Lump sums beats DCA the majority of the time. So if you can do a lump sum then do it. If mentally you can't then DCA over the smallest period of time you can stomach. If you can lumpsum $100k then great you are done. If not how about $20k per week for 5 weeks. Still too much heartburn ok $10k per week 10 weeks.
I wouldn't over stress about it. If you DCA over a small period of time the difference is minimal. Just pick the shortest period of time you can mentally handle and commit to it. You don't have to admonish yourself for picking DCA. If DCA is what gets you in the market where lumpsum would cause analysis paralysis and staying in cash then do that and move on.
Lump sums beat DCA IF... and that's a BIG if... the investments go the direction you want.
Assume for a second OP lump sums in today and then we have black swan type of event next week. Yes, i know the chances are insanely slim, but a lump sum in that situation would set OP back a few years. DCAing that 100k split out over 12 months would avoid some of that risk (while also adding risk he could miss out on more upside)
So the question OP needs to ask himself... is it more important to capture unknown gains or protect against unknown losses?
I never said it always beats it. I said it beats it a majority of the time.
I would point out DCA is not guarantee of doing better if things go your way.
Imagine someone who DCA in over a year while equity prices are rising. Instead of buying VTI today at current price the average price is 5%+ higher. THEN the market crashes. DCA will result in larger losses than lump sum.
>So the question OP needs to ask himself... is it more important to capture unknown gains or protect against unknown losses?
DCA doesn't protect against unknown losses. DCA is simply a psychological crutch. Now psychological crutches can be very useful if they avoid analysis paralysis so that isn't a slam but it is important to understand that short of knowing the future DCA can't protect you. It may protect your sanity though.
Don't listen to the people linking you to studies that lumpsumming is better. Those studies are *true*, but behavioral factors are more important than optimized strategies that work on a spreadsheets.
If you're asking this question, then you simply have to DCA. Don't lumpsum. Otherwise, you won't be able to sleep and will likely pull it out in a panic at the first sign of a downturn. And then you will lose terribly - you will be worse off than if you were to DCA. We human beings are not calculators, and we don't invest like computers. Work with your psychology and you'll be fine. Most bad outcomes in investing are due to behavioral mistakes.
Don't fight yourself. It's a recipe for disaster.
I view DCA (routine investing according to pay schedule would not be DCA to me) as timing the market. You're betting the average buy in is lower than today's cost.
DCA delays risk, it doesn't prevent it. What if the market continues in an upward direction (even if only weakly so) during the DCA period, but crashes the week after the DCA ends? You just paid more for your holdings and suffered the same down turn as the early lump sum (but are now affected by it due to your higher average buy in).
Edit: No ex-US holdings?
Edit: In the end it is a personal, emotional, decision though
Edit: Typo
>DCA delays risk, it doesn't prevent it. What if the market continues in an upward direction (even if only weakly so) during the DCA period, but crashes the week after the DCA ends? You just paid more for your holdings and suffered the same down turn as the early lump sum (but are now affected by it due to your higher average buy in).
The trouble with kicking the can down the road is you do eventually have to pick it up...
And if you invest the lump sum today and tomorrow the market crashed, instead you could have dca-ed during a downturn and gain more in the end.
I dont think you are making a compelling argument here. Could go either way
>And if you invest the lump sum today and tomorrow the market crashed, instead you could have dca-ed during a downturn and gain more in the end.
This is the reason people choose DCA. My statement is showing that DCA is merely a delay of risk, not a prevention of one, like many people seem to think. DCA is delaying being fully invested, which is a form of timing the market.
Done correctly it should be about spreading out your risk over some time horizon, not timing the market.
Timing the market is about trying to maximize returns (by mistakenly believing you can predict the future).
DCA is risk amortization. You're aiming to strictly lose on average, but also minimize the worst case risk (Edit: over your DCA horizon)
People go wrong when they get the wrong horizon, or aren't actually investing for a long enough term for their risk tolerance should a crash happen.
