- Sébastien Van Passel

# Invest all at once or regularly?

This week I would like to broach the following subject and help you to define which could the best strategy for you. Should you invest regularly or all at once?

**Definition**:

Technically, economists call a regular investment strategy thelump sum investment.(which means a single payment made at a particular time, as opposed to a number of smaller payments or instalments). On the other hand, the regular investment is called the Dollar cost average investment.

**The principle**:

**1. Lump sum investment (all at once)**

This table represents an investment of 5.000 USD offering an annual cost average per share of 20 $

**2. Dollar cost average investment (DCA- regular investment)**

Herewith you observe that If you invest 417 $ each month (5.004 USD / year) you'll reduce the cost average per share at 17$.

**But ....**

Now the idea is to compare this theory with the return of the **S&P 500 between 1926 and 2013.**

As you can observe, the "**lump sum**" strategy is clearly the most performing one. But to be complete a **Vanguard study** shows that during some periods of 10 years they analyzed that for almost 1/3 of the time systematic investment is more efficient.

**General observation:**

Stock markets overperform cash on a longer period.Less risk you take, less return you getThis strategy is also available for stocks, bonds and mix allocations

**Conclusions, what should be the best strategy ?**

If you are afraid about the short term volatility of the markets you'd prefer a **regular investment strategy and take advantage of market decrease periods.**If your objective is to invest for a longer period and you're not afraid about a short term decrease of the market you'll probably decice to **invest all at once. **In any case, if you invest **all at once**, you'll have a **higher probability to overperform** the regular investment strategy.

**Sources** :

http://www.theglobeandmail.com/globe-investor/investment-ideas/lump-sum-investing-vs-dollar-cost-averaging-the-nitty-gritty/article20707395/https://www.edwardjones.com/en_US/products/saving/systematic_investing/index.htmlhttp://www.businessinsider.com/investing-immediately-vs-dollar-cost-averaging-2014-7?IR=T