I was thinking about this today as I dumped $6000 into my Vanguard Roth IRA. Glad I just did the max contribution and carried on with my life!

These kind of local, common sense videos are what make be feel better about my slow and steady investment strategy.

This was a fantastic explanation! Thank you!

The 'right' advice: Investing the lump sum ASAP is statistically advantageous. The 'good' advice: If you're paralyzed and delaying investing, just start DCAing that sum right now and stop thinking about it! The behavioral angle is paramount and if someone is stressed out at the idea of going all in with a lump sum, they're statistically better off to go with DCA it away immediately than wait (presumably months or years) for when they will muster the courage to invest it all at once anyway. I like the holistic approach I've seen so far in your videos!

@tmbrown1755

2 жыл бұрын

I'm paralyzed and delaying so this makes sense.

@DavidEVogel

2 жыл бұрын

@@tmbrown1755 Ha ha. If I have a buy plan, I write it down and include a spreadsheet with dates and dollar amounts. $10,000 cash to invest is $833/month for the next 12 months. If the market is up or down stick with the plan.

@tmbrown1755

2 жыл бұрын

@@DavidEVogel Thank you. You just gave me the kick start I needed. 🙌💯

@jlina

2 жыл бұрын

You are right! I've been frozen for a whole year and havent invested it was a stupid move I should have DCA.

@fredericbrown8871

2 жыл бұрын

@@jlina Well, nobody could have forecasted this year's return, but this is the very reason it's better late than never and that if DCA is less stressful and allow someone to fight paralysis, whether it's the optimal option isn't what's more important.

I literally came to the lump sum conclusion after doing days and days of research and in Amsterdam every scenario I ran, lump sum won over dca which I couldn't grasp at the the time (days ago) but it makes perfect statistical sense. I think dca is all about when markets are actively crash and you're the average emotional investor. If you have a good plan, stick to it.

Super insightful! Thanks Rob!

What a fantastic video. Thanks a lot Rob, this was eye opening

Simple but great example Rob. Just Subscribed. TY

I appreciate these tips, thank you.

Great topic. Thank you.

Really good video. The best on youtube on this matter.

great channel Rob - subscribed!

I do lump sum because I get a decent amount of cash twice a year, so it's easier for me to put my funds into various growth stocks and dividend stocks. I use my dividend stocks to sort of take advantage of DCA in a way.

amazing video! precious content, thank you!

Thanks for the video!

a good video... you explained logically. a great video... you explained it sincerely

Very good video. Thanks

Here we go!!

Great video. Thanks!

Best approach is lumpsum investing and then depending on asset allocation if equities are down..move funds which are in profit for eg bonds to equities to get back to original percentage for 60:40 or whatever your allocation is

Great video and information. Greetings from Romania!

Great vid ☺️ thanks :)

Not sure if that’s your standard quote but it’s a good one. Best money advice, period.

Very helpful!

Rob, just found you on youtube. I've only watched a few of videos so far. I rarely leave comments, but wanted to let you know how much I enjoy your content. Really appreciate your holistic practical approach and the references to relevant research. Great work and thanks again!

Thumbs up! Keep churning! 👍

Great video! Volume a little low but great tips. The way I DCA is to wait for prices to dip down to the 200 exponential moving average on the 4hr chart and sometimes use the 50 exponential moving on the DAILY charts.

why not dollar cost average with an investment opportunity fund have a pocket of money that you have set aside to throw at the market in a drop if it drops a certain amount you throw x% in if it drops more you throw more kinda thing and just build it back up after sure the market could go lower im not saying try to hit the exact bottom just if an abnormal drop happens throw some extra money at it

The key is to lump sum half and then DCA the rest either weekly (48 week plan) or monthly (12 month plan), learned not to lump sum the entire sum in one shot last year when the S&P500 drop 20% just months after i maxed outy Roth and put ot all in into VTSAX.

I would like to see a video on DCA vs lump sum investing in a portfolio comprised strictly of equities and no bonds. I have no idea but I'm wondering if not having the stabilizing effect of bonds would alter the results significantly ... just a hypothesis that it might. Thank you.

Volume a bit low on this one Rob. But another great video.

