What caught my eye this week.
I am running late this week, so I’ll cut straight to the chase and suggest you check out this post [1] on investing a lump sum over at the Of Dollars and Data blog.
Author Nick Maggiulli writes:
The main reason Lump Sum outperforms Dollar Cost Averaging [DCA] is because most markets generally rise over time.
Because of this positive long-term trend, DCA typically buys at higher average prices than Lump Sum.
Additionally, in those rare instances where DCA does outperforms Lump Sum (i.e. in falling markets), it is difficult to stick to DCA.
So the times where DCA has the largest advantage are also the times where it can be the hardest for investors to stick to their plan.
Nick made his bones with animated graphics, but he hasn’t done so many of late.
This post is full of them! The example below shows how the underperformance of dollar-cost averaging increases as the length of the buying period increases.
[2]
Our view is that deciding whether to invest a lump sum [3] or put the money in over time is – and should be – an emotional decision, not an intellectual one.
Are you freaked out by the very idea of putting a life-changing amount of money into the market in one go?
Then don’t do it. But do make sure you have a strategy to get the money invested sooner rather than later.
As Nick vividly illustrates, most of the time you’ll pay a high price for leaving cash on the sidelines.
Important note: A long-time reader reports being cold called by an ‘adviser’ claiming to have gotten their telephone number from Monevator. I know nothing about these people and any such calls are not anything to do with this site. Please be careful! My personal rule is NEVER EVER to invest a penny as a result of a cold call. Ever. Unfortunately, people trading off the reputation of others is a growing problem, as Martin Lewis recently went to court [4] to prove.
From Monevator
How did Warren Buffett get rich? – Monevator [5]
From the archive-ator: They don’t tax free time – Monevator [6]
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1 [7]
What price pension freedoms? [Search result] – FT [8]
[Surprisingly] Madoff trustee has recovered 76% of $17.5bn swindled – Reuters [9]
Global dividends hit new record [Search result] – FT [10]
First-time buyer numbers reached a 12-year high in 2018 – Property Reporter [11]
London’s property flippers forced to sell at a loss [Search result] – FT [12]
[13]
Africa is a real demographic outlier – Visual Capitalist [14]
Products and services
Royal Mail to donate £60,000 to charity after breaking stamp price rise cap – Guardian [15]
Households spend 10x more toasting bread than charging phones – ThisIsMoney [16]
RateSetter will pay you £100 (and me a bonus) if you invest £1,000 for a year via my affiliate link – RateSetter [17]
[Selective?] data shows rare winning fund returns fall when stars leave – ThisIsMoney [18]
Seeing green: The Foresight UK Infrastructure fund – DIY Investor UK [19]
Beware of a sim card swap scam that can empty your bank account – ThisIsMoney [20]
Homes for sale that come with a perk [Gallery] – Guardian [21]
Comment and opinion
Why do markets go up? – Factor Investor [22]
Fast cars, low returns – Scalable Capital [23]
The case for investing in international bonds – Young FI Guy [24]
Time for Gen X to rally – Money Maven [25]
You wouldn’t wish typical hedge fund returns on anyone – Evidence-based Investor [26]
No-one wants to invest in your shit – Meb Faber [27]
Rental DIY Step 1: Find a tenant – 3652 Days [28]
Rich People’s Problems: I have bonus envy [Search result] – FT [29]
If you love your spouse, FIRE them [Um…] – Financial Samurai [30]
Warren Buffett’s brother from another mother – Abnormal Returns [31]
My financial mistakes – Mrs Young FI Guy [32]
First-mover alpha – A Wealth of Common Sense [33]
What infrastructure has to do with investing – Oddball Stocks [34]
Is HSBC worthy of investment, 10 years after the crisis? – UK Value Investor [35]
Brexit
Holidays 50% cheaper the week after Brexit, due to uncertainty – ThisIsMoney [36]
Three Tory ministers set to rebel to stop no-deal Brexit [Search result] – FT [37]
What is the practical impact the next day if there’s no-deal? – Guardian [38]
As Britain self-combusts, Ireland is seizing the opportunity – Fortune [39]
Marina Hyde: The country needs Tom Hanks. We get Derek Hatton – Guardian [40]
Kindle [41] book bargains
Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb – £1.99 on Kindle [42]
ReWork: Change the Way You Work Forever by Jason Fried – £1.99 on Kindle [43]
Unscripted: Life, Liberty, and the Pursuit of Entrepreneurship by MJ DeMarco – £0.99 on Kindle [44]
Off our beat
How it feels to win a lifetime’s supply [Of books, milk, KFC…] – Guardian [45]
There’s only one thing to do with today: Seize it – Ryan Holiday [46]
Tim Ferriss interviews Jim Collins [Podcast] – Tim Ferriss [47]
How to build Atomic Habits [48] – Rad Reads [49]
Different kinds of stupid – Morgan Housel [50]
Boy, 12, creates nuclear reaction at home [Note to self: Must try harder] – Guardian [51]
And finally…
“You do not rise to the level of your goals. You fall to the level of your systems.”
– James Clear, Atomic Habits [48]
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- Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [↩ [57]]