$300K-$400K is headed my way either late this week or early next week. Most likely, 100% of it will go into VFIAX.

Question: Should I lump-sum it asap, or dollar-cost average it over 6-9 months?

What I know:
- Mathematically, lump-sum outperforms dollar-cost average over the long haul, as it gives you exposure to the market sooner. (Although the difference is not that significant.)
- Dollar-cost averaging spreads the risk.
- Emotions can play a role in the decision / strategy.

What I don't know:
If I dollar-cost average, how much will I lose to inflation over the next 6-9 months with cash sitting there waiting to be invested.

I would take a look at VTSAX over VFIAX (depending on your desired allocations) as you'll get small and mid cap exposure.

I believe Vanguard did a study that showed lump sum is better most times. Just depends on your risk comfort level. You could also hedge by doing lump sum on half and DCA the other half.

https://www.forbes.com/sites/robertberger/2021/02/12/dollar-cost-averaging-vs-lump-sum-investing-how-to-decide/?sh=68ac94f07c50

Normally I'd say lump sum, but I think there's a lot of uncertainty in the markets for the next 3-7 weeks. I'd talk with your financial advisor. If worried about time in the market, maybe do 3-4 monthly tranches so all of your money is in after the 2nd or 3rd months.

I would also add that if I were going to lump sum money into investments right now, I'd make sure a portion goes to Nikkei or other foreign index, and at least a small portion goes into inflation hedge such as gold or even crypto. I'd also lean my equities more towards large cap value than I would towards growth or small cap. Again those are just my thoughts based on what I see as big uncertainties at the moment. I'd make sure to have some conversations with my advisor(s).

https://ofdollarsanddata.com/dollar-cost-averaging-vs-lump-sum/amp/

I've read a ton of these and they always use some huge spread like 2 years of DCA, use time periods during bull trends or averaged across all time periods (which on average the market has been a bull market, or use other restrictions to force the answer that the only right answer can be lump sum. I'm not saying that you're wrong going with a lump sum to get time in the market, especially if you have a long investment period, but I do think under certain market conditions it can be wise to avoid putting all of your money in right before a massive pullback. I think we are living in those conditions and would not put an additional $500k I'm the market lump sum right now. That is only my opinion, but using averaged/normalized data doesn't counter that opinion.

Quote:

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"The only thing that really matters in asset allocation is sidestepping some of the pain when the rare, great bubbles break." - Jeremy Grantham

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There's always a risk either way. You could lump sum half and DCA the rest if that makes you feel better.

I'm a big fan of lump sum investing and big positions. Having said that I bought 100 shares of FB last week at $301.

Joe KID said:

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$300K-$400K is headed my way either late this week or early next week. Most likely, 100% of it will go into VFIAX.

Question: Should I lump-sum it asap, or dollar-cost average it over 6-9 months?

What I know:
- Mathematically, lump-sum outperforms dollar-cost average over the long haul, as it gives you exposure to the market sooner. (Although the difference is not that significant.)
- Dollar-cost averaging spreads the risk.
- Emotions can play a role in the decision / strategy.

What I don't know:
If I dollar-cost average, how much will I lose to inflation over the next 6-9 months with cash sitting there waiting to be invested.

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in today's environment, I would lump sum that SOB!!

Put it in VDIGX, and transfer it $50K at a time over the next 8 - 10 months.

Joe KID said:

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$300K-$400K is headed my way either late this week or early next week. Most likely, 100% of it will go into VFIAX.

Question: Should I lump-sum it asap, or dollar-cost average it over 6-9 months?

What I know:
- Mathematically, lump-sum outperforms dollar-cost average over the long haul, as it gives you exposure to the market sooner. (Although the difference is not that significant.)
- Dollar-cost averaging spreads the risk.
- Emotions can play a role in the decision / strategy.

What I don't know:
If I dollar-cost average, how much will I lose to inflation over the next 6-9 months with cash sitting there waiting to be invested.

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Rich.

Normally, lump sum is the answer. I could talk myself into DCA, but I could also talk myself into lump sum. The Democrats seem to be moving towards ending COVID restrictions en masse yesterday and today so a memo has clearly gone out to them.

Due to that, you could see markets take off for a bit.

Joe KID said:

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$300K-$400K is headed my way either late this week or early next week. Most likely, 100% of it will go into VFIAX.

Question: Should I lump-sum it asap, or dollar-cost average it over 6-9 months?



What I know:
- Mathematically, lump-sum outperforms dollar-cost average over the long haul, as it gives you exposure to the market sooner. (Although the difference is not that significant.)
- Dollar-cost averaging spreads the risk.
- Emotions can play a role in the decision / strategy.

What I don't know:
If I dollar-cost average, how much will I lose to inflation over the next 6-9 months with cash sitting there waiting to be invested.

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Something else to think about:

Take $100K & buy 4 rent homes. If each can cash flow to you $350, you would generate an almost 17% cash on cash, TAX FREE, return. Little better than VFIAX.

Mind explaining how that would be tax free?

