I have £10,000 I would like to invest in a tracker fund for 10 years should I put it in as a lump sum or drip feed it?
14 July 2021
Question by Uzma
Hi I have £10,000 I would like to invest in a tracker fund for 10 years should I put it in as a lump sum or drip feed it?
Answered by Lee Glennan
Your question is around market timing, I think. Drip feeding your investment money in over a few months or so can mean that you get an averaged investment price over a period of time, particularly useful if markets are unusually volatile. As to whether you would end up better off with this strategy or not in the long run though is purely a matter of chance. With a ten-year investment timeline your investment will have a good time in the market and plenty of time to recover were there to be any initial falls.
My view would be that the prices of shares and tracker funds always represent fair value at the time of investing and so I would nearly always be inclined to invest a lump sum in one go.
Lee Glennan is a Financial Planner and IFA, currently practicing in his own boutique wealth management business and serving the needs of around 100 client families. He has worked in face to face financial advice for over thirty years and is passionate about financial planning and helping clients to ‘live their best lives’. Lee is a Chartered and Certified Financial Planner and a pensions specialist focussing on the ‘at retirement’ market. He’s 51 and married with three daughters (and a female dog!).