Investing a lump sum: wait, drip feed or take the plunge?
World’s worst timer
Finally, it’s worth remembering that even if you do invest a lump sum immediately before a big market decline, time is on the side of long-term investors. In his 2015 book A Wealth of Common Sense, Ben Carlson details the case of a fictional investor, Bob, who invested only at market peaks. Bob invested $6,000 at the market top in 1972, just before stocks halved in 1973-74. He didn’t sell and invested another $46,000 in savings in October 1987; within months, stocks tanked 34 per cent. Again, he didn’t sell, and invested another $68,000 in late 1999. The dotcom bubble then burst; by late 2002, stocks had halved. Undaunted, he held on and invested another $64,000
in October 2007, just before the biggest crash since the 1930s depression.
Bob may have been “the world’s worst market timer”, but he did okay; by 2015, his total investment of $184,000 was worth $1.1 million. It may be the stuff of nightmares but there are, it seems, worse things than investing at market peaks.
Buying just before a sharp market fall is likely to give would-be investors sleepless nights. Drip-feeding into investments over time eases this tension, and gradually gaining investment exposure will always be preferable to no exposure at all.
Why Invest in Gold?
For centuries savvy investors have been aware of the importance of gold as part of a well balanced portfolio. In addition to offering wealth diversification, gold is a world renowned safe haven for investors offering the ultimate insurance and protection against turbulent economic times. History illustrates that gold is a timeless asset, not only proving to be a successful preserver of wealth, but
high gold prices and record demand has ensured it has outperformed most other forms of investment.
In order to know if gold is a good investment, it is important to understand why people buy gold. In times of economic uncertainty and instability, buying gold makes more sense than other assets.
With confidence in the banking system and worldwide economy at an all-time low, gold bullion could be the ultimate insurance and should act as an essential part of everybody’s investment portfolio.
With the famous yellow metal in greater demand than ever, there are many reasons why people should buy gold. Owning gold could be the ultimate way to preserve your wealth, and possibly make a healthy return in these uncertain times. It’s an age old question which people have been asking for centuries – where is my money really safe? And more and more people are now choosing the oldest answer: GOLD.