTL now represents a potential hole in our budget, I’m hoping if it comes to it we can negotiate interest only on the mortgage.
The portfolio has held up reasonably well and none of my 5/25 rebalance triggers have been reached. I don’t intend to rebalance until they do. No point having a plan unless you give it a chance of working.
My biggest concern is family welfare to be honest. My wife is undergoing treatment for breast cancer, which is going well and our treatment under the NHS great, if somewhat haphazard administratively. They are talking about accelerating her surgery and cutting short chemo. We’re pulling our son from school from today to limit family exposure. I have two colleagues from work with confirmed CV19 and I have been working from home since I went into self-isolation over two weeks ago (I am fine). So first world problems and solutions.
Stock markets are a zero sum game, commissions excluded. Someone is trousering a huge fortune as the market tanks.
Goldman yesterday published a paper saying “our global GDP growth forecast for 2020 has fallen to just 1¼%. This would be less bad than the deep recessions of 1981-82 and 2008-09 but worse than the mild recessions of 1991 and 2001.”
What utter rot. There will be millions of job losses and thousands of companies going to the wall. The recession will be long and deep. They are just trying to get mugginses like me to invest back in the market knowing full well the bottom is a long, long way off
Any plungers out there , anyone maxing out credit cards etc. to buy equities on the cheap.
This isn’t right. 🙂 Actively *trading* stocks is a zero sum game.
Stocks going down because the companies they confer part-ownership in will earn less in the future (or their earnings are perceived to be more risky) has nothing to do with zero sum games. People can be buying and selling to each other at ever lower prices all the way down.
This is the flipside of how passive investors can equally make money just sitting in shares without trading, and profiting from the growth of the economy reflected in company earnings.
In other words, investing is not a zero sum game: https://monevator.com/is-investing-a-zero-sum-game/
I do agree with you though that the economic hit of this total lockdown strategy will be massive, barring some miracle.
*sticks my hand up*
Going to be steadily buying stocks over the next 12 months every couple of weeks, does that count?
Someone on this site commented recently, *dollar* cash is king. I should have listened.
As for waiting for ‘better times for the market’- it’s perhaps not irrational to expect better times for investors, lower prices as the crisis deepens.
Stay safe everyone, and remember that self-isolation, breaking the chain of infections is everyone’s duty now. Many lives are at stake.
@John Nener , very sensible approach you are taking , not quiet plunging but your method will produce good long term results . Best of luck.
@Grislybear – my take is that there are more shockwaves to come, from direct effects to the economy or systemic risks such as USD liquidity or corporate debt.
I could be wrong of course. We may be headed for a rapid recovery or the world may turn “Japanese” and stocks won’t reach their old heights for the next 40 years. No one knows.
Buying stocks on credit is a recipe for disaster, and on *credit card* at 20+% interest, really??
@John’s plan sounds sensible.
A very timely message TA.
Deploying that cash that was ready for such an equities rout requires some nerve when all the signs suggest things could get much worse.
But all bad bear markets feel like the end of times, yet morph into an obvious buying opportunity once they’re in the rear view mirror.
So regular drip feed, or if you have a cash lump sum waiting to deploy, commit to buying in a few times as the market falls further.
@The Investor, thanks I know you must know the difference, and undoubtedly I’m being a pedant, but it is continually irks me when I hear people say cost-averaging when they are not really cost-averaging. We agree that a strategy of continual accumulation through the highs and lows of the rollercoaster is definitely the proven strategy over long time.
On a related topic, have you ever covered value-averaging? It requires an expected IRR but can be an alternative strategy for those willing to try something a bit different.
@vanguardfan yes this is me to a t. People say you have to live through something like this to know if you’ve got your asset allocation right.