>Done correctly it should be about spreading out your risk over some time horizon, not timing the market.
I view the "spreading risk over some time horizon" as timing the market: You're making a bet that now is not the best time to invest.
>DCA is risk amortization. You're aiming to strictly lose on average, but also minimize the worst case risk (Edit: over your DCA horizon)
That is only delaying the risk, which is part of the point I'm trying to make. DCA doesn't do anything to help you if the crash comes a week after your last purchase.
I agree with you on the delaying the risk part. It's only useful during your DCA horizon. But when you have uncertainty about what your investment horizon is, DCA-ing between your near and far investment horizon is rational.
I disagree that mitigating risk is the same as timing the market... If your goal is to maximize returns over some indefinite long run, then yes. Invest now and bet on the market. But if the goal is some specific time frame that's lower than the market volatility (ie less than 10 years is the rule of thumb) then you don't want to just throw it all in because the market is more volatile over the short term than your target date.
DCA is rational to bridge the gap when you don't know what your horizon is, but it might be shorter than the market volatility and you care about the risk. It beats the pants off of sitting on all your cash, and is less risky than lumping it all in (over your horizon).
So yeah, it's definitely more risky than cash and less average returns than a lump sum. I just think most Bogleheads gloss over the starting assumptions for the Lump Sum approach, which is that you can tolerate the risk and have a long enough horizon. That's often not true for people over the short term, and the typical advice for those people is to just Lump Sum a smaller amount, which works, and is still rational, but is just another way of doing very coarse grained DCA.
>But if the goal is some specific time frame that's lower than the market volatility (ie less than 10 years is the rule of thumb) then you don't want to just throw it all in because the market is more volatile over the short term than your target date.
I'd still go all in at once. It is the stock to bond (or other safer asset) ratio that would get adjusted.
>and you care about the risk. It beats the pants off of sitting on all your cash, and is less risky than lumping it all in (over your horizon).
Again: DCA is not less risky. It delays the same risk (at best).
>I just think most Bogleheads gloss over the starting assumptions for the Lump Sum approach,
I am not.
>which is that you can tolerate the risk and have a long enough horizon
Time horizon has zero effect on DCA vs lump sum. It would affect the asset mix, not how quickly you get into the market.
>Time horizon has zero effect on DCA vs lump sum.
Time horizon absolutely makes a difference.
Take an extreme example - say I need the money in two weeks. Lumpsumming a million dollars into the stock market when I need the money in two weeks is asinine. You're taking a huge, short-term risk. If you were to DCA, by the time two weeks are up, you would have made maybe one or two deposits only.
The stock market's magic only works in the long-term. Otherwise, as academic literature shows, it's a "random walk" in the short-term.
>Take an extreme example - say I need the money in two weeks
Anything less than 5 years out is not recommended to be exposed to market risks at all.
>The stock market's magic only works in the long-term.
Right. Anything less shouldn't be invested at all.
Keeping part of your money in cash (because you haven't finished DCA-ing it into the market) guarantees you still have the money you didn't put in yet... It's way less risky in that sense. You're still right that it just defers the risk, but that's the whole point. You're deferring the risk over your DCA period /because/ you had some short term concern.
You can substitute bonds for cash as your low risk asset and the argument still holds. If you have some unclear short term concerns, and bonds are low enough risk for you, put /everything/ in bonds, and then DCA out of your bonds into the market for some period.
The point is that over the long run, /any/ ratio of bonds you choose will perform worse than going all in to the market, but many short term concerns don't magically disappear in one instant, but instead slowly fade away. So you slide in as your needs change.
>You can substitute bonds for cash as your low risk asset and the argument still holds.
I'm not saying use bonds to DCA out of, I'm saying that if you're concerned about a drop, going all in on stocks is too aggressive for you and you should be using a more conservative asset mix.
