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  1. #1

    Lump sum at not-so-bad time works better?

    I'm very ignorant in investing and have very limited experience, but in my own case in mutual funds the biggest gains seem to be usually those that I bought a couple of lump sums just few days apart at a "good time" (not even very close to the lowest) and then "forget about it" until I sell 2-3 years later (I've never held longer than that, it seems ). This seems to be better than buying a little every frequently. To be honest, most times I bought in lump sums were due to the fact they were transaction funds. (When I say buy a "little" every now and then I mean buying $200, $400.... For me 4-digit dosn't count as little ;-))
    Does anyone share my experience?

  2. #2
    I normally favor lump summing, but if we're talking four figures or less (< $10k) then I would lump sum no matter what. I know that what is "small" or "large" is relative, but there are some absolutes: we all pay the same amount for a Starbucks coffee. DCAing a couple hundred bucks here and there cannot make much difference - and cannot (I hope) be worth your time trying to analyze.

  3. #3
    Unless you get a windfall, the best time to invest is when you have money to invest, and best time to sell is when you need money. You will of course decide what to buy or sell and that will depend on the system you are following. And it won't matter in the long term.

  4. #4
    When you buy lumpsum, you know *exactly* what you invested in it and immediately know your returns just by looking at its current total value.
    Also, you are smart to buy, set it aside and then check it years later. Your performance is even more obvious that way and you avoid hyperventillating about the little and not-so-little hiccups in the markets. How did you manage to avoid looking at your stuff in 2009, though? NO ONE looked good then. Or is that when you bought?
    I have at times lumpsummed into a fund, but usually when I am speculating and only plan to hold the fund up to a year. I normally prefer to DCA (dollar-cost average) into my funds when I am building them up. I am not speculating. Now? In my Rollover IRA, I still use DCA to manage my core portfolio of 5 funds to rebalance it back to my chosen formula/allocation.
    There is nothing wrong with lumpsumming. It is a personal choice. But, as yogibearbull says, "...the best time to invest is when you have money to invest, and best time to sell is when you need money." Well, I started out small and learned to rebalance as I DCA. Hence my personal bias.

  5. #5
    Lumpsuming is okay except when you are buying on impulse. If one tends to be impulsive, DCA'ng will add a necessary bit of discipline to your system. Buying in reaction to a piece of news will almost always lose money for you


 

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