I’m 100% equities and not worried at all about my actual investment despite being obviously about 30 odd % down nearly . Possibly naive but I figure the powers that be that can actually do something about this have far more vested interest in keeping the capitalism show going. There’s been other pandemics (Spanish flu)
My job is secure (as much as anyone can say) and I’ve got about 10k in ready cash and another 10k in 40% equities 60% bond a that hasn’t tanked quite as much. But I’ve realised Itd he preferable to have another 10k in cash with hindsight. I’ll be continuing to invest at current levels but I’d literally just gone interest only on my mortgage to put more in my isa. I may just trickle my emergency fund up a bit more while continuing to invest at current amounts
Interesting question monevator is there anything that would make you sell? If it went to 50%?60? 90% I kind of think by that point you figure you may as well hang on as its already screwed
Very helpful advice. (Speaking personally, as mentioned on another thread I am due to receive an inheritance in the next month or so which creates a question about what best to do with it).
On the face of it, the stock market drop implies such an excessive expected loss in companies’ future earnings that shares ought to be good value – except that might be accounted for by a few companies failing completely. I don’t know how likely that is, but I do know my brother-in-law’s small business is already hurting from the drop in cash flow. He is having to look seriously at reducing staff.
Bizarrely, the politicians’ obsession with a destructive Brexit over the last few years may have done us a favour. I am old enough to recall Thatcher taking actions that were calculated to undermine manufacturing industry: the ones that suffered most were those that had invested in improved productivity and had high fixed costs in terms of loan repayments. Those with older technology could simply close production lines and lay off workers to ride out the downturn. (Of course they then got outcompeted by Asian companies that had bought state-of-the-art manufacturing equipment at knock down prices from the UK businesses that had failed). The fact that now for several years in Britain there has been too much political uncertainty for companies to invest much may give them the flexibility they need to survive.
I started buying cautiously today – which is probably a sign we’re a long way off the bottom, based on my normal luck! Probably drip drip drip every month or two, depends on how things develop
— new ISA season in ~3 weeks as well…
One of the most widely quoted pearls of wisdom of legendary investor Warren Buffett is: “Rule No. 1: Never lose money. Rule No. 2: Don’t forget rule No 1.”
Investing anything, either by averaging or LS just at this moment is, IMHO, simply taking the risk of catching a falling knife. Why?
Don’t sell, but don’t buy either. Keep your powder dry.
Markets can stay irrational longer than you can stay solvent.
I’m about to pull the trigger (any day now…maybe next week) on a lump sum (not leveraged) making up about 12.5% of my investments pre-crash value.
However, in writing a post on another thread I decided to spread it out over weeks (or maybe months or even quarters). Hopefully I won’t procrastinate too long and miss out on all the upside!
It would be worth redoing these calculations adding in the dividends received from the shares over the period.
The FTSE index already yielding nearly 7% and energy stocks such as shell at nose bleed levels. However green you might be. We were going to be needing oil and gas well past the end of my lifetime.
I’m with The Borderer.
Long term outlook is horrific. Stocks could lose another 40%. Hyperinflation could wipe out the value of our cash we’re keeping for a rainy day, or govts could force-repurchase gold…
John Bogle was very equivocal about rebalancing
Thought over the long term that it made little difference
A great comfort to me -so I sat out 2001 and 2008 and will this one
If your Asset Allocation is st right then as you add money in Accumlation phase -you rebalance
As you take money -Deaccumulation phase-you rebalance
Seems to work
If your additions or withdrawals of monies were not enough to rebalance your Asset Allocation then the 5% rule could be used
Aged 73-17 years retd- need to use 5% rule never arose for me
PS small technical note. I am in funds only which take a day or two to trade and even more in volatile times( pressure on platform systems) so a slow steady system of rebalancing suits everybody
@all — This isn’t a post for speculation from readers about hyperinflation or forced repurchases of gold et cetera. There are abundant other venues on the Internet for that (and potentially more applicable posts on Monevator).
Let’s please keep this thread to the pros/cons/methods of buying into the market over time please.
Sorry I am confused with those figures. Why is the last line showing
5 2,000 10 2,200 13,000
surely it would be £200 not £2,200? The total of column 4 indicates that you meant to put £200 but the £13,000 you arrive at uses the £2,200
@xxd09. Yes, I am inclined to agree about rebalancing but in any case it seems a risky exercise when asset prices are so volatile: ok in the face of a steady breeze, not so clever when a hurricane is passing through!
