Lump sum or DCA investment for inheritance?

[QuarterMillionMan]

Good problems to have ds.

[RyanBuckly]

I don't think that investing all the money at once is the best idea. If I were you, I would do this step by step, analyzing possible losses. I think it would be one large investment in a few weeks or a month. If you are not sure of your actions, then I advise you to use the services that help you make a more correct choice. Often people do not even realize that they can get help from outside, and because of inexperience they lose a lot of money. It's easier now than ever.

[myrdale]

I haven't heard the term Dollar Cost Adveraging before. From what I gather the intention is to invest over a time period to spread out risk from fluctuations in the market. Has anyone put any work into how this applies to retirement investing?

Over the last couple of years, I've just done the Lump Sum approach with my Roth IRA, putting the full $6,000 in around the start of February. As long as you have the cash available, is their any argument for doing $500 per month vs $6,000 at once? On average?

[kork13]

I haven't heard the term Dollar Cost Adveraging before. From what I gather the intention is to invest over a time period to spread out risk from fluctuations in the market. Has anyone put any work into how this applies to retirement investing?

Over the last couple of years, I've just done the Lump Sum approach with my Roth IRA, putting the full $6,000 in around the start of February. As long as you have the cash available, is their any argument for doing $500 per month vs $6,000 at once? On average?

I'm surprised DCA is new to you, it comes up on the boards fairly often. In general terms, DCA is about putting in regular amounts of money on a given schedule, in order to buy more shares when values are lower, and fewer shares when values are higher. What isn't always recognized is that the 'schedule' can be once a week, twice a month, monthly, quarterly, annually, and so on.

At its root, the driving theory of DCA is that TIME IN THE MARKET is the most important factor in determining long term growth. So by extension, the best DCA strategy is to put money into the market whenever you have it available. If you receive an annual bonus & can max out your IRA all at once, do it. If you don't ever have a large lump sum suddenly available, but you consistently have a few hundred dollars that you can toss into the market, do that. But if you're saving up the money in cash for 12 months in anticipation of your once annual investment, you're losing time in the market, so your investing strategy is less effective.

If you consistently add your $6k once a year, you are technically still using a DCA strategy. The main argument for doing $500/mo (or $250 twice a month) vs. $6k/yr in one shot is primarily that you can take more advantage of the up/down oscillations of the market month to month (or week to week).