We welcome Katelyn back from the 2023 Women's World Cup in New Zealand.

In this episode we compare lump-sum investing vs dollar cost averaging. Let's first define both.Dollar-cost averaging is continuously investing the same amount of money in a security over time, regardless of fluctuating prices.

Lump sum investing is investing the full amount all at once.

Example- You are left $12,000 from your Grandparent on January 10th. On January 12th, you invest the full $12,000 in a Total Stock Market index fund. That would be Lump sum investing.You are left $12,000 from your Grandparent on January 10th. On the 12th of every month you invest the $1000 in a Total Stock Market index fund. You do that every month for 12 months in a row. That would be Dollar Cost Averaging.

Which performs better in the long run?

The lump-sum investor who invested the money immediately was the winner. Schwab analyzed 76 rolling 20-year periods dating back to 1926—for example, 1926 to 1945, 1927 to 1946, and so on. In 66 of the 76 periods, the results were the same.The takeaway here is don't procrastinate. Realistically, the best action long-term investors can take is to determine how much exposure to the stock market is appropriate for their goals and risk tolerance and then consider investing as soon as possible.

The best time to start was yesterday. The next best time is today.

LUMP SUM INVESTING beats Dollar Cost Averaging 68% of the time.

DOLLAR COST AVERAGING beats Cash 69% of the time.

LUMP SUM INVESTING beats Cash 70 % of the time.

What if You Only Invested at Market Peaks? I link to a great article about what if you only invested at the height of the market-the worst time. Guy invests $2000 a year during 1970’s, $4000 a year during the 1980’s, $6000 a year during the 1990’s, $8000 a year during the 2000’s . He retires in 2013 with 1.1 million dollars. Why? He never sold.

⁠https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/