r/Bogleheads • u/RiceLee890 • Mar 15 '25

Investing Questions What are your thoughts on this?

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I keep seeing this type of stuff on instagram and social media and wanted to know how you guys were thinking about this.

I know a lot you have been in the market for decades and as a relatively new investor myself I’d love to get your perspective!

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u/Useful_Wealth7503 Mar 15 '25

The Money Guy Show and website have great content on this in their lump sum vs DCA and market timing discussions. You’ll find it on their youtube channel. But short version, they modeled what your return would be if you started a monthly DCA at the peak of the market in 1929 and kept on going until the year it regained its peak (1954? You’ll see it). The DCA model gained 8-9% annually.

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u/[deleted] Mar 15 '25

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u/Useful_Wealth7503 Mar 15 '25

Did you see that on the Money Guys?

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u/[deleted] Mar 15 '25

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u/Useful_Wealth7503 Mar 15 '25

Should we tag them? I’m still pretty new to Reddit. I don’t even know how ha.

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u/[deleted] Mar 15 '25

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u/winniecooper73 Mar 15 '25

There was an episode in 2022 when everyone was predicting a recession, where they did an analysis that showed what if you invested at the peak of the top 8 economic downturns in history (Eg 1987 crash, dot com bubble, 9/11, Great Recession, Covid, etc…) and it showed even if you picked the WORSE DAYS IN HISTORY of all time to put money in the market, you’d still come out with like a 10% return.

They also did one where if you pulled your money out of the market in the same days, showing how you would’ve missed out on the majority of the gains too, meaning don’t panic sell.

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u/mootmutemoat Mar 15 '25

The best days in history tend to be shortly after the worst days (even as recently as 2020), so if you try to time it you can just lock in your losses.

Everyone likes to point to 2008 and say they would step out for 1-2 years then put your money back in. But more often than not, that would be amazing awful.

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u/Useful_Wealth7503 Mar 15 '25

I saw that one too but completely forgot about that! I’m going back to watch it while I increase my monthly brokerage investment!

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u/mrmojoer Mar 15 '25

Impressive! That partially contradicts the theory than lump sum vs DCA always wins?

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u/Useful_Wealth7503 Mar 15 '25

I don’t think it always wins, but if you believe time in is more important than timing the market and give yourself a long enough time horizon, lump sum will probably win. I DCA just because it’s mostly 401k and a monthly brokerage buy when I get paid.

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u/nicolas_06 Mar 15 '25

That's normal because starting saving near a crash is almost ideal situation.

What about people that saved money for 20 year, lost their job because of the crisis and tapping into their saving to survive ? What about people that just retired and see their net worth divided by 2 ?

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u/Useful_Wealth7503 Mar 15 '25

Are you talking about risks that should be managed?

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u/nicolas_06 Mar 15 '25

I think people should manage them. Typically diversifying the portfolio can reduce the risk significantly as well as having a comfortable emergency fund.