It strikes me that this is a blog for those lucky enough to have surplus assets and/or income and who want to know how best to deploy the surplus. Best that every one checks the stability of the ‘ surplus’. If next month’s paycheck was the last for a while, have you got enough cash to see you and your dependants through the next 6 to 9 months. Any doubt then don’t invest any more, don’t drip feed.
Personally I might buy a bit more gold in a hedged ETC and into a IL fund and perhaps chuck good money after bad by buying a bit more LLOY but, I have to say with some regret, nobody has got rich copying what I do and I can in fact afford to lose it if it goes south ( but don’t tell my heirs-in-waiting that I said that). Other than that, what’s wrong with cash ?
@JRA — Ack, you’re right. I’m sure it was okay when @TA posted it, perhaps he’s accidentally modified the Google Spreadsheet. I’ll ask him to fix it.
@all — Just to note I’ve deleted a couple of comments speculating about the imminent recession (that I agree is coming) after my request we stay on-topic here. There’s no point filling this thread with lots of speculation that’ll be out of date in two weeks, let alone two months or two years.
Great to see all the different types of articles. In times like these, particularly when many people are working from home, over communication in all its forms is a great idea.
I’ve always like the idea of pound cost averaging and I suppose have implicitly done this for many years through filling up the ISA’s every year, pensions monthly and then GIA monthly.
I think pound cost averaging in this current environment remains valid. Some people think things are going south, others north, just remember though many people in Asia are a little more optimistic than they were a month ago – a friend in HK yesterday commented to me, ah I see the UK are in panic stations mode – i.e. where we were a couple of months ago. But it is very likely that the country will have some medically issues in the next one to two months. I only say that because if you are pound cost averaging don’t stop in the next couple of months as the news deteriorates.
Before pound cost averaging in this environment though, I would make sure that I have either a robust recessionary proof job (I don’t as I work in FS) or sufficient savings (I do and go for dollars (medium duration TIPS), gold coins and some £) that have some money printing proofing – how much you need depend on your liabilities (mine have gone up having a young family!). So far they’ve done well in £ terms although will see how it progresses.
This is probably going to be the first year where I pound cost average but on a monthly basis into the ISA’s etc. Vaguely pointless but feels like I am taking action.
I just saw this comment. This is an extraordinarily bad idea. Please see these articles:
I’m not going to get into the pros/cons of buying right *now*.
And obviously I cannot give personal advice.
What I would say though in general is that if somebody does really want to extend themselves to buy at these lower prices, my suggestion is it should only be done with very long-term, abundantly affordable debt that is not marked-to-market. For the likes of most of us, this means a mortgage. So if one had an offset mortgage, say, then perhaps withdrawing 5% to invest now — with the aim of getting back on top of it when/if the market rebounds — wouldn’t be the worst idea. However I’d strongly suggest not chasing the market down on leverage. Many people who do this will bail if the bear market continues.
Another alternative for naughty active investors is again not to borrow on a credit card (hugely insanely risky) but to instead increase riskiness. So for example you could invest a small amount in the most viable/solvent travel/energy industry company that has been smashed 50-80% in the fall. If the market does bounceback quickly as you presumably predict if considering leverage then you benefit, but if you’re wrong the most you can lose is your stake.
Passive investors should stick to the plan, good times and bad, x100.
Yes – I like the idea of pound-cost averaging but into *different* assets to normal in response to the unusual market conditions. Like, for example, buying income via dividend hero ITs whose yields are up substantially say. Its increasing riskiness, but only on a relatively small stake.
I’m with the Borderer too on this one …nearly 20% now of my sipp is in cash (and was prior to February) and just about to get a £30k pension contribution as part of a redundancy settlement. If i’m honest though my inaction (no selling or buying lately) is through paralysis rather than strategic. But , come April , will have £60k in cash inside the sipp begging to go somewhere
Right, from here on I’m deleting any comments speculating on real-world short-term market movements from date of publication. Don’t want you wasting your time typing stuff that will be deleted, so fair warning. 🙂
I’ll be posting something relevant on Weekend Reading and we can debate the situation to our heart’s content there.
