Whether it is the proceeds of a property sale, business transaction or inheritance, lump sum investment has its own set of considerations.
When investing a lump sum your costs should be lower than investing on a regular basis. This is due to economies of scale. The cost of administering a single investment of US$250,000 is less than 250 regular investments of US$1,000.
When you are investing in real assets there is a risk of the investment value falling as well as rising. Real assets are almost anything apart from cash in your base currency. Your base currency is the one in which you are paid or the currency of the country you intend to live in long term.
Based on historical data of lump sum investment, the longer you invest the less likely you will lose money. Additionally, the greater the likelihood of achieving a return in excess of a bank account and importantly, inflation.
Most advisers would not recommend investing for a term of fewer than 5 years. Any investment for a term less than this is high risk. It should, therefore, be avoided unless the loss of the investment would not significantly affect your standard of living.
Whilst investment should be more than 5 years, you may not remain invested in the same funds or products for the whole of the time you are invested. Regular reviews are essential.
For example, recently investment costs have fallen dramatically. Many investors in old-style funds would benefit from switching to the new low-cost investment options as this would result in a larger amount of money for them.
Regular reviews also enable you to adjust course by making changes to your portfolio to improve the probability of achieving your goals.
What Should I Do Next?
Please contact us for more information on investing a lump sum.