According to Alliance Bernstein, a leading global investment management firm, it’s more profitable to invest a large sum in one company than put bits and pieces of your money in a whole chart of companies.
This theory is a completely different approach than before, and is very difficult to embrace for those of us who prefer to spread their risks, but A.B. concluded that after examining the U.K. stock market between 1926 and 2008 the market went up 73 per cent of the time and only 27 percent of the time down.
After comparing the two investment-techniques side by side the lump sum-strategy returned an annual average of 12 per cent and the dripfeeding-approach only 9 per cent, which is a pretty significant difference, certainly if you compare it over the years.
But in the end it’s just a question of preferences; if you’re more comfortable dripfeeding, than there’s no reason for that to change now, but now you at least know that spending all your money in one go might be a better move.
Laura Herbert
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