Would it be best to invest a lumpsum of money over time or to invest it all at once to let it start growing?

Question

I have just started investing in VGS , VAS , and IVV,  I am trying to educate myself as much as possible on all the ETFS and platforms and have now just come across Pearler really good info. I am stuck on how to invest a lumpsum of money, as a 37year old would it be best to invest the whole lumpsum or invest it over time and is my portfolio a good selection and diversified enough.

Answer

Hi Vaughn, If you review the top holdings of VGS (60% US) and IVV (100% US) you will see that they are very very similar. If the portfolio split is even then you have to be comfortable with a diversification that has greater exposure in the US market. All good if that’s your goal. If you want more global then maybe have a look at IVV (100% US) &amp; VEU (Europe/Asia/Emerging) as a combination with VAS and see if the holdings and exposures within that works for you. Otherwise a more simplified combo you can consider is VAS (100% AUS) /VGS (60% US 40% other) or VAS (100% AUS) /IVV (100% US) and split between those (or other ETF equivalents including diversified single ETFs) to save rebalancing for your goals and also brokerage fees. With regards to diversification you would be considered diversified in the companies being held in the ETF baskets but you are 100% shares in the stated scenario which are volatile and med-high risk compared to say other asset classes like property, bonds or low risk assets like cash in the bank. But yes effectively diversified with a basket of individual securities, consider reading –&gt; (https://pearler.com/explore/learn/blog/what-i...).

If you have an investment timeframe of 5-7 years you are hoping the value of your investments / ETFs are higher than they are today despite the ups and downs of the markets. History says they should be (unless you invested in Japan’s Nikkei in the late 80s). Investing a lump sum when your journey is (if) commencing is scary. Imagine yourself being the person who invested a lump sum on Oct 12 1988, Sep 28 2008, or Feb 11 2020. They would have never predicted the crashes in the following d/w/m/y. If they didn’t need the money and held their nerve and stayed the course with continued investments they would all still be smiling, no issues whatsoever. If they didn’t and panicked enough to sell out, then it’s doubtful they are investing today (from a good audio book Tony Robbins – Unshakeable). If you think you would panic then consider taking your time with regular investments over a timeframe that suits you. 3,6,12 months. The market as a whole shouldn’t run away from you that much in its current climate to have FOMO be of concern. You just have to be comfortable and understand your individual risk appetite with your money. Pearler also has a great blog I read on DCA vs lump sum. https://pearler.com/explore/learn/blog/dollar....  Have a read and see which one suits you. But I can’t recommend the aforementioned book enough (audio is best) for ETF investors. All just food for thought, and hopefully it triggers a decision making process for you. All the best mate.

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INVESTING STRATEGY

Vaughn Danker.

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