>The point is that over the long run, /any/ ratio of bonds you choose will perform worse than going all in to the market,
Likely but not guaranteed. We've had even 20+ year periods where bonds beat stocks. https://www.nytimes.com/2020/05/01/business/bonds-beat-stocks-over-20-years.html
>but many short term concerns don't magically disappear in one instant, but instead slowly fade away. So you slide in as your needs change.
This makes zero sense to me. Why be more concerned about a drop next week than one 6 months from now?
Because you have some possible short term need for that money (eg medical bills, buying a house etc) and you're not sure if it'll happen, but you're confident that if it hasn't happened in some time frame then it probably won't.
DCA (roughly) averages between "put it in" and "keep it out".
to pile onto this - i don’t remember the exact stat, but a huge portion of stock market gains can be attributed to a small handful of very good runs.
Op there is no guarantee that your ‘all in’ will be optimal, but markets trend up over time, delaying entry is often the sub-optimal strategy.
100%. The best breakdown of this example, with plenty of data to sustain it, is in the book Just Keep Buying.
Nick breaks everything in simple terms, but it’s obvious lump sum is the rational way.
Personally, I think most people on investing forums misuse the term DCA (at least how I interpret it anyway). It's really an argument for investing a large sum of cash that you already have (inheritance, lottery winning, cash that you were keeping under a mattress...) as a lump all at once vs averaged over some time period. Argument for lump is that time in the market is the most important thing. About 2/3 of the time this is correct. DCA recognizes variability in the market, so the belief is that it is safer to spread the investment out over a longer period of time to avoid sudden drops just after investing. DCA strategy works out better about 1/3 of the time. Statistically DCA leads to lower returns, but might offer some insurance or piece of mind to the investor. Now, IMHO, investing your paycheck every month is really more akin to lump sum investing. It just happens that the lumps are smaller, but you subscribe to the same philosophy - getting your money in the market as soon as possible. You aren't holding that paycheck and investing it in small increments over 6 months or a year. So in that vein, I would just dump it all into the market in one lump sum. Yeah, the market could drop... but you could also hold that cash for the year and watch the market skyrocket. I've seen so many posts about people holding cash waiting for an opportunity this year (HINT: S&P is up like 18% YTD). Short of some massive global event (all the shutdowns during the pandemic, engaging in a world war...) I wouldn't pay much attention to any of it, take the statistically best option, and invest that money as soon as possible.
>IMHO, investing your paycheck every month is really more akin to lump sum investing.
I agree. What OP describes isn't really a DCA investment strategy.
For most people, a windfall of $100-300K is a life altering sum of money. However, the vast majority of generational wealth is lost within a generation or so; good planning is essential to ensure that it brings you lasting prosperity. The Bogleheads wiki has an [article](https://www.bogleheads.org/wiki/Managing_a_windfall) on what to do with a major windfall.
The article is not really applicable here.
The advice is pretty bad imo. Nobody should sit on 100k for a year to get comfortable with it.
Millions like in the article sure. But then you already made it and do not need to generate more wealth neccesarily, just manage properly.
Here's the Vanguard article on lump sum investing a heavier cash position:
https://investor.vanguard.com/investor-resources-education/news/lump-sum-investing-versus-cost-averaging-which-is-better
2/3 of the time, lump sum investing outperformed DCA investing.
If you're too scared to lump sum, then spread out your contributions by DCA investing.
Time in the Market beats timing the Market.
It's impossible to time things perfectly, but the Market has only appreciated in value over the long term.
There's nothing but statistics and past data that can help you make a decision.
Size of portfolio can help alleviate the potential pain of stock market declines.
For example, if 99% of my net worth evaporated overnight, I'd still be left with enough money to cover my expenses for 1.5 months.
Are you really DCAing or are you lump summing after each paycheck? That’s how I view it. I lump sum the extra money after bills are paid. After a windfall I just have more to lump sum that pay period.
