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I'm going to do some old school value investing, holding around ten stocks.
Other than investing say 2k every month, I also have around 100k in savings. I'm contemplating investing these alongside my 2k, say over the next 3 to 5 years.
I don't want to take too much risk in regard to market timings. Any thoughts on the period for investing the additional sum?
Vanguard's research says you'll probably yield more by investing the lump sum immediately.
https://personal.vanguard.com/pdf/ISGDCA.pdf
In Figure 1, we compare the historical performance of immediate and systematic investing across three markets: the United States, the United Kingdom, and Australia. For the systematic plan, we invest the cash in a balanced 60% stock/40% bond portfolio in 12 equal monthly installments. We then evaluate the returns of both immediate and systematic investing across rolling 12-month historical periods. (See page 7 for additional details about the methodology.)
In each market, immediate investment led to greater portfolio values approximately two-thirds of the time. On average, immediate investment outperformed systematic implementation by a high of 2.39 percentage points in the United States and a low of 1.45 percentage points in Australia. These findings are unsurprising. Stocks and bonds have historically produced higher returns than cash, as compensation for their greater risks. By putting a lump sum to work right away, investors have been able to take advantage of these risk premia for a slightly longer period.
We also compared immediate and systematic plans over shorter and longer investment intervals using the same 60/40 portfolio. As the interval increased, immediate investment outperformed more frequently. In the United States, for example, immediate investment of a lump sum outperformed a six-month series of investments in approximately 64% of the historical periods. Over a 36-month interval, immediate investment outperformed approximately 92% of the time.
