A recent Jim Collins post (we know, big surprise) got us thinking about what our emotional threshold is for investing in one lump sum.
In 2012 Vanguard did a study that showed lump sum investing was more profitable than dollar cost averaging 67% of the time. With results so clear, shouldn’t investing large sums of money be easy?
Jim’s Case Study:
Jim’s Dollar Cost Averaging Post:
Emotional threshold…easy come, easy go. Really, if you worked your butt off for the money, it’s hard to let go. If it was given to you, no biggee. Think of all the time represented in your first 100000. That’s what does it for me.
It my net worth were $2 million, I believe it would be easier for me to lump sum invest $400,000 than if I had $1 million If the market did adjust down by 10%, I wouldn’t be as concerned about the $40,000 loss having that extra million in the bank. Interesting question!
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The Vanguard PDF report is missing. Is it still available on the internet?