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Fidelity, who asked for this?
If you have cash that you want to invest. Please consider Treasury Series I Savings Bond (Electronic). Interest is 7.12% right now. While it's not guaranteed that the 7.12% will remain until next year, it's still a good deal.
My SO and I just invested 20k (10k max per person even married).
https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm
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Chief
Lump sum beats DCA statistically. Just invest it now
This is statistically the best answer. DCA for consistent cash flows over time, push it all in for lumpy $$.
Pro
It’s really a personal preference. $5k/wk for a month, $5k a month for 4 months...it’s really up to you.
With lump sums I don’t DCA and just throw it all in.
What do you think will happen with the market over the next year? If you think the market will go up, then DCA over 1-2 months to get it in quickly. If you think the market will be flat/go down, then spread out your DCA time horizon to 6-12 months so you won’t feel like you threw it all in at the top
I agree with KPMG 2 but also would DCA over a relatively short period (1 to 2 months and not 6-12 months) because the market tends to go up over time. The market is so volatile right now it would be difficult for me to lump sum everything even though statistically it is better off.
Also, DCA is not the same as trying to “time the market.” It is a way to get into the market with less risk (especially during volatile periods). Vs timing the market would be for example not investing anything until you see the market dip to what you think is the right price.
D1 you have already commented 3 times in this thread saying lump sum, so we get it, it’s a fine strategy. OP literally asked the best way to DCA and I am trying to help answer their question.
👍
Lump sum now.
Future contributions (to your 401k, to Roth, into a brokerage, etc) will help you DCA over time.
Really ? When do you ever DCA then ?
Chief
I say DCA reduces downside risk, but it also reduces upside risk. Cash is always stable but slightly negative returns (inflation), whereas equities are highly positive in the long run but highly variable. If you don’t need the money anytime soon, lump sum VOO. If you do, then you might need to be more cautious by lump summing in HYSA or bonds. But never DCA.
Don’t lump sum, please. Please.
Suffice to say you are at all time high dropping 20k in one name. You might 5-10% but over the medium term there has to be an elevator down situation which everything will correct (and then go back up). Give yourself an opportunity to pick up shares at lower prices (even if you never get that chance, at least you calculated the risk). I had 30k and I averaged into MGM over the last 3 months. I’m all invested now with cost basis of 16$. I’m happy now. My first purchase was at 20.5 but the swings have been absurd. When you are investing always give yourself an opportunity to buy 8-15% lower, in this environment maybe even lower than that. I did the same with Denny’s DENN. Bought at 13 then 9 then 7. Look where we are today.