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

James Shack 59 views

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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?
Comment from : @JamesShack

It's totally emotional If you have $700,000 and lump sum and the market drops you can feel like you made a bad decision If you DCA the same amount of money you will probably feel better about it Like you said though, rationally, lump sum yields higher returns So why is it still such a difficult decision
Comment from : @ryanr6240

If a little nervous…probably better to pick a more conservative asset mix, and still lump sum it, rather than DCA
Comment from : @ChrisD-br1jg

Hi James With the current interest rates being high and many platforms offering high interest on ininvested cash, seeing that the markets p/e ratio is very high, would DCA still under perform lump sum, seeing you are getting interest on uninvested cash?
Comment from : @danielstreva7415

If market already in a down trend on mothly candle chart - i would wait for an end of trend brIn any other situation - all in
Comment from : @dmitriyobidin6049

Can we invest several big lump sums ? Is it perceived as phased investment? For example if I invest £1000, reinvest the dividends and in 2 years I invest 1000 more, in the same account, and in another 2 years I invest another £1000
Comment from : @mihaelamarcu5990

That depends on how much i have put away in cash isa which is roughly 46Been investing for 2 and a half years still learning and adding as and when The high st banks are offering intant access flexible accounts so this year havent used my ias yet The first year of stock market was at loss the second year in profit 75
Comment from : @annaconstantinou7961

James, excellent video on this subject Your analysis of the historical results of LS versus DCA is compellingbrbrHowever, if I came to you for advice in regard to this issue, I would expect an advisor with your level of knowledge and experience to be able to tell me if the S&P 500 Index was in a downward or upward price trend - - - and that would drive my decision to LS or DCAbrbrI didn't expect you to wear a coat and a tie, but a white T-Shirt doesn't convince me you have made a lot of money by investing nor that you have a lot of clients
Comment from : @jimgrant1776

Too many people are now investing They buy when it’s up, buy when it’s down, buy on bad news, buy on good news, every month It’s a disaster waiting to happen … but not any time soon Probably just when you want to take your pension 😂
Comment from : @adp3965

Good information! I don’t have enough money for a lump sum so I’ll keep averaging in 😅
Comment from : @eddiesigerexperience9803

Needed to hear this, thanks!
Comment from : @capnron65

Very helpful Thank you
Comment from : @jeremyh2652

Watching this because I'm a new investor and did lump sum purchase of several stocks last month, now I'm kinda nervous after seeing my holdings value drop not gonna sell but I just want the assurance that what I did was alright in the long run and to remind myself not to sell low
Comment from : @ieornl

Interesting tho DCA has most definitely been the better choice in the last 2 years on the S&P 500 Hindsight 20/20
Comment from : @shane6860

DCA-ing a lump sum is just taking risk later and rationally speaking makes no (statistical) sense If you can’t get to putting your lump sum in at once, your asset allocation might need reviewing first
Comment from : @Pieter2360

If I were an advisor I'd generally advise dollar cost averaging - only because I'd avoid wrath and blame in the unlikely event that the stock market flounders For myself I can see past the time machine illusion and I'd throw it all in and get on with my day
Comment from : @leifharmsen

A lot of people will tell you to only put a 500 a month in the S&P 500 With a 10 annualized return on average That can be a million dollars In 30 years, a lot of people don't have Lump sums of money I have mine on auto invest at $5 per day But for some reason I'm only up five percent this year Is only one year and it when it's up fifteen percent
Comment from : @BrettsCorner92

Hi James, if you have 100k lump can you invest into a Vanguard life strategy fund with out get tax as it is above 20k allowance?
Comment from : @carltontv4453

What kind of figure would you consider a lump sum?
Comment from : @gee3883

I think the perfect answer here depends on time , if your plan is to invest for more than 10 years going all in is a perfect way , because even if you face a crisis and buy all of the assets at a high price eventually you will make it positive, on the other hand, if it's less than 5 years cost averaging is the perfect decision
Comment from : @zakariasunbol4645

If i invested a lump sum into a fund ie adventourous fund but decide to move it to s cautious fund Would this cost and should i do this, would it cost? Just a beginners, apprehensive investor
Comment from : @wild4fp

Great vid!
Comment from : @MaxPayne322X

Warren Buffett ‘dollar cost averaging is the best strategy’ this Cunt, lump sum it
Comment from : @ciaranmccormack4434

Still as relevant today
Comment from : @sarchmaster5779

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
Comment from : @DemonWolfEdits

