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Invest all at once or regularly?

Updated: Jan 8, 2021

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?


Technically, economists call a regular investment strategy the lump 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 :

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