There is no conistent empirical evidence available to suggest that this strategy works all the time. It's easy to prove this 'tried and tetsed' strategy over time but it is also easy to disprove it over a specified period, when you compare it with making a once-off investment.

Fine, if you want to reduce the risk of timing the market by making a once-off investment only, but combining regular contributions and once-off contributions is probably a better strategy, given current market conditions.

Hi Gerard,

Thanks for your feedback.

The point I am making about regular investing is that it may reduce the risk of investing particularly when the market is so volatile. I agree that if you were to pick a specific period in time when markets only went up investing a lump sum would be more beneficial but who knows when this is going to happen.

Investing on a regular basis will help to smooth out the returns over the medium to long term, but as we always say it is up to the individual to decide on the strategy that suits them best. If you think we are at the bottom of the cycle a once off contribution might give you a better return over time.

Best of luck,

Killian

I was not referring to 'a specific period in time when markets only went up'.

For example, if you invested €10K 15 years ago in a typical balanced fund it would be worth about €19K at the moment. If you drip fed €55.55 per month into the same fund over that period, it would be worth about €11K.

Markets would have went up and down over this period.

My point is that it is probably better to mix one-off and regular contributions.

Hi Gerard,


Your point is correct - if you can afford to leave your money invested for the medium to long term (and have the nerve to stay invested in turbulent markets) a lump sum will outperform a regular savings contract for the simple reason that you have more money invested for a longer period of time. The point I’m making is that if you are not comfortable to invest a once off contribution (or don’t have a lump sum), you can drip feed your money into the market and this will help smooth out the volatility. Both are good strategies, so it just depends on what you are most comfortable with and how much time you have on your side.


Rgds, Killian

WHAT WOULD YOU RECOMMEND TO DO WITH 30K AT THE MOMENT

In the hope that we might, just might, some day make some profit on our investments, I've been reading about taxation and looking at the forms. It would be so much easier if Rabo did that at source like on savings accounts.

Hi Simon, Sorry for the delay in getting back to you. A good starting point for investors is to look at the Top Picks 2009. All the funds have been chosen by the fund providers on our platform and represent what they believe will do well in the medium to long term. In addition to this you should remember the key points I made in a previous blog about diversification / asset allocation. In other words don’t put all your eggs in the one basket. To review this article click here  I hope this helps but if you have any additional questions please let me know. Regards, Killian P.S. Remember if you set up a Rabo Regular Investor there is free entry into all funds for the remainder of 2009.

Hi Martin,

Taxing the funds at source is something we have considered but in order to do this we would have to set up a unit trust structure and this would add an additional fee (of up to 0.5% per annum) onto the funds. So after some consideration we decided this was not in the best interest to the investor.

If you an opinion on this I would be delighted to hear it.

Thanks for your email.

Killian