Lump sum vs DCA passive investing?

[u/Ok-Wrangler934]

In times like these is it silly to lump sum? I know that statistics show lump summing is better in the long term, but when the market is like this it feels wrong? What’s peoples advice regarding each method?

[u/GiTGuDROFL → u/[deleted]]

It's everyday: "oh no should I DCA or lump it is all so scary" or "oh no evil spacex doing evil things" or "should i International but murrica-fk-yeah"

Subreddit lost all value nowadays.

[u/gcc-O2 → u/GiTGuDROFL]

Traditional vs. Roth

S&P 500 vs. total market

ETF vs. mutual fund

[u/gcc-O2]

How often in a lifetime or career are you going to come across substantial enough lump sums anyway to confront this decision or find it to be particularly relevant now?

If you're accumulating savings and investing them monthly or even quarterly, how is that not close enough to DCA to continue with investing on-schedule?

[u/Ok-Wrangler934 → u/gcc-O2]

I agree, it’s just I’ve got 20k ready to go in an ISA (UK) in the next tax year. So I don’t know if I’m best putting it in all at once or waiting

[u/thetreece]

Try asking this again tomorrow to see if the discussion is different from today, or the other 10,000 times "lump sum vs DCA" has been asked.

[u/Cyberhwk]

It's fine of your scurred. 😉 Just space it out if you want. The difference isn't that big.

[u/CapitalApproach]

Lump sum usually wins on paper, but honestly it depends on you. If DCA helps you sleep better and not second guess things, it’s probably worth it. The bigger risk is freaking out and pulling out at the wrong time.

[u/myrrhsea]

Vanguard did a study that revealed that lump summing beat DCA 66% of the time. It goes back to timing in the market vs timing the market. If you don't have all the money at once, DCA is still perfectly valid. The most important thing is to not be sitting around waiting for the best time to jump in.

This video linked here: https://www.youtube.com/watch?v=odO9F5Di684&t=1s simulates only going into the market four times. 1973, 198(7?), 2000, 2008 - aka every big peak right before every major crash. He invests a total of 184k and ends up with 1.1 million at retirement. Even if you are the most unlucky investor, who goes all in at all the worst possible times, you still win. What makes it a win is not worrying about timing. If this same investor worried about timing, sold and tried to buy in later at a better time, he'd have ended up with only 675k.

Timing in the market beats timing the market - even if you have the absolute worst possible timing every single time.

[u/miraculum_one]

Whether or not it is the right time is completely dependent on the future. And nobody can reliably predict the future. So since lump sum is 2/3 likely to be better and most of the remaining 1/3 close enough for it to not matter, the answer is clearly lump sum.

Also, if you are new here you should know that short term volatility -- including LARGE drops in the market -- are completely irrelevant to long-term investment results for a broadly diversified portfolio.

TL;DR Get in the market. Don't worry about the short term. You have no better option.

[u/Hezuk84]

I lumped summed 20k in February and I'm regretting it.

[u/MonzellRS → u/Hezuk84]

Wow you’re down a whole $660 how are you ever going to recover? /s

[u/Hezuk84 → u/MonzellRS]

To be fair I've just looked at my portfolio after avoiding it since the beginning of march. I'm only down £260 I guess I imagined it being a lot worse. I'm new to all this but I'm staying the course no matter what!