Lump-sum vs dollar-cost-averaging.
In plain English
When you have a chunk of money to invest, you can put it all in at once, a lump sum, or feed it in over weeks or months, dollar-cost averaging. Because markets rise more often than they fall, investing the lump sum immediately has historically produced higher average returns, since the money is in the market longer. Dollar-cost averaging can lower the average purchase price in a falling market and, more importantly, reduces the regret and risk of buying everything right before a drop. The standard framing is a tradeoff between higher expected return and lower emotional and timing risk.
01Why it matters
How you deploy a windfall affects both your returns and your peace of mind, so understanding the tradeoff helps you pick the approach you can actually stick with.
02The math, step by step
You have 60,000 dollars to invest. A lump sum puts all 60,000 in today, historically the higher-return choice on average. Dollar-cost averaging invests 10,000 a month for six months, smoothing your entry price and reducing the risk of buying at a peak.
03What this is NOT
Neither approach is universally best. Lump-sum investing tends to earn more on average because the money is invested sooner, while dollar-cost averaging lowers timing risk and regret; the right one depends on your temperament.
04Receipts
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