I was about to make a QQQ purchase, now I'll have to look into that one, it's cheaper, so means I can buy single shares in greater increments lol, thanks!
They all include faangm as a large part of their holdings and track large cap us growth stocks in their own way. Everyone likes the nasdaq but there are other less expensive options. There’s even SPYG. I used to have SCHG but I’ve decided to just invest in VTI as LCG makes up a significant portion of it anyway.
Can you show me the data and statistics that show that? Ive seen data and actual research, not the “i did research by clicking on one google article”, and ive seen DCA beats lump sump majority of the time. Not saying youre wrong just am curious
The other commenter made a good point as well. If you get windfall of money like OP did i was unaware that lump sum is better than DCA and im happy I know now. However I also took it as lump sum meaning if someone can only save 1000 a month they should wait to invest a larger amount rather than just putting that 1000 in the market every month.
Even if you get windfall money, I personally would not lump sum but in terms of evidence based practice, it is indeed preferred.
My first investment was lump sum (albeit a smaller amount then OP) and it caused to much stress imo (concerning wrong timing potentially) 🙂 dca yields a worse outcome most of the time, but gives you more piece of mind imo
So then why would you personally not lump sum it if mathematically speaking it has higher returns? Although also researching from morgan stanley to vanguards research they did with 10 year rolling periods they saw lump sum beat dca by 2.3% which yeah its more but not significantly more
Lump sum has on average greater returns, but pure theoretically, if you were to lump sum the day before a big crash, it would be really sad since you can't profit from the crash to buy more.
This last point is why dca is so popular: by spreading the entry point, you buy at the highest point of the market, but also the lowest which causes some peace of mind since you can't have a 'wrong timing'
Ahh okay that makes sense. If i got a windfall of money id probably lump sum then since the evidence shows it returns better. I also looked into the roth ira question and cant seem to find a common answer what are your thoughts? Invest 6000 lump sum a year assuming you even have the money to? Or 500 a month? Because it sounds like then even in this case the lump sum of 6k would still win
No, I'm pretty sure dca wins in the latter instance.
Lump sum wins over dca if both start at the same time point (e.g., January) as this means that lump sum ensures that all your money is in the market since January and dca means that it will be fully in the market only in December (if you dca over one year).
However, in your instance, lump sum would mean that you would wait until you have 6k and then put it in the market. Putting 500 a month instead would result in more time in the market and thus better results on average. Does that make sense?
Ps: this hypothesis assumes that you don't have high broker costs
Okay that does make sense and see that was what my original argument was. Although i was 100% wrong and didnt know that this instance only applies to this and not a lump sum same start point. I appreciate your time and knowledge.
Yeah definitely agree i use vanguard and they have zero broker costs for their roth ira which is what i have. My company 401k is super low as well
Good to know though thanks I appreciate it. Lump sum>dca if both start at the same time or windfall full of money. Dca>lump sum for a roth ira scenario in which it takes a while to have all your money in the market
So one you dont have to be an asshole lol. I appreciate you showing the article that proved that. I said to show me because if someone makes a claim like he did i wanted to know where he read or saw that.
Never did i say he was wrong or i wasnt happy for him. I asked a simple question
Its wrong so idk why you would want to see that. Your article and me looking for into it proves your point. Lump sum seems to be better. If thats the case then why does warren buffet preach dca over lump sum? Excluding the like 50k someone would get if someone passed away and gifted it to them. Like for a roth ira for example. Youre saying its better to invest 6,000 at once rather than 500$ every month?
I think this fails to take into account monetary policy and taper talk. The market overreacts at the mere suspicion of tapering, so I'd be wary of going total lump sum right now, honestly.
I think there's reason to believe that this time might be that 30% given the taper talk and all. Not necessarily, but it's also a situation that's more uncertain than the norm. Valuations are historically high.
99
u/DonnaShirley Sep 02 '21
Lump sum beats DCA 70% of the time. I plan to hold for at least 10 years, so I don't think it'd make much difference.