Tax laws. 1 of the reasons real estate remains the top investment vehicle for wealth building.

Not following. Income from rental properties isn't taxed?

12thMan9 said:

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Joe KID said:

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$300K-$400K is headed my way either late this week or early next week. Most likely, 100% of it will go into VFIAX.

Question: Should I lump-sum it asap, or dollar-cost average it over 6-9 months?



What I know:
- Mathematically, lump-sum outperforms dollar-cost average over the long haul, as it gives you exposure to the market sooner. (Although the difference is not that significant.)
- Dollar-cost averaging spreads the risk.
- Emotions can play a role in the decision / strategy.

What I don't know:
If I dollar-cost average, how much will I lose to inflation over the next 6-9 months with cash sitting there waiting to be invested.

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Something else to think about:

Take $100K & buy 4 rent homes. If each can cash flow to you $350, you would generate an almost 17% cash on cash, TAX FREE, return. Little better than VFIAX.

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Somewhere in the Real Estate forum history is a thread on short-term furnished rentals. Buy a really nice home in a vacation located conveniently to a large metro area. Their posts indicate that they are making a killing through VRBO/Airbnb, as in paying off 6 figure loan balances in a few years. Earning WAY more than $350/month. Just an FYI.

Thank you. I have a rental so I was trying to understand. I appreciate the info instead of just "tax laws".

Cyp0111 alluded to it in the comment about depreciation. Little more to it than that, and, if you,know what you're doing, SF rental can be fairly easy.

There are several educational programs out there you can delve into that provide more detail.

I do have a SF that has been cash flowing pretty well. I did some pretty extensive research but hadn't run across that concept. I'll look for some educational materials online.

Thx.

I prefer DCA. I decide on the equity and the amount to invest. Then build a position over several months.

Short Term rentals in vacation spots works but you see a lot of guys on twitter talking it up.

A few things, wear and tear on house and furniture is real and shows up 2-3 years in, if you're renting at a premium you need to keep the furniture and all items in top shape. You will likely need a rental company unless your job and that is a big cut (20-30%) off the top.

H & B

Just on the thought of RE above but I like it for diversification. Usually when we talk about topic it's in terms of growth stocks vs blue chips, but you might want to ask yourself if you even want the money in the stock market? I have a couple hundred thousand tied up in a rental property not because of RE does better than the stock market or vise versa, but because I want my portfolio to be diversified.

As for your actual question about lump sum versus cost averaging? Usually I would say lump sum, but we have rate hikes coming in the near future. Maybe half now and half after the hikes.

i know someone dealing with something similar in real time. they asked an advisor last week how they'll handle it - he said they'd flow it in over the course of 4 or 5 months unless there's a dip. and they promptly spread 20% over the last couple days.

Similar situation as the OP.

What would be your time horizon in this market to DCA mid six-figures? 1 month? 3? 6? 12?

P.H. Dexippus said:

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Similar situation as the OP.

What would be your time horizon in this market to DCA mid six-figures? 1 month? 3? 6? 12?

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Correct me if I'm wrong, but quick google shows that the OP would have benefited most from just doing lump sum, no?

htxag09 said:

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P.H. Dexippus said:

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Similar situation as the OP.

What would be your time horizon in this market to DCA mid six-figures? 1 month? 3? 6? 12?

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Correct me if I'm wrong, but quick google shows that the OP would have benefited most from just doing lump sum, no?

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With hindsight, he would have been better off DCAing in Feb 2022 (34,738), continuing to buy on the way down to Sept 2022 (28,725). Its not difficult to imagine other recent scenarios (say Sept 2019-Jan 2020 or Oct 2021-Jan 2022) where DCA over a few months would be the better decision.

P.H. Dexippus said:

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htxag09 said:

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P.H. Dexippus said:

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Similar situation as the OP.

What would be your time horizon in this market to DCA mid six-figures? 1 month? 3? 6? 12?

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Correct me if I'm wrong, but quick google shows that the OP would have benefited most from just doing lump sum, no?

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With hindsight, he would have been better off DCAing in Feb 2022 (34,738), continuing to buy on the way down to Sept 2022 (28,725). Its not difficult to imagine other recent scenarios (say Sept 2019-Jan 2020 or Oct 2021-Jan 2022) where DCA over a few months would be the better decision.

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lol. I'm obviously an idiot so feel free to ignore me; didn't realize this thread was 2 years old, thought it was just 1 year old

P.H. Dexippus said:

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Similar situation as the OP.

What would be your time horizon in this market to DCA mid six-figures? 1 month? 3? 6? 12?

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We've been at all time high area for a bit now. Although this could progress into the election, it also could start to pull back before then. DCA over a short term period is likely more beneficial.

If a year from now you lump sum and there was a big pull back, it'll be easy to say "well of course it finally pulled back, etc".

I think at this point in the market, DCA is the better move. Plus, it takes away a little of the sting if you go Lump Sum and it immediately drops. Over time, it will all average out, but you will be pissed until you get back to even