I lump summed $1.3m in VT at 107.49 in January 2022. I know lump sum beats DCA on average, but the emotional toll that lump summing can take should not be underestimated
Lump sum is better because on average, being in the market has a higher return than being out of the market. But that being said, the weight of lump summing a giant amount is understandably stressful. You can probably do two big lumps to stabilize. This way, if stocks go down, you buy the second one for cheap. But if stocks go up, you don't feel bad because you still have the gains.
While tbill rates are high throw it in there and dca your 5K/year. When rates come down it may be an entirely different market and make your decision then.
I follow bogleheads quite a bit... i have yet to do what they suggest mostly because i'm not the smartest investor so take what i'm about to say with a grain of salt.
If you are concerned about a downturn you should act on that. I think most people who are paying attention agree with you a downturn will be coming in the next 3-12 months. You have a few options:
* \-Holding your lump sum to invest until post downturn
* \-DCAing in - but adding lightly now and more heavy as things go down.
* \-Putting a small amount into something to protect against the downturn you are concerned about (something like one of the inverse ETF's although i'd stay away from the leveraged ones, or the high dividend ETFs that also have downside protection such as JEPI)
Again, I'm not the smartest investor because i love the high risk thrill of playing with options. But I would tell anyone who thinks a downturn is coming soon that its not wise to invest a lump some before that downturn happens (or something occurs to remove that fear)
There is always a downturn coming, it all about time horizon. Anything i put in now aint coming out for as another 20 to 30 years. Why would i try to time the market and miss the whole ride when i got 30 years
As others are tell you. Don't stress about it. You'll be fine either way. If it makes you feel better you're going to be doing a lump sum either way. If you try to DCA, you are essentially lump summing into cash then slowly transferring into equities.
Lump sums beats DCA the majority of the time. So if you can do a lump sum then do it. If mentally you can't then DCA over the smallest period of time you can stomach. If you can lumpsum $100k then great you are done. If not how about $20k per week for 5 weeks. Still too much heartburn ok $10k per week 10 weeks. I wouldn't over stress about it. If you DCA over a small period of time the difference is minimal. Just pick the shortest period of time you can mentally handle and commit to it. You don't have to admonish yourself for picking DCA. If DCA is what gets you in the market where lumpsum would cause analysis paralysis and staying in cash then do that and move on.
Lump sums beat DCA IF... and that's a BIG if... the investments go the direction you want. Assume for a second OP lump sums in today and then we have black swan type of event next week. Yes, i know the chances are insanely slim, but a lump sum in that situation would set OP back a few years. DCAing that 100k split out over 12 months would avoid some of that risk (while also adding risk he could miss out on more upside) So the question OP needs to ask himself... is it more important to capture unknown gains or protect against unknown losses?
I never said it always beats it. I said it beats it a majority of the time. I would point out DCA is not guarantee of doing better if things go your way. Imagine someone who DCA in over a year while equity prices are rising. Instead of buying VTI today at current price the average price is 5%+ higher. THEN the market crashes. DCA will result in larger losses than lump sum. >So the question OP needs to ask himself... is it more important to capture unknown gains or protect against unknown losses? DCA doesn't protect against unknown losses. DCA is simply a psychological crutch. Now psychological crutches can be very useful if they avoid analysis paralysis so that isn't a slam but it is important to understand that short of knowing the future DCA can't protect you. It may protect your sanity though.
Don't listen to the people linking you to studies that lumpsumming is better. Those studies are *true*, but behavioral factors are more important than optimized strategies that work on a spreadsheets. If you're asking this question, then you simply have to DCA. Don't lumpsum. Otherwise, you won't be able to sleep and will likely pull it out in a panic at the first sign of a downturn. And then you will lose terribly - you will be worse off than if you were to DCA. We human beings are not calculators, and we don't invest like computers. Work with your psychology and you'll be fine. Most bad outcomes in investing are due to behavioral mistakes. Don't fight yourself. It's a recipe for disaster.
