So the big question for beginners starting to invest is whether is it better to invest all the money they have allocated for investment in a Lumpsum amount or invest in small increments.
Investing in regular increments in the stock market is called Dollar Cost Averaging , in which you create a schedule of buying with a fix amount of money at a fix interval . For example, 100 Euros every month. When it comes to comparing Dollar Cost Averaging and Lumpsum Investing, a study from Vanguard (https://ahsanfinance.com/s/vanguarddcavslumsum) shows that historically speaking, Lumpsum investing outperforms dollar cost averaging in the long term. But when you are investing a large amount of money at once, there is a large emotional response every time there is a fluctuation in the stock market.
Every time there is a dip you feel that you have lost a large chunk of money but on the contrary if there is a dip and you follow dollar cost averaging , you feel that this time you would be able to buy more stocks with the same money as compared to the previous month.
*None of this is meant to be considered as investment advice, as I am not a financial expert and am only sharing my experience with stock investing. The video is accurate as of the posting date but may not be accurate in the future.
