Lump Sum Investing vs Investing Over Time (dollar cost average) | Which is best?

If you've got a lump to invest should you be investing it all straight away or should you phase it in overtime?

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[JamesShack]

If you received a significant lump sum, let's say more than you'd typically save in an entire year, how would you feel about investing it? Would you invest it all at once or phase it in over time?

[darmstro]

So true...having recently invested a lump sum then seen the markets go down, it is reassuring to know that in most instances it is generally the better strategy. Having said that, it is more stressful and makes you question yourself more, so I can well understand why you might advise your clients to DCA instead. I am continuing to invest small sums on a monthly basis so can hopefully benefit from both strategies in the long run.

[derekdrew]

I recently downsized my property and was faced with this very decision on what to do with the cash. Even though I knew from previous literature that lump sum was a better approach than phasing in, I went for phasing in mainly because I wanted to minimise the regret I would feel if the markets went down after investing . As it turns out I've made on some decisions and lost on others. The good news is that I haven't lost a nights sleep! Seeing this video first would have made my decision a lot easier to make. Keep up the great content!

[simonspencer]

Great video. Another advantage of DCA is that it gives you time to learn and for your strategy to evolve as you pick up more data. It is not so “one and done” as lump sum investing…

[nathanhallisey]

I will have my car loan paid out in a few weeks. I cut up and closed my credit card last week. I have an Emergency fund, and with my budget i have room to build that up. In my job i get lots of overtime. Every month i am going to buy into an ETF with the extra pay.

[Amit_l]

Personally I will stick to dollar cost averaging for now as I’m early in my journey yet & feel more comfortable doing that though my opinion may change as time goes on. Great video.

[samuelijeh]

Thanks James !, as usual very candid, useful and honest advice. It’s always a pleasure to watch your content .

[sunnytylee]

Great video! Thanks James! I was one of the ones who asked this question.. 😅 appreciate the insight. Invest lump sum if disciplined enough. At the end of the day, only invest in what you can afford to lose.

[tracythompson]

Thanks James, was planning to invest a lump sum in the next couple of years and hadn't thought of the emotional/stress aspect - food for thought!!!

[calum]

Nice video. After always hearing time in the market not timing the market (& reading various books etc) I made a lump sum investment in early Jan 2020. By mid March i was really beating myself up. From my own experience I will certainly drip feed in the future into final allocation position (to counter lump sum i went higher allocation to bonds than final position but still didn't cope physiologically well in declining market)

[NardiPaffon]

How come YouTube never recommended me this channel thus far? Why aren't there a billion vews on this? Keep it up mate, lovely and valuable content

[jonnywishbone]

The £20k annual ISA allowance and the specific time of year relative to 5th April when you acquire your cash may also significantly influence the DCA vs lump sum investment equation.

[sevensorrows]

Great video as always, James, thank you. If I was handed a lump sum to invest, I would probably take a third way and split the money in two equal parts, investing one half straightaway and phasing in the other half in stages, thus benefitting from both scenarios.

[felipearaujo]

What about doing both? Six months ago, I opened an investment ISA and and a pension ISA. Paid a lump sum into each of those accounts, and set up a monthly direct debit for each. Would you recommend that strategy? Big fan of your content - clear, concise, and extremely digestible. Keep those videos coming.

[sanjaymanu]

Excellent insight...I was about to invest a lump tomorrow ... but was bit nervous. Now, I can do with better understanding and less worries...thanks a ton..!!!

[molocouk]

Another great video, thanks. Food for thought for sure. You're totally right about obsessively checking the portfolio for weeks after a lump sum investment and plotting the falls against a bad night's sleep would make an interesting graph!

[Jamiebmurray]

We invested lump sum and then set it all on DR ie DCA. I think the key is that we don't need the money right now which takes the stress off it, I also went with a biblical idea of planting and waiting 3 years before doing anything with it! This has protected us from reacting emotionally to the ups and downs of the past year! Enjoy your instruction James, thanks.

[rustypipe]

James are you planing a video about inflation / risks and where to invest to be protected from inflation. The forecasts for rise in inflation during next months years are scary.

[patricksharkey]

Thanks James- your content is very good and delivery excellent. I think part of the problem is that at present it is so easy to monitor your investment progress that it facilitates regular checking with attendant anxiety. I’m older than most of your subscribers (I suspect) and in the past you received an annual update which made it unlikely you would change a strategy when implemented. For me- look at the data, make the decision and only monitor very occasionally.

[DemonWolfEdits]

Thank you, I like the way you've layed this out. I have done a combination of both strategies, I put in 30% of my savings to get things started. I plan on DCA another 40% in over the next 12-18 months.