Feeling a bit of a twit here. I pressed the wrong button and emptied my VGLS in error. I put it back as soon as poss(1 week later) after reading the article /comments I guess I should have drip fed over the next 12 months. I am an emergency worker on the front line so a secure job at least but there is a BIG downside element also. (must keep smiling).
I wouldn’t criticise anyone for any approach they want to take but I do find it curious how on many generally passive FIRE/personal finance sites, many people have suddenly become expert market timers. I think a fair amount of that is greed in wanting to make a killing at some point when the markets recover.
I was scarred by 2008 and put off investing for a while. I was up for redundancy twice but kept my job. I was determined when the next recession came I would be ready and the sick to the pit of my stomach feeling would be minimised. I therefore have no debt and two years worth of lean expenses in cash.
Beyond that I will Pound cost average for as long as I stay employed. I wasn’t able to market time on the way up and I certainly won’t be able to on the way down either. I may only get what the market gives me but that is enough. If we don’t believe the markets will ever recover then there is little point investing at all. So I’ll keep buying monthly and currently this is lowering the average price I’ve paid for the units I hold.
No debt,2 years living expenses in cash and a portfolio with your age in bonds should do it
Global Index Trackers in Equities and Bonds and you are there
Sleep at night and ride out the downturn
@ xxdo9. That’s exactly what I was trying to do(rebalance) when I hamfisted the keyboard).l am fortunate that I gave a pot of cash, so come April 5th will add a little more each month. Must remind myself. LONG TERM plan.
reminder to myself, emergency fund money isnt to be used to buy “cheap stock”
@Clementine, yes, a timely reminder.
Had a sly glance at one account yesterday. Through my squinting eyes looks like equity global generalists are down about 40% and bond funds static, neither up or down much. Since I claim my objectives are capital preservation, I shouldn’t think of chancing my arm and committing fresh cash to anything much at the moment.
When the smoke clears and dust settles, governments are going to have to draw the accounts. The future landscape may be much different from that of a month ago so even if I was minded to slowly reinvest, I don’t think that should be on the basis of continuation of the ‘old’ stories. Infrastructure spend, for example, may be pushed down the order of government priorities
If you can’t see the road ahead, perhaps pull over and stop the engine for a while.
@never give up
I think you confusing ‘market timing’ with a need to rebalance now for passive investors
@Madflier. Yes I had a similar idea last year to be told by HBOS that bed & ISA was not possible with the very basic ETF because they were “sophisticated funds”.
@Neverland. Rebalancing is fine but some seem to either want to deploy emergency funds or significantly change their asset allocation. As I say no criticism from my perspective. People are free to invest however they want. I know little other than what I have read on sites such as Monevator.
For those like me that have little knowledge or do find stock market investing a little daunting, then I do think it is important to stick to the plan.
My Emergency Fund is there for a reason. So I’m not going to use it to invest. I’m also not going to radically change my asset allocation because of events. If I make wild changes right now I’m likely to make mistakes. So I’ll just plod along as I am and try to stick to the simplicity of the “Don’t just do something, stand there” approach.
Have an Investment Plan written down
Set your Asset Allocation
Have 2 years of living expenses in cash
Have your age in Bonds as the bond proportion of you portfolio
Equities and Bonds should be Global Index Funds
That’s it for a start
As you acquire more knowledge you can tinker but if you do nothing more you will arrive at your goal of a reasonable retirement
I have been fortunate and was positioned quite defensively into this sudden selloff.
However – now I need to decide how to start putting come chips back on the table as I have a very long term perspective and I think that this should be a good entry point (although I obviously know that I won’t be able to time it perfectly).
Given the crazy intra-day moves I think funds (e.g. LifeStrategy) are not a good vehicles currently so I am therefore sticking to (low cost/passive) ETFs.