Great video, Rob! I like your common sense approach to this question. At my age, I would probably lump sum it, but then again I haven't ever suddenly came into a large lump sum of money before.

This is gold! <

Hey Rob - love the videos. Just a note on the technical side, it seems the sound volume is quite low, so when the ads cut in they're very loud.

@waterdd1

2 жыл бұрын

Ditto

thanks

A great information! thanks a lot! Do you recommend to hold on investment, not to sell during stock market down turns?

Thanks for the videos, what would you suggest should be the length of DCA ?

@rob_berger

3 жыл бұрын

There's no one answer to that. For me, it would be a short as I was comfortable with. As for what most people do that use DCA to invest a windfall, I just don't know. My guess would be one year, but that's just a guess.

Rob, like a lot of your videos, and I know many people agree with you on this notion of lump sum vs dca. But I wonder what your thoughts are on a video done by "Math and Money Academy" called "The surprising advantages of dca". Personally, I have developed a model portfolio that utilizes ETFs and Stocks both. With a lump sum I plan to invest in each individual ETF and Stock as opportunity presents itself over the years. I suppose this is a form of dca and I just think in the long haul it will be a better option. Again, I think much of what you share is very valuable for viewers.

When is the best time to invest your money, all at once or a little at a time? Reminds me of the old fisherman's advise to the question, "When is the best time to go fishing?" It's obvious, when you can.

It's worth pointing out that there is *absolutely no difference* between $50k received in a windfall versus $50k accrued over a decade of small, monthly contributions. They have the exact same worth, and they have no memory of the past. If you'd spent years watching your nest egg grow, would you suddenly sell off all your investments today, and then spend the next few years re-investing it in small increments? No, of course not, because you want to keep your money working for you. Money doesn't remember where it came from, so why would you treat windfall cash any differently from money that you might already have in the market?

@robertswift6101

5 ай бұрын

ask that during 2008 or 1929 market crashes,,people waited years,,ven a decade to get even

I’ve been dollar cost averaging for years BUT when there’s been a market correction like march/April 2020 I’ve bought a bit more.

@MICEVVV

2 жыл бұрын

That's my plan, I am entering my second year of investing and I hate emotions so I will dca for my whole investing career, just to take advantage of the voids to come in my way.

I wasn't financial free until my 40’s and I’m still in my 40’s, bought my second house already, earn on a monthly basis via my investment and got 5 out of 5 goals, just hope it encourages someone that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made. Great video! Thanks for sharing! Very inspiring! I love this.

@emmaemily7308

Жыл бұрын

Not quite long I started investing. I did a trial investment in stock like Disney but to be honest I don’t know what am doing and I don’t think I made anything either. I'm very curious and need help on how to enhance and increase my returns. Any good investment tips would be appreciated.

@drewseaver4531

Жыл бұрын

very encouraging actually! I'm 35 and only the past year started taking savings/investing/retirement seriously with more objective goals. Thank you !

@alyciagordon3447

Жыл бұрын

@@drewseaver4531 I invest with Alexandra Diana Jose. You can look her up with her name and have a personal chat with her

@TheFourthWinchester

2 ай бұрын

Fk these ads.

We lump sum invested a fairly large inheritance mid 2021 and retired. It has been hard watching basically half the amount of that inheritance vaporize from the portfolio 21% downturn this year. Kinda wish we had dollar cost averaged it over 2 years.

@robertswift6101

5 ай бұрын

wow you must have picked a poor performing one since markets are at an all time high

@TheFourthWinchester

2 ай бұрын

@@robertswift6101 You replied to a 1yr+ old comment, genius.

funny looking back, Lump some in early 2021, YES!!!! Lump sum late 2021. NOOOO

If you read the study carefully, they run DCA over a max of a 3 year period vs LSI. Meaning, if your DCA doesnt equal the LSI amount within 3 years, your losing our more. Most people would not have $100K invested within 3 years by DCA. Hopefully this makes sense.

Thanks Rob. I have a 401k rollover coming in the near future and this video was very helpful.

