Lump Sum Investing or Dollar Cost Averaging?

On today’s episode of the Wiser Roundtable Podcast, the team discusses the pros and cons of lump sum investing vs. dollar cost averaging.

Listen on Apple Podcasts or watch on YouTube:

SUMMARY:

Casey starts the show by giving a hypothetical example of receiving a payout from a pension of $800,000.  The group discusses whether an investor should take the lump sum payout and invest a little at a time into the market (dollar cost averaging) or should the investor put the entire payout into the market at once (lump sum investing).

According to a Vanguard study, over a long period of time, those investors who used a lump sum investing strategy earned more money by the end of the period studied than those that used a dollar cost averaging strategy.

Over the last ten years, we have seen that when people use dollar cost averaging, they have a lower rate of return than those that put the money in as soon as they receive it.  Another consideration the team discusses is considering the source of the studies conducted on this topic.  Do the entities conducting the research have a vested interest in whether or not someone uses dollar cost averaging or lump sum investing?  Be sure to consider the advice giver to make sure the strategy is best for you.  A fiduciary, fee only advisor should provide you with advice that is in your best interest.

TIMESTAMPS:

0:00 Introduction

1:29 Dollar cost averaging or lump sum investing?

4:17 What do they statistics show?

8:05 Human nature vs the math

9:16 Time in the market or timing the market

11:04 The behavioral side

13:00 Wealth Building Checklist

16:10 Buyer Beware- Consider the Advice Giver

18:20 Probability of Success

LINKS:

Learn more about Casey Smith and connect with him on Twitter.

Learn more about Brad Lyons.

Learn more about Matthews Barnett.

CONNECT:

Twitter, Instagram, Facebook, LinkedIn, and YouTube.

Learn more about A Wiser Retirement podcast and access previous episodes.

learn-more-2024

Recent posts

  • what is financial planning
  • 5 Psychological Biases in Financial Decision-Making

Share This Story, Choose Your Platform!

Wiser Wealth Management, Inc (“Wiser Wealth”) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). As a registered investment adviser, Wiser Wealth and its employees are subject to various rules, filings, and requirements. You can visit the SEC’s website here to obtain further information on our firm or investment adviser’s registration.

Wiser Wealth’s website provides general information regarding our business along with access to additional investment related information, various financial calculators, and external / third party links. Material presented on this website is believed to be from reliable sources and is meant for informational purposes only. Wiser Wealth does not endorse or accept responsibility for the content of any third-party website and is not affiliated with any third-party website or social media page. Wiser Wealth does not expressly or implicitly adopt or endorse any of the expressions, opinions or content posted by third party websites or on social media pages. While Wiser Wealth uses reasonable efforts to obtain information from sources it believes to be reliable, we make no representation that the information or opinions contained in our publications are accurate, reliable, or complete.

To the extent that you utilize any financial calculators or links in our website, you acknowledge and understand that the information provided to you should not be construed as personal investment advice from Wiser Wealth or any of its investment professionals. Advice provided by Wiser Wealth is given only within the context of our contractual agreement with the client. Wiser Wealth does not offer legal, accounting or tax advice. Consult your own attorney, accountant, and other professionals for these services.

Sign up for our newsletter!

Our latest blogs, podcasts, and educational videos delivered to your inbox weekly.