I’ve read that if you have the money up front, investing it as a lump sum on January 1st will produce higher returns more often that investing on a monthly/weekly basis. Is there more to consider in 2024 with our current high interest rates?
I’ve read that if you have the money up front, investing it as a lump sum on January 1st will produce higher returns more often that investing on a monthly/weekly basis. Is there more to consider in 2024 with our current high interest rates?
Except when we’re talking about accounts with maximum annual contributions (e.g. IRAs).
As I mentioned in my original comment, assuming one subscribes to the philosophy that in the long run, time in the market always beats timing the market, then logically it follows that one is better off investing a lump sum as early as humanly possible (i.e. as soon as they have the capital available to invest). If somebody doesn’t subscribe to this philosophy, then of course we’ll never agree on investing the lump sum up front vs DCA.
In the context of investing a lump sum all at once versus DCA, DCA is a form of timing the market. The only time DCA isn’t a form of timing the market is when the capital is only available in certain intervals (e.g. disposable income from wages).