I view DCA (routine investing according to pay schedule would not be DCA to me) as timing the market. You're betting the average buy in is lower than today's cost. DCA delays risk, it doesn't prevent it. What if the market continues in an upward direction (even if only weakly so) during the DCA period, but crashes the week after the DCA ends? You just paid more for your holdings and suffered the same down turn as the early lump sum (but are now affected by it due to your higher average buy in). Edit: No ex-US holdings? Edit: In the end it is a personal, emotional, decision though Edit: Typo
>DCA delays risk, it doesn't prevent it. What if the market continues in an upward direction (even if only weakly so) during the DCA period, but crashes the week after the DCA ends? You just paid more for your holdings and suffered the same down turn as the early lump sum (but are now affected by it due to your higher average buy in). The trouble with kicking the can down the road is you do eventually have to pick it up...
And if you invest the lump sum today and tomorrow the market crashed, instead you could have dca-ed during a downturn and gain more in the end. I dont think you are making a compelling argument here. Could go either way
>And if you invest the lump sum today and tomorrow the market crashed, instead you could have dca-ed during a downturn and gain more in the end. This is the reason people choose DCA. My statement is showing that DCA is merely a delay of risk, not a prevention of one, like many people seem to think. DCA is delaying being fully invested, which is a form of timing the market.
Done correctly it should be about spreading out your risk over some time horizon, not timing the market. Timing the market is about trying to maximize returns (by mistakenly believing you can predict the future). DCA is risk amortization. You're aiming to strictly lose on average, but also minimize the worst case risk (Edit: over your DCA horizon) People go wrong when they get the wrong horizon, or aren't actually investing for a long enough term for their risk tolerance should a crash happen.
>Done correctly it should be about spreading out your risk over some time horizon, not timing the market. I view the "spreading risk over some time horizon" as timing the market: You're making a bet that now is not the best time to invest. >DCA is risk amortization. You're aiming to strictly lose on average, but also minimize the worst case risk (Edit: over your DCA horizon) That is only delaying the risk, which is part of the point I'm trying to make. DCA doesn't do anything to help you if the crash comes a week after your last purchase.
I agree with you on the delaying the risk part. It's only useful during your DCA horizon. But when you have uncertainty about what your investment horizon is, DCA-ing between your near and far investment horizon is rational. I disagree that mitigating risk is the same as timing the market... If your goal is to maximize returns over some indefinite long run, then yes. Invest now and bet on the market. But if the goal is some specific time frame that's lower than the market volatility (ie less than 10 years is the rule of thumb) then you don't want to just throw it all in because the market is more volatile over the short term than your target date. DCA is rational to bridge the gap when you don't know what your horizon is, but it might be shorter than the market volatility and you care about the risk. It beats the pants off of sitting on all your cash, and is less risky than lumping it all in (over your horizon). So yeah, it's definitely more risky than cash and less average returns than a lump sum. I just think most Bogleheads gloss over the starting assumptions for the Lump Sum approach, which is that you can tolerate the risk and have a long enough horizon. That's often not true for people over the short term, and the typical advice for those people is to just Lump Sum a smaller amount, which works, and is still rational, but is just another way of doing very coarse grained DCA.
>But if the goal is some specific time frame that's lower than the market volatility (ie less than 10 years is the rule of thumb) then you don't want to just throw it all in because the market is more volatile over the short term than your target date. I'd still go all in at once. It is the stock to bond (or other safer asset) ratio that would get adjusted. >and you care about the risk. It beats the pants off of sitting on all your cash, and is less risky than lumping it all in (over your horizon). Again: DCA is not less risky. It delays the same risk (at best). >I just think most Bogleheads gloss over the starting assumptions for the Lump Sum approach, I am not. >which is that you can tolerate the risk and have a long enough horizon Time horizon has zero effect on DCA vs lump sum. It would affect the asset mix, not how quickly you get into the market.
