Lump Sum Investing

Let's say you inherit $100,000. You've got two choices: invest it all today (lump sum), or spread it out—maybe $10,000 per month over 10 months (dollar-cost averaging, or DCA). Which is smarter?

Research from Vanguard and others consistently shows lump sum investing wins ~two-thirds of the time. The math makes sense: markets tend to go up over time, so getting your money in earlier captures more of that upward movement. Sitting on the sidelines—even while gradually investing—means missing potential gains.

But here's the thing: the one-third of the time DCA wins usually lines up with market downturns—exactly the scenario that keeps investors up at night. If you go all-in right before a 30% crash, you'll wish you'd spread it out.

So the real decision usually comes down to your psychology, not the statistics. If investing a huge sum all at once would make you anxious enough to panic-sell during a dip, DCA is the better move despite its statistical disadvantage. A slightly suboptimal strategy you stick with always beats an "optimal" strategy you abandon.

A solid middle ground: invest 50% right away to get market exposure, then DCA the remaining 50% over 3-6 months. You capture most of the lump-sum advantage while cushioning yourself against bad timing.