@Rob Berger ... Can you do a video that compares timing in a retirement account (457b, 401, TSP). For example, is it better to rush contribute the maximum or better to average it out over the year? Is is better to invest all of your money in the first six months or last six months? Or is there another period of time that is better to invest? Thanks!

@I..cast..fireball

2 жыл бұрын

Statistically better to drop it all in if you have it in cash, but if you have it in cash, that means you were already trying to the the market.

I got lucky and dumped most of my Roth 6k into the covid dip but now I just put it in on opening day anyway.

When you went all in, how much are we talking about ?

I'm not going to say what your first graph looked like but if you turn your head 90° to the left you might get a better idea.

If i had a plan of DCA and the market tanked early i would have been ecstatic that i'd not lump summed. Might also abandon the planned lump sum dates and buy in each time everyone is going on about the world ending.

Dollar Cost Averaging is defensive Lump Sum is offensive.

Thank you Rob. I was debating lump sum vs dollar cost average for sometime and you cleared it up from me. I also want to say your channel content is amazing. You are very knowledgeable, savvy, wise and an excellent lecturer. I thank you for your channel. It has helped me with my investments tremendously.

Would the opposite apply? Is there a statistical benefit to taking an entire annual RMD from my rollover IRA at the beginning of the year? That calculation would have to factor parking some it in a short term treasury fund or other pot to dole out for expenses over the year.

@DavidEVogel

2 жыл бұрын

Picking a redemption date has no advantage. January 1 is as effective as any other day. You will find plenty of "best time to sell" advice with a google search. But the deviation is so big that the recommendation is ineffective.

Great videos Rob! My take on this, since I am in this exact situation right now as of December of 2021, is a hybrid of DCA (dollar cost averaging) and lump sum investing. "My" logic in this particular economic environment is a 25% to 50% lump sum investment, along with DCA for 12 to 24 months. Of course if markets decline more abruptly a larger installment for that particular month or time frame may be more logical. One simple point to remember is that a lump sum at totally the wrong time could be extremely detrimental in a extended down market if you do not have a 10 year or longer time frame. Remember that if a stock or fund retreats by 50%, for example, that remaining amount has to go up by 100% to reach the same level prior to the decline. (100 - 50 = a 50% drop and a 100% increase from 50 gets you back up to 100) (Dividends do play a factor) I am 56 years old and retired with a lump sum to deposit. This is a different scenario than a 30-year-old with 25 or 30 years until retirement. Everyone's scenario is specific to their age and risk tolerance. FOMO (fear of missing out) makes for poor decision making more often than not. When you're older patience is a virtue.... In long-term investing its a necessity.

@Texasbird026

2 жыл бұрын

What do you think about keeping 10 years expenses in cash/bonds (or until your social security adds to income) and lump sum the balance into the market since you won’t need that money for 10 years. I think it is the bucket approach. Does this keep two much money on the sidelines for too long? Maybe this is OK if it meets future likely inflation adjusted expenses.

@jlina

2 жыл бұрын

How did you do this year?

@infinitemonkey917

2 жыл бұрын

I like that approach as a compromise between the numbers and peace of mind.

@thetjt

9 ай бұрын

Very good post. If one is not that young and we're talking about big sum for closing in retirement then it's more important not to lose the money than to maximize all profit. Especially in current economic environment. I've invested 50% of my big lump sum during past ten months, and third of it to bond etfs. So I still have half left for good opportunities. It's also a nice protection against big crashes.

Great video! I am in your position. I just doubled an investment in 1 stock after 1 year and cashed out. I want to preserve my gains while avoiding inflation. My plan is to go all-in on VOO. I don't need the money for at least 10 years. I don't see a point in DCA when the investment itself is low-risk. Plus the extra dividends you collect by going all-in right away should help offset any dips you may experience over time. I will then buy individual stocks for fun with each paycheck to motivate myself work overtime and to add a DCA aspect to my portfolio.

@El_Gualla

2 жыл бұрын

I jus got in VONG. Good stuff.

@teutonalex

2 жыл бұрын

Agreed

Maybe the better way is the mixed approach

For SP500, long term its ALWAYS going up-again, long term, so LUMP SUM will put my money at the lower part earlier of the line graph. This LUMP sum is more advantageous. Individual Stock picking could be a different story.