Its always painful to watch any lump sum investment drop in value over the day (if its the stock market), but I have managed to remove the emotion from it, and essentially treat my investments as my own "retirement tax", ie its not my money and never will be, treating it like a monthly bill When I do get lump sums its always gone into investing
Comment from : @lawrencesinderson

I heard my dad say when i was young in for a penny in for pound
Comment from : @BenBen-yx6ug

I tried dollar cost averaging and have made over 14 return Really happy with that Not so happy that I now have more than half my money sitting in cash that will be going in at higher rate
Comment from : @djfearross4144

Lump some doesn't mean you are investing every dollar you have
Comment from : @Bitachon

Great info 👍
Comment from : @Bitachon

Interesting to see that you and Pensioncraft, the other youtube financial chanel I follow come to more or less the same conclusion Lump sum is the 'best' but DCA is less scary for a quite small downside as long as you do it over a reasonable period (< 1 year)
Comment from : @drazziweht

Thanks so much James, great video, you solved one of my biggest doubts Just one question, if I look at today's data, Shiller PE is at 32 while Forward PE ratio for the SP500 is 17,5 Very close to the 17 average, suggesting we are in fair value territory, while the Shiller PE is suggesting otherwise What is the best indicator from your point of view?
Comment from : @albertfranchgibert3980

Would the lump sum still be the best move now with the market falling? I doubt it
Comment from : @johntownsend3944

I've watched a few vids on this subject as I am currently wrestling with this conundrum, but I think you've convinced me to bite the bullet and throw it all in and set and forget 🤔brThanks
Comment from : @clarenceishmael9615

THX
Comment from : @bth2012

I guess an important factor of lump sum investing is that the money starts earning dividends NOW, straight away, as opposed to earning nothing if you carry on waiting in the wings with "dead" money
Comment from : @happyuk06

I can understand that DCA over a 24 month period is not a good option But what about DCA over a shorter (eg 4-12 week) period at times when you fear that a serious market drop could be imminent, eg very high p/e valuations or new global events such as COVID or the present Ukraine crisis? That still strikes me as an open question
Comment from : @ytprodata

Would you say lump sum investing is still bad currently or is now great to do this
Comment from : @alancallanan9928

This is a really useful video to me as I have been having this question and battling with myself in my mind for some time This video really provides me with an answer that i can live with and follow Great thanks!!!!
Comment from : @yueranzhang7840

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
Comment from : @sevensorrows2595

An approach might be duality a bit of both to hedge your bets 👍
Comment from : @chrismclean2989

Doesn't your analysis assume that you sbrAren't watching the market and making decisions about how much to add I to the portfolio? I mean if you see a price drops you invest more
Comment from : @oliverpaton556

Great rational advice thanks James, love the cool, calm, historical analysis of previous trends
Comment from : @neilcook1652

I went for a lump sum investment over DCA-ing to benefit from time in the market It would be great to hear about the best approach to take a lump sum OUT of the market (say to buy a house) I'm currently down 2 - part of me wants to take the money out in a lump sum to protect what I still have for the house, but part of me wants to DCA out, so that I avoid crystalizing my 2 loss and have a chance to regain some capital
Comment from : @Jammy-Bread

Great video I have a question, can I open up a vanguard retirement account and also a life savings 100 account at the same time?
Comment from : @amechiokonyia820

I put 20k in my Vanguard ISA this year after 2 years of DCA after realising that the market went up during more more months than it fell in the previous 2 years(small sample size)I also noticed that the gains far outstripped the losses Thus far(9 months in) it looks like a good decisionbrI may put 10k in April and 10k in October after noticing a pattern there but again a small sample sizeWill definitely do that if Jan-March repeat the last 2 years performance
Comment from : @redhouseclose

While Lump Sum Investing may be the better option when the stars align But I would argue that Investing Over Time is the better option because the option you have right now is the best option Investing over time may be the only way you can invest without leaving your self at a huge financial risk
Comment from : @Falney

People can't stop believing in "house money" They find it a lot easier to stomach the loss of earlier gains - "house money" - than losses on their original stake
Comment from : @craigross341

There's plenty of junk on YT, and TBH I thought you'd be another charlatan, but no, your explanations are superb, and I say that as a fellow chartered IFA Well done sir
Comment from : @KaliYug

🙌
Comment from : @thatslucko8548

People that quote P/E ratios as a reason that a high growth company is over priced often haven't a clue what growth does to it Maths is hard brIf you DCA you probably haven't done enough research into the company/s you are investing in
Comment from : @turningpoint4238

