Should I lump sum some money today?

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justsomeguy2018
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Should I lump sum some money today?

Post by justsomeguy2018 » Tue May 26, 2020 10:31 am

Well, my attempt to market time has failed, as the "dead cat bounce" rally doesn't seem to be dying (though knowing my luck, a new bottom is right around the corner).

I have $4k left in brokerage account I was hoping to use to buy on a further decline, should I lump sum it today, or am I buying in at the highs of a suckers' rally due to FOMO? I suppose I could always TLH if it drops, right?

Note: though I describe it as market timing, to a certain extent my thinking is also driven by having had super low expenses this month due to WFH, so my EF probably grew by about $3k more than usual due to the excess cash flow.

Triple digit golfer
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Re: Should I lump sum some money today?

Post by Triple digit golfer » Tue May 26, 2020 10:32 am

I think you're looking for confirmation that lump summing today is the right move. I think most will agree that now is always the right time to invest money that is to be invested.

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ruralavalon
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Re: Should I lump sum some money today?

Post by ruralavalon » Tue May 26, 2020 12:28 pm

justsomeguy2018 wrote:
Tue May 26, 2020 10:31 am
Well, my attempt to market time has failed, as the "dead cat bounce" rally doesn't seem to be dying (though knowing my luck, a new bottom is right around the corner).

I have $4k left in brokerage account I was hoping to use to buy on a further decline, should I lump sum it today, or am I buying in at the highs of a suckers' rally due to FOMO? I suppose I could always TLH if it drops, right?

Note: though I describe it as market timing, to a certain extent my thinking is also driven by having had super low expenses this month due to WFH, so my EF probably grew by about $3k more than usual due to the excess cash flow.
Yes, invest the $4k today.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

WhiteMaxima
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Re: Should I lump sum some money today?

Post by WhiteMaxima » Tue May 26, 2020 12:29 pm

As a long term investor, lump sum.

sailaway
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Re: Should I lump sum some money today?

Post by sailaway » Tue May 26, 2020 12:30 pm

I did.

Ferdinand2014
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Re: Should I lump sum some money today?

Post by Ferdinand2014 » Tue May 26, 2020 12:46 pm

I always invest as much, as frequently as I can into my S&P 500 index fund with the truck backed up and a large shovel in hand. No hesitation. My time horizon is generational. I do not care about dead cats, live cats, V shaped or swoosh shaped graphs or in fact anything of less than 20 years.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

Topic Author
justsomeguy2018
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Re: Should I lump sum some money today?

Post by justsomeguy2018 » Tue May 26, 2020 3:06 pm

Ferdinand2014 wrote:
Tue May 26, 2020 12:46 pm
I always invest as much, as frequently as I can into my S&P 500 index fund with the truck backed up and a large shovel in hand. No hesitation. My time horizon is generational. I do not care about dead cats, live cats, V shaped or swoosh shaped graphs or in fact anything of less than 20 years.
I did 80/10/10 to add some diversification, you think that's ok?

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JoMoney
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Re: Should I lump sum some money today?

Post by JoMoney » Tue May 26, 2020 3:10 pm

If you're going to be an active investor, I don't think asking the Internet is a good way to go about that.
If you're going to be a passive investor, I think you need to come up with a plan and stick with it.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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dogagility
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Re: Should I lump sum some money today?

Post by dogagility » Tue May 26, 2020 4:00 pm

Yes, you should lump sum ALL of your money today. Yesterday would have been an even better day. Any day in the future will be a worse day.
:beer
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

mortfree
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Re: Should I lump sum some money today?

Post by mortfree » Tue May 26, 2020 4:43 pm

Did you invest today?

That way I know to be ready for tomorrow’s drop.

:sharebeer

Topic Author
justsomeguy2018
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Re: Should I lump sum some money today?

Post by justsomeguy2018 » Tue May 26, 2020 7:29 pm

mortfree wrote:
Tue May 26, 2020 4:43 pm
Did you invest today?

That way I know to be ready for tomorrow’s drop.

:sharebeer
I did. I pulled the trigger.

I am sure I got in right at the peak of the suckers' rally. ::sigh::

The annoying part is that I didn't invest the money in March or April....(I did invest money in March, just not enough, apparently)

Rosencrantz1
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Re: Should I lump sum some money today?

Post by Rosencrantz1 » Tue May 26, 2020 8:42 pm

justsomeguy2018 wrote:
Tue May 26, 2020 7:29 pm
mortfree wrote:
Tue May 26, 2020 4:43 pm
Did you invest today?

That way I know to be ready for tomorrow’s drop.

:sharebeer
I did. I pulled the trigger.