What does overvalued really mean? All the money in the market consists of shares bought. It just goes down because people decide to sell for some reason. Some of the selling is brought about because the media highlights the fact that stocks are down and then some people panic and sell. Then more people panic. How much analysis is gone into the selling?

@carlbook2051

2 жыл бұрын

Stock doesn't go down because people decide to sell. Someone is buying any time there is a sale.

What I don't understand is why everyone is comparing lump-sum investing to Dollar-cost averaging? If you read most of the old investment books they don't do that! They talk about lump-sum investing and compare it to the Constant dollar plan, the fixed ratio plan, and the variable-ratio plan. They do compare " Stock price averaging" and "Dollar Cost Averaging". While it is possible to take a lump sum and split it up and invest it over time why would anyone want to do that? That would be like do you want to put all your money in the bank at once, so you get the greatest benefits from compound interest, or keep it under your bed, and slowly put it in the bank over time? One should understand that mutual funds and Dollar-cost Averaging were designed for small investors that do not have a lump sum and are taking money out of their paycheck and investing it.

You can't time the market.

@Jsuarez6

2 жыл бұрын

I time the market all the time. The problem is that I can't tell time. Lol

Dollar cost averaging if you are 100% equity. Lumsum if you asset allocation between other asset classes: bonds/gold/crypto/em etc. you can rebalance them.

I think the issue is simply the extraordinary state of this market. The market is not simply overvalued, but it's never been this high by a longshot. The high prior to the tech collapse was never exceeded for 13 years...13 years that any amount of lump sum money you committed just prior to the crash that wasn't working for you. In the current market I would never lump sum...I'd only consider DCA if I was to commit funds at all.

@DavidEVogel

2 жыл бұрын

Good points. The NASDAQ is up 41% over the past 12 months. Mom and pop investors pat themselves on the back for the paper gains. Professionals, on the other hand, know that this is too much too fast. They cut back on technology holdings. Average yourself in. You may catch the next market correction.

Can someone please explain why I should stick to my plan if market goes down? I am a complete newbie and to me it looks like a better idea to start invest more when market drops sharply

Note to everybody: dollar cost average is better. Let me explain. Dca has to be used correctly, which means lump sum at the beginning, than after that if employed you set aside new money every month, that itself is the dollar cost average, if unemployed, selling small percentage of the portfolio to last you anywhere from 3 months to 6 months(including expenses) and dollar cost average from the sold shares. That way, you are lump sum and you are dca together, if the market goes down, the dca helps with the monthly contributions, if the market goes up ALL THE REST except the sum set aside for dca is going up.

What about if 1929? 2000 or 2008 happen again? 40-60% dip you will wish you did Cost averaging. Given the current inflation and CPI metrics and given the poor planning of the Fed, a 20-40% dip is likely.

Every time you think you have figured out life, and are about to burst into happiness... Rob: "... the problem with that..." :P

I am no more interested in watching videos of how i turned 100$ into a million at age 19, thats bs...Rob your channel is a ship full of knowledge

Interactive comment.

Instead of S&P 500 for your 3 ETF portfolio what do you think of doing BRKB instead of S&P?

Or perhaps split the difference-a portion for lump sum and a portion for DCA!

@stephen9609

2 жыл бұрын

Wouldn't that by definition just be DCA?

@ffnightranger

2 жыл бұрын

@@stephen9609 In a way, but you can do it in a more frontloaded way. Like, you can invest 6k per year in a Roth IRA; so you could do something like, invest 3k in January and then DCA 3k throughout the other 11 months.

@WestCoastUSA546

2 жыл бұрын

@@stephen9609 Yes and no. You allocate a large portion as a lump sum. Then distribute the rest as smaller portions than they would have been if devided equally for each month.

Sir you are full of wisdom. I’m starting to invest now with 20K, I’m 31 :( is it too late to build the snowball ?. Now matter what I do, I don’t see more than 2 million in 10 years even if I invest 5000$ per month

If I have a lump sum I invest right away. I don't wanna think about that money sitting in my bank potentially not earning $. Of course it could go backwards but emotionally I want the biggest possible return. Minimizing loss isn't my main concern. I'll worry about that the closer I get to retirement. The market always goes higher than loss in the long run. Now if I don't have a lump sum then DCA every month would be my choice. Again, I don't want $ sitting around not potentially making me more. What is strange is when I run both scenarios of a $6k lump sum or $500/month for my roth using vtsax, portfoliovisualizer has dca ending up with a bigger return from 2003-2022. So.....lol.....IDK!

