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Dollar cost averaging vs. Lump Sum investing

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Dollar cost averaging vs. Lump Sum investing

Old 02-21-2019, 04:37 AM
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Default Dollar cost averaging vs. Lump Sum investing

Interesting article. Most of us at some point get a lump sum from inheritance, severance, etc. https://ofdollarsanddata.com/how-to-invest-a-lump-sum/
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Old 02-21-2019, 05:20 AM
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I've read that paper from Vanguard. Stressful yes, but statistically, you're best off jumping right in.
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Old 02-21-2019, 05:33 AM
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Hard to argue in a sustained bull market. I would be more careful if markets were volatile
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Old 02-21-2019, 05:43 AM
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I can give you an example based on past experience. At the end of 2012 I received a large bonus. I decided I was going to max my less than one year old sons 529 for college. At this time I thought the market was high and was nervous about dumping it all in at once, but I did. Turned out to be the right move.
Same thing happened at the end of 2013, with my less then one year old daughter. Now the market was even higher. I dumped it all in a gain and it worked out again.

Fast forward to August 2016. Wife changes jobs and we roll her 401k into an IRA. With the election looming, I decide to stay put. Market is at about 18,000. The evening of the election, the futures are down 1000, and I am looking like a genius. The next morning the market is up, and it doesn't look back for a long time. I tried cost averaging in, but I missed out on huge returns. Not putting it in as a lump sum cost me about $80,000.

Circumstances change. But in my experience, if you do not need the money any time soon....get it in the market.
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Old 02-21-2019, 05:45 AM
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Originally Posted by joe.giuliano View Post
Interesting article. Most of us at some point get a lump sum from inheritance, severance, etc. https://ofdollarsanddata.com/how-to-invest-a-lump-sum/

How much ya' get?
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Old 02-21-2019, 05:49 AM
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Originally Posted by aubv View Post



How much ya' get?
Nuthin' I have a disabled brother and my parents made it clear (thought the will read different) where the $ would go.
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Old 02-21-2019, 05:52 AM
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Originally Posted by joe.giuliano View Post
Nuthin' I have a disabled brother and my parents made it clear (thought the will read different) where the $ would go.
Hopefully a Trust, that you manage...
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Old 02-21-2019, 06:03 AM
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Originally Posted by joe.giuliano View Post
Nuthin' I have a disabled brother and my parents made it clear (thought the will read different) where the $ would go.
I too have a disabled brother and passed on my share of the inheritance to add my portion to his special needs trust. Congrats on being a good brother.
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Old 02-21-2019, 06:57 AM
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Here's another way to look at it if you are a risk averse investor.

The "odds" of underperforming by using DCA is the price of being conservative. It's just a cost, but one you may or may not incur. If it makes one feel better, it does reduce the risk that the market corrects in the upcoming months.

When I discuss this with clients, I tell them it may or may not make sense. If they feel better, and know the impact, it's still a win.
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Old 02-21-2019, 06:57 AM
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Time in the market not timing the market...
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Old 02-21-2019, 05:01 PM
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Hold my beer and watch this!
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