Waaait wat So the shiller pe ratio is why people get called a shill when they seem to be low key advertising something?
Comment from : @UIMcocodog

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
Comment from : @felipearaujo5835

I just regret never really paying too much attention to investments and instead putting things on useless savings accounts I wished I would have started investing in my 30's
Comment from : @CrappyProducts

I'm going all in It's pointless to have the money sitting on a savings account at 01 interest rate You are effectively losing more money anyway than having it invested and crashing for a while
Comment from : @CrappyProducts

Good points, I'm investing money from my house sale and debating this , right now feels like it's all overpriced and likely to crash but I dont want to sit on cash eitherbrI'm putting large ish sums in weekly but wondering if I'm just prolonging the agony and buying more expensive each time
Comment from : @FlyingFun

If I decide to put in a lump sum vs stretch it over a year, would you advise to still make regular contributions? Because in theory I would simply be employing both strategies
Comment from : @livehockey09

Great video! Thanks How would you compare this against the brokerage that you pay every time you dollar cost average? Eg $1000*5 at $10 each trade is $50 vs $5000 for any trade above $1000 is $20 Speaking from ASX perspective
Comment from : @eshanpotnis

I started investing inbstock market and crypto at the end of april and i m in the third month now I have so far allocated only 35-40 of my funds as several companies are quite overpriced and slowly buying into dips with the cash
Comment from : @n8899

This seems to be more of an academic exercise, as most people are not sitting on a huge pile of cash, wondering what to do with it Rather, they’re earning a salary and putting away a percentage each month
Comment from : @vincehilaire720

DCA always underperforms the market in a rising market This is because investors will be lifting their cost basis over time by buying higher and higher prices The reverse is true in a falling market because the investor will be lowering their cost basis Most people have to dollar-cost average because they don't have a lump-sum to invest
Comment from : @alleneverhart4141

Great advice, thank you! Especially when you think that a lot of the peaks and dips in the price of shares are the result of buyers and sellers emotional response to price fluctuations, committing them to buy and sell when holding is usually the best option
Comment from : @christinanolan2388

Thank you Enjoyed the entire video Lump sum Living in Ireland and only one broker Davys Which one do you think is best Vanguard but which one for lowest tax, domicility etc
Comment from : @KilkennyLights

Hi , great vid! For what time period of investment are these stats based on?
Comment from : @AES2016

I'm putting £200-£400 a month into index funds while they are rising If they are down one month on last, I will put double in that I previously put in I'm keeping a lot in reserve to cash in on a crash I'm watching the graphs every day, and I will probably throw large amounts in as it tumbles, and especially as it begins to rise again I may throw everything at it, hoping it will be a quick recovery like post pandemic ladders which made many people wealthy who timed it right I'm sure
Comment from : @ArcanePath360

Hi James I reached 40 of profits with a mixed etf portfolio, and sp500 reached 4300 and markets are stretched I am up 20k out of 55k of investment brWhen do we take profits from the table? I can't find any answer in your videos What about selling everything tomorrow, and restart dca 8k for the next 6 months?
Comment from : @basmatibam

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
Comment from : @NardiPaffon

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
Comment from : @patricksharkey7764

Great data and honest evaluation of investing 👍🏼 TY new Sub
Comment from : @FredBerger1111

I'm currently investing 30 of my weekly disposable income into a stocks and shares ISA and holding back 70 as cash If and when the markets crash, I'll be "all in" on my weekly investing and phasing in the cash store as well in instalments as the crash may take months to hit rock bottom
Comment from : @Alan7997

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
Comment from : @nathanhallisey441

Thanks James I really appreciate the research and data you provide in your videosbrbrIn all time market highs with p/e ratios the way they are, over how many months do you recommend to dollar cost average? Is it more stretched out than normal or do you maintain the same time frame?
Comment from : @omax-sy8xp

Hi James Great Videos and I've recommended your channel to friends and newbe investors I've just gone (apart from my other investments) for Vanguard Life Strategy 100, VHVG, VUAG and VWRP 25 each in one go (ACC not DIST) as a "Punt" but also monthly continuously adding the same pick I know there's no Bonds here I'm going for growth - Is this a is good strategy or can you see any obvious issues ?
Comment from : @owenrosindell8956

I think it depends on previous exposure to the market I've been massively guilty of watching previous investments like an inexperienced baby sitter And I think I would still have issues with it to some degree if it wasn't a diversified investment
Comment from : @timp1390