Honestly .. just don’t think it’s such a straightforward set of choices. This reminds me of that old saying “you can prove anything with statistics”. Also what so special about the endpoint.

Super helpful! Is it possible that lump sum may be better for less-volatile, less-risky investments and perhaps better to DCA into more volatile, growth-oriented stocks? I'm wondering if you could devise a strategy based on investing a percentage of a lump sum, where stable equities (i.e. large value) are purchased whenever they're cheap with monthly purchases of growth for a given time period. Sound too complicated?

if you got lump sum is more profit potential you didnt mention the pros of lump sum and we all want more profit cause all your money is working at all times and in a bull market you be missing out on crazy gains

In what increments do I DCA, monthly, bi-weekly, etc

@baybay7898

2 жыл бұрын

most people do monthly.

@TheSmartLawyer

2 жыл бұрын

Weekly or biweekly contributions in an amount you can easily afford is easier on a budget

@robertswift6101

5 ай бұрын

only on red days

As a 26 yo iv seen the value of the dollar decrease overtime in the real world. With talks of minimum wage increasing to 14$ or what ever that would mean that ever other job needs to have an increase in pay other wise why would people work there and if employees are more expensive then the goods/products will be more expensive and over time the stocks I purchase RIGHT NOW with 7.50 being the minimum wage by the time they increase it to 14$ my now purchase stock should double in value based solely off the dollar amount. Eventually we'll be like Chinese yen and say a ridiculous number for basically a 10$ product.

"Once in a century" riiiiiight

I just DCA weekly and lumpsum on the 1st of every month lol 🤷‍♂️

Have a 100 thousand in bank to invest. Been afraid to go ahead with complete amount. Have close to 50 thousand to keep for emergency. Should I go ahead and invest in this unstable market. Is my money insured if I switch from bank to broker

@jlina

2 жыл бұрын

No it's not insured if it is actually in the stock market.

Slow and study win the race

Hi Rob😀😀 , I'm a BIG fan of yours! Please tell me how I would invest 1,100,000 .I was going to lump sum 500k and DCA 20k each month for 30 months in S&P 500 . Can you PLEASE give me advice? Thank you very much!

@robertswift6101

5 ай бұрын

what did you pick?

This guy makes some boring videos. Where's the get-rich-quick method? Where's the Lambo? LOL. Just kidding. Great, solid advice. Subbed.

Sir, your sound is very poor.

Do a lump sum but don’t put all your eggs in one basket. I would invest 50% on a S&P 500 and the other to a Total Stock Market (small, medium, and large cap companies). This way, your investments can tolerate market volatility and see your money grow faster and compound over the years until you reach 59 1/2.

@drag0..

11 ай бұрын

There’s no point in having both they have too much of an overlap of the same stocks

@TheBrightFuture30Channel

11 ай бұрын

@@drag0.. I learned that about a year ago.

@TheBrightFuture30Channel

11 ай бұрын

@@drag0.. I learned that about a year ago.

80% lump sum, and 20% DCA.

You have to look at it like you could have always done better investing. You could have bought Tesla 10 years ago but you didn't. You could have had a 30 percent stock and 70 percent bond portfolio from 2000- 2009. You could always have done things differently and made more money looking back.

The current bear market and uncertainties we are facing might provide a different outcome for the comparison between lump sum and dollar-cost averaging strategy :) DCA wins in the 🐻market in the long run. And I made a video this week to provide more details and other considerations!

Volume is too low , ill have to pass.

Anyone ever tell you that you sound just like David Letterman?

@rob_berger

2 жыл бұрын

Actually, yes.

I love the information on this channel! On a side note I wish you shaved your beard, so I don't feel like I am taking financial advice from Homeless Santa :P (all in good fun, dont take it seriously)

Great video. Thanks!