When to put money into a S&S ISA

[ChilliMayo]

This may seem rather naive, sorry.
If you invest in a stocks and shares isa when the stock market is low, do you get a larger stake (and hence the possibility of a larger long-term return) for the same money?
I can't get my head round it.

[nannynick]

Lets assume you are investing in a Fund, such as "Vanguard Lifestrategy 80% Equity". According to Hargreaves Lansdown buy price is 21,315.75p. Looking at the performance chart, it drop[ed below 18,000p in December 2018.
So if you invested £1000 in December 2018 at the point of lets say 18,000p then you would have brought 5.555 units.
If you buy £1000 today at 21,315.75 then you would buy 4.691366 units.
So as the price of the unit comes down, if you are investing on a regular monthly basis, your monthly investment amount will buy more units. As the price increases your same monthly investment value buys less units.

[ChilliMayo]

Thanks, that kind of answers my question. Was the stock market lower in Dec 2018? Does the unit price change in line with the FTSE. I am thinking of investing a lump sum initially and following up with monthly investments. But I want to get the timing right for that initial investment.
The background to my worry is that a relative invested in the stock market in August of 2001 and of course world events the following month meant that his investments fell drastically. Of course I heed all the 'the value of your investment...' warnings but I don't want to set up for a fall!

[Sunseed]

Say you have £10,000 to invest. You may choose to buy 'units' in a particular fund. If the current unit price of that fund is £1 then you'd buy 10,000 units (ignore dealing costs for now). If the unit price then rose to £1.20 your overall holding would go up in value to £12,000. If the unit price fell to £0.80 the value of your holding would fall to £8,000.

You might choose to sell some of your units when the price was high so that you capture some of the gains. Or if the price falls you might see that as an opportunity to buy more units at a lower price, in the hopes of a larger profit if the price increases again in future.

[Sunseed]

There are many market indices, of which the FTSE 100, FTSE 250 and FTSE All Share Index are just three. How useful they are as an indicator of market conditions will also depend on the main constituent parts of the underlying fund(s) that you choose.

Why not open a free practice account with somewhere like The Share Centre so you can start to get a feel for things.

[nannynick]

You are trying to Time The Market and if you have a long term view, investing at least 5 years but ideally much much longer then you should not Time The Market. It is time in the market that matters, as historically the market goes up over a period of time.

Yes if you put a lump sum in and then whatever you invest in drops in value then you have made a loss but you have not made a loss until you sell. So if you buy and hold, for a long period of time, then value generally increases.

Investing is not a short term thing. If you intend to use this money is less than 5 years put it in safer savings.

[Yeahyeahyeahyeeeeah]

You only make a loss if you remove the money when the value is low. Leave it in and it should recover.

[Weathergirl1]

You probably need to work out what your aims are for the investment. Are you wanting capital gains or regular dividend income? As a PP has said, you also need to work out what your plans for that investment are, short or long term. Short term capital gains are effectively gambling, long term divided income is less so. We have a high yield portfolio (we manage ourselves) for dividends which is giving us a much better rate of return than we'd get in cash accounts, but we have also sold shares from that if there's been a huge gain in their price and reinvested the proceeds into other shares, but generally we don't go looking for capital gains.

Also you spread the risk of share prices changing by investing smaller amounts over a longer period, rather than a lump sum in one go.

[MissConductUS]

They don't ring a bell at the top of the market, so you may as well just get in. Trying to time it is impossible.

[Septembersunrays]

Op I've read that drip feeding in is best. You have to take gamble with that initial lay out but otherwise drip feeding in, levels out those highs and lows

[MissConductUS]

The drip feeding approach (also called cost averaging) is what most people do because they can afford to divert a certain amount of money from every paycheck or on a monthly basis into investments. But if you have a lump sum to invest the likelihood is that you'll do better putting it all in at once:

www.finra.org/investors/insights/three-things-know-about-dollar-cost-averaging

A 2012 study by Vanguard found that historically investing your money in a lump sum vs. dollar-cost averaging produced better results 66 percent of the time. The longer the time frame, the greater the chance that investing all at once beat dollar-cost averaging, the study found.

“We conclude that if an investor expects such trends to continue, is satisfied with his or her target asset allocation, and is comfortable with the risk/return characteristics of each strategy, the prudent action is investing the lump sum immediately to gain exposure to the markets as soon as possible,” the Vanguard study authors wrote.