Lump-Sum Investing vs Dollar cost averaging DCA

Dollar cost averaging vs lump sum investing

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.

Lump-Sum Investing vs Dollar cost averaging DCA

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