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Dollar cost averaging versus all at once?

If I get a large sum of money, and want to put it into a stock index fund, is it better to put it all in at one time or to use dollar cost averaging over a period of time? If the latter, what period of time?

4 Answers

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  • Anonymous
    2 decades ago
    Favorite Answer

    Mathematically, it is best to put it all in at once. However, emotionally it can be gut wrenching. I put a lot of money into Vanguard Total Stock Market Index Fund all at once, and the first thing it did was drop 10%. I held onto my guts and it's now up ~50%.

  • 2 decades ago

    Dollar cost averaging is a way of compenstating for the volatility of your investment. As the first answer states from a mathematic point of view, you are better off fully invested from day 1.

    Personally I would probably split it up into 5 to 10 payments and invest each week, until I had invested all the money.

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    Lv 4
    4 years ago

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  • 2 decades ago

    If you have the money already, put it all in since the money that you're not putting in is "wasted." If you're investing by taking a portion from your paycheck every 2 weeks or every month, then the DCA is automatically there.

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