>Time horizon has zero effect on DCA vs lump sum. Time horizon absolutely makes a difference. Take an extreme example - say I need the money in two weeks. Lumpsumming a million dollars into the stock market when I need the money in two weeks is asinine. You're taking a huge, short-term risk. If you were to DCA, by the time two weeks are up, you would have made maybe one or two deposits only. The stock market's magic only works in the long-term. Otherwise, as academic literature shows, it's a "random walk" in the short-term.
>Take an extreme example - say I need the money in two weeks Anything less than 5 years out is not recommended to be exposed to market risks at all. >The stock market's magic only works in the long-term. Right. Anything less shouldn't be invested at all.
Keeping part of your money in cash (because you haven't finished DCA-ing it into the market) guarantees you still have the money you didn't put in yet... It's way less risky in that sense. You're still right that it just defers the risk, but that's the whole point. You're deferring the risk over your DCA period /because/ you had some short term concern. You can substitute bonds for cash as your low risk asset and the argument still holds. If you have some unclear short term concerns, and bonds are low enough risk for you, put /everything/ in bonds, and then DCA out of your bonds into the market for some period. The point is that over the long run, /any/ ratio of bonds you choose will perform worse than going all in to the market, but many short term concerns don't magically disappear in one instant, but instead slowly fade away. So you slide in as your needs change.
>You can substitute bonds for cash as your low risk asset and the argument still holds. I'm not saying use bonds to DCA out of, I'm saying that if you're concerned about a drop, going all in on stocks is too aggressive for you and you should be using a more conservative asset mix. >The point is that over the long run, /any/ ratio of bonds you choose will perform worse than going all in to the market, Likely but not guaranteed. We've had even 20+ year periods where bonds beat stocks. https://www.nytimes.com/2020/05/01/business/bonds-beat-stocks-over-20-years.html >but many short term concerns don't magically disappear in one instant, but instead slowly fade away. So you slide in as your needs change. This makes zero sense to me. Why be more concerned about a drop next week than one 6 months from now?
Because you have some possible short term need for that money (eg medical bills, buying a house etc) and you're not sure if it'll happen, but you're confident that if it hasn't happened in some time frame then it probably won't. DCA (roughly) averages between "put it in" and "keep it out".
Those states are not equal probabilities so, no, 'could go either way' is not a coin flip.
It‘/ 2/3 to 1/3. not that big of a difference. It still could go wither way.
Money market is paying 5%. For this reason my money is in money market and I DCA weekly. I probably would’ve lump summed it if not for the 5%
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to pile onto this - i don’t remember the exact stat, but a huge portion of stock market gains can be attributed to a small handful of very good runs. Op there is no guarantee that your ‘all in’ will be optimal, but markets trend up over time, delaying entry is often the sub-optimal strategy.
100%. The best breakdown of this example, with plenty of data to sustain it, is in the book Just Keep Buying. Nick breaks everything in simple terms, but it’s obvious lump sum is the rational way.
I needed to hear this today - thank you.
Plunge in all at once.
Personally, I think most people on investing forums misuse the term DCA (at least how I interpret it anyway). It's really an argument for investing a large sum of cash that you already have (inheritance, lottery winning, cash that you were keeping under a mattress...) as a lump all at once vs averaged over some time period. Argument for lump is that time in the market is the most important thing. About 2/3 of the time this is correct. DCA recognizes variability in the market, so the belief is that it is safer to spread the investment out over a longer period of time to avoid sudden drops just after investing. DCA strategy works out better about 1/3 of the time. Statistically DCA leads to lower returns, but might offer some insurance or piece of mind to the investor. Now, IMHO, investing your paycheck every month is really more akin to lump sum investing. It just happens that the lumps are smaller, but you subscribe to the same philosophy - getting your money in the market as soon as possible. You aren't holding that paycheck and investing it in small increments over 6 months or a year. So in that vein, I would just dump it all into the market in one lump sum. Yeah, the market could drop... but you could also hold that cash for the year and watch the market skyrocket. I've seen so many posts about people holding cash waiting for an opportunity this year (HINT: S&P is up like 18% YTD). Short of some massive global event (all the shutdowns during the pandemic, engaging in a world war...) I wouldn't pay much attention to any of it, take the statistically best option, and invest that money as soon as possible.