I don’t have much time in general so I just want to stick to simple World Equity GBP-hedged ETFs.
The best I have found is IGWD…
I was wondering if anyone has any other suggestions on the ETF front that I could be looking at closer?
IGWD’s divi-paying equivalent IWDG with .25% cheaper OCF (.3% plays .55%) appear to be the only really large and liquid global hedged funds. I use the distributing version for rebalancing tho in the current market I can see the benefits of the accumulating version. Wish Vanguard would offer currency hedged alternatives.
I use Vanguard Global Bond Index Fund hedged to the Pound for the bond part of my Portfolio-actually 65%
I use a Vanguard Global Index Equity fund ( actually I use 2 funds-one a UK one and one a World ex UK)-unhedged -30%
Seems to work
Looking forward to the new tax year, will be opening a new LISA and splitting my contributions henceforth between that and the general S&S ISA. Pound cost averaging with a 25% headstart on half the pot? Yes please!
(If nothing else, this plan is a distraction from checking up on the real terms losses living in the S&S ISA currently…)
@AndrewSeib @xxdo9 – thanks!
It is interesting that at times when the markets trend upwards, advice tends to point out the benefit of time in the market, that a lump sum invested early does better on average than dripfeeding it. But now the markets are in decline with no indication when or where the bottom is, the benefits of pound cost averaging get advised.
Obviously, since overall stock markets have tended to go up long term even when they have suffered setbacks along the way, any modelling will favour lump sum investment. But similarly, that long term modelling will show that 100% equities will do better than a balanced portfolio. For real investors who don’t have 120 years to play with and get nervous about share volatility, the reduction in risk is well worth the modest loss in benefit that comes both from including bonds in a portfolio alongside shares and from phasing investments.
(Though to be fair, most readers here will likely practise pound cost averaging not as a strategy but because availability of cash comes in small chunks as it is saved from earnings).
Seems the Man is going to underwrite wages…
On the plus side, with the govt taking the vast bulk of risks in the economy we can finally cut the cord with the EU phew
No Deal, No Problem
@GVS. Patience is a virtue! Wait a while yet.
I know TI is going to tell me off but I’ll VERY gradually be increasing my Degiro margin loan over the next 12 months or until the market stops going down, whichever is earlier. I started today, essentially gearing my portfolio to < 3%. This is partly because my earnings are very irregular but I’ve got some chunky payments coming in over the next couple of months. And partly because I’m very risk tolerant (read: greedy).
The bright side.
Last month my pension contributions bought 62 units.
This month the same contributions bought a whopping 105 units. That’s a massive discount. Obviously this will have to be balanced against the drop in the value of my portfolios.
VWRL or anything similar. Check this website’s EXCELLENT archive, especially the cheap index trackers page.
Plus this link re. your other concerns: https://monevator.com/lump-sum-investing-versus-drip-feeding/
I agree Vanguard’s global etf VWRL is usually a good choice. Problem is when the global market dives the dollar rises. VWRL has been protected from a greater fall by the collapse of the quid, but if sterling recovers to its pre-Brexit level there will be a huge reversal for this unhedged global ETF. As far as I can see IWDG is pretty well immune from this problem. If you prefer accumulators it’s VWRP v IWDG.
Just an observation and a question from someone who has not visited the UK for a long time. Your English seems totally American but you are a Brit? “dude” “work with me here” “badass” It that common now? Why would you do that when you have rich heritage of Britishisms — bloke, fella, etc? Are Brits now ashamed of their own language? Is it no longer cool? Would explain why, if you are British, Brexit and yet another “free enterprise” destroy-the-NHS Tory government
Sparked into reading by Jo Jasper’s observation, I notice that I gave the wrong code for the iShares MSCI World GBP-hedged accumulating ETF. It is IGWD, while the distributing version is IWDG. My apologies.
@ Jo – yes a Brit with a love of language regardless of origin. I don’t mind whether you think my writing is a load of old pants, chuddies or briefs.