lump sum from PPOR equity investment strategy

Question

Hi everyone, I am hesitating at the moment with how to invest a lump sum of $300k extracted from my PPOR equity into my portfolio. I did read the article that David wrote about how to invest lump sum into the market. But I guess the hesitation came from the current Aussie and US Market are sitting at historical high and high overvaluation risk. I am worried if i invest the lump sum during this time, I might be buying at the peak. My portfolio are mainly ETFs, A200 (16%), IVV (20%), NDQ(7%) and the rest are diversified globally. So I need some guidance or insights in this situation please. Thank you!

Answer

Hi Yoko.If you read the article, then you know there’s multiple ways to do it. If particularly nervous about the market, then one option is to just invest it slowly.For example, 3k per week for 100 weeks! That may be a little extreme in terms of timeframe, but gives you an idea of how it could be done to avoid timing risk.For what it’s worth, the market hitting new highs is nothing special. The market can only be two things: at new highs, or down from the highs. At new highs is actually fairly common by the way, so try to ignore any media hype around that. If you’re worried about valuations though, that’s another thing. That said, very smart people have been saying markets are overvalued for literally the last ten years since I began investing, so who knows!

Answer

I’m in the same boat as you. The strategy I am going with is to invest the lump sum in large portions, every quarter over the next 12 months starting with low risk ETF options like a global index ETF and an Australian index ETF. Later in the year next year, I will add my satellite ETFs which are tech and emerging markets. If you plan to hold for 20+ years like me, as much as it will suck watching them dip (which I strongly think that they will) but should eventually recover and grow in the long term. I have thought the «big crash» is just around the corner for over a decade and am tired of being wrong!

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