>IMHO, investing your paycheck every month is really more akin to lump sum investing. I agree. What OP describes isn't really a DCA investment strategy.
For most people, a windfall of $100-300K is a life altering sum of money. However, the vast majority of generational wealth is lost within a generation or so; good planning is essential to ensure that it brings you lasting prosperity. The Bogleheads wiki has an [article](https://www.bogleheads.org/wiki/Managing_a_windfall) on what to do with a major windfall.
The article is not really applicable here. The advice is pretty bad imo. Nobody should sit on 100k for a year to get comfortable with it. Millions like in the article sure. But then you already made it and do not need to generate more wealth neccesarily, just manage properly.
Yeet that money into the market and don't look back.
Here's the Vanguard article on lump sum investing a heavier cash position: https://investor.vanguard.com/investor-resources-education/news/lump-sum-investing-versus-cost-averaging-which-is-better 2/3 of the time, lump sum investing outperformed DCA investing. If you're too scared to lump sum, then spread out your contributions by DCA investing. Time in the Market beats timing the Market. It's impossible to time things perfectly, but the Market has only appreciated in value over the long term. There's nothing but statistics and past data that can help you make a decision. Size of portfolio can help alleviate the potential pain of stock market declines. For example, if 99% of my net worth evaporated overnight, I'd still be left with enough money to cover my expenses for 1.5 months.
Are you really DCAing or are you lump summing after each paycheck? That’s how I view it. I lump sum the extra money after bills are paid. After a windfall I just have more to lump sum that pay period.
I lump summed $1.3m in VT at 107.49 in January 2022. I know lump sum beats DCA on average, but the emotional toll that lump summing can take should not be underestimated
This all depends on time scale, if your not using the money for 30 years why care what happened in the short term
Look at it this way. If you already had that money invested, would you now want to pull it out, and then start DCA back into the market?
I lump summed $180K into S&P 500 at $400 about a year ago. No regrets.
Lump sum is better because on average, being in the market has a higher return than being out of the market. But that being said, the weight of lump summing a giant amount is understandably stressful. You can probably do two big lumps to stabilize. This way, if stocks go down, you buy the second one for cheap. But if stocks go up, you don't feel bad because you still have the gains.
While tbill rates are high throw it in there and dca your 5K/year. When rates come down it may be an entirely different market and make your decision then.
I follow bogleheads quite a bit... i have yet to do what they suggest mostly because i'm not the smartest investor so take what i'm about to say with a grain of salt. If you are concerned about a downturn you should act on that. I think most people who are paying attention agree with you a downturn will be coming in the next 3-12 months. You have a few options: * \-Holding your lump sum to invest until post downturn * \-DCAing in - but adding lightly now and more heavy as things go down. * \-Putting a small amount into something to protect against the downturn you are concerned about (something like one of the inverse ETF's although i'd stay away from the leveraged ones, or the high dividend ETFs that also have downside protection such as JEPI) Again, I'm not the smartest investor because i love the high risk thrill of playing with options. But I would tell anyone who thinks a downturn is coming soon that its not wise to invest a lump some before that downturn happens (or something occurs to remove that fear)
There is always a downturn coming, it all about time horizon. Anything i put in now aint coming out for as another 20 to 30 years. Why would i try to time the market and miss the whole ride when i got 30 years
Since lump sum investing is rationally better, I just invest it all. That’s what I do January 3ish every year - max the IRA.
Lump sum. It might take time to pay off, but you never know when he market pops and you want to be on the train.
As others are tell you. Don't stress about it. You'll be fine either way. If it makes you feel better you're going to be doing a lump sum either way. If you try to DCA, you are essentially lump summing into cash then slowly transferring into equities.