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Lump-Sum & Regular Investors

By November 15, 2022Blog

We believe that there are, broadly speaking, two kinds of investors – lump-sum investors and regular investors. Deciding which one you are is one of the first things you must do when starting on your investing journey.

We recently wrote two long-form pieces for subscribers about lump-sum and regular investors. We reproduce here (in abridged form) our article on lump-sum investing.

A lump-sum investor is one with a large sum of capital that they are looking to invest into the markets. This capital is a once-off sum and likely can’t be replaced (by, say, income). As such, paying attention to values is very important – you may not get another bite at the cherry.

The key thing to note is that time in the market is very important. Even investing at market peaks is not necessarily a disastrous outcome – provided that one’s time horizon is long enough to stay the course.

The table above uses S&P 500 total return data from 1927-2022 to examine how an investor would have fared over different time horizons. The first line in the table shows the percentage of times that an investor would have at least broken even if they made an investment in the S&P 500. The second line in the table above shows how frequently an investor would have earned an annualised return of at least 7% over different time horizons. 7% was chosen (slightly arbitrarily) as an adequate compensation for the risks assumed in equities.

However, not all returns are made equal – starting valuations still matter, as the table below shows: the lower your starting price-to-earnings ratio, the better the subsequent returns. For example, anyone who made their initial investment when the price-to-earnings ratio was between 5.7 and 12.5 (5.7 being the lowest ever recorded), the subsequent returns were 15.7% annualised.

Paying attention to starting valuations, then, helps to avoid being in the 6% of cases where returns were negative over 10 years. On the GillenMarkets website, we provide “Lump-Sum Portfolios” (Multi-Asset, Income, and Growth options available) to help lump-sum investors get started. These portfolios are populated with companies and funds which we believe are high-quality, and which represent good starting value for investors.


Did you know that we have a section in the members area that invests €1,000 monthly and has been doing so since late 2009? Each month, website subscribers get to see our favourite picks and how we are getting along. Consistency and accountability are at the heart of our weekly newsletter/website offering to retail investors.