I am sure I got in right at the peak of the suckers' rally. ::sigh::

The annoying part is that I didn't invest the money in March or April....(I did invest money in March, just not enough, apparently)
Well, if it's any consolation, I bought on the way down and, now, on the way back up. I was most 'afraid' when the DOW was around 19000 and I briefly paused buying. Of course, looking back, I should have kept on my schedule.

Topic Author
justsomeguy2018
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Re: Should I lump sum some money today?

Post by justsomeguy2018 » Tue May 26, 2020 10:31 pm

Rosencrantz1 wrote:
Tue May 26, 2020 8:42 pm
justsomeguy2018 wrote:
Tue May 26, 2020 7:29 pm
mortfree wrote:
Tue May 26, 2020 4:43 pm
Did you invest today?

That way I know to be ready for tomorrow’s drop.

:sharebeer
I did. I pulled the trigger.

I am sure I got in right at the peak of the suckers' rally. ::sigh::

The annoying part is that I didn't invest the money in March or April....(I did invest money in March, just not enough, apparently)
Well, if it's any consolation, I bought on the way down and, now, on the way back up. I was most 'afraid' when the DOW was around 19000 and I briefly paused buying. Of course, looking back, I should have kept on my schedule.
I've made the same mistake twice now - I've bought all the way down this time and in Dec 18, but on the way up I stop buying, expecting further declines (which may still happen, but still...)

Buddy0329
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Re: Should I lump sum some money today?

Post by Buddy0329 » Wed May 27, 2020 9:18 am

Preparing for the worst I held back my regularly bi-weekly contributions to VTSAX in my taxable account as of a couple of months ago. I've got about $15K in my settlement account now that is burning a hole in my pocket. Was expecting the S&P500 to go back down to the ~2600 level which never happened. Would love to jump back in but a a part of me is saying to wait out this wave.

It's not all bad though; at least in our 401Ks I redirected all of our bond contributions into the S&P500 when the market tanked which has helped. Though I wish I had re-balanced some of those $ sitting in our total bond funds into the S&P500 as well.

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justsomeguy2018
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Re: Should I lump sum some money today?

Post by justsomeguy2018 » Wed May 27, 2020 4:19 pm

Buddy0329 wrote:
Wed May 27, 2020 9:18 am
Preparing for the worst I held back my regularly bi-weekly contributions to VTSAX in my taxable account as of a couple of months ago. I've got about $15K in my settlement account now that is burning a hole in my pocket. Was expecting the S&P500 to go back down to the ~2600 level which never happened. Would love to jump back in but a a part of me is saying to wait out this wave.

It's not all bad though; at least in our 401Ks I redirected all of our bond contributions into the S&P500 when the market tanked which has helped. Though I wish I had re-balanced some of those $ sitting in our total bond funds into the S&P500 as well.
I hear you....I didn't optimize during the market downturn as well as I could have either. But on the plus side I did not sell and did get some buys in. Bonsues (401k) also hit during March.

Maybe you can DCA the $15k in? Do $1k a day, or $1k every Monday?

Triple digit golfer
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Re: Should I lump sum some money today?

Post by Triple digit golfer » Wed May 27, 2020 4:43 pm

justsomeguy2018 wrote:
Wed May 27, 2020 4:19 pm
Buddy0329 wrote:
Wed May 27, 2020 9:18 am
Preparing for the worst I held back my regularly bi-weekly contributions to VTSAX in my taxable account as of a couple of months ago. I've got about $15K in my settlement account now that is burning a hole in my pocket. Was expecting the S&P500 to go back down to the ~2600 level which never happened. Would love to jump back in but a a part of me is saying to wait out this wave.

It's not all bad though; at least in our 401Ks I redirected all of our bond contributions into the S&P500 when the market tanked which has helped. Though I wish I had re-balanced some of those $ sitting in our total bond funds into the S&P500 as well.
I hear you....I didn't optimize during the market downturn as well as I could have either. But on the plus side I did not sell and did get some buys in. Bonsues (401k) also hit during March.

Maybe you can DCA the $15k in? Do $1k a day, or $1k every Monday?
Why DCA anything? Stop thinking. Invest when the money is available, period. You have made several posts that reek of market timing over the last few weeks. Just invest money that is to be invested. If you didn't invest before, do it now. It makes absolutely no sense to hold in cash money to be invested. You wouldn't sell investments to hold in cash, so why would you hold cash rather than buy?

Agonizing about $4k or whatever day to day, week to week is silly. Just invest per your AA, which I suspect may be too stock-heavy, and be done with it.

Do you have an IPS? What does it say about investing new money? Mine says keep $15k in savings and invest the rest into my AA to whichever is lagging. Right now that means every dime in savings over $15k goes directly into stocks. Pay days are every other Friday, and investments are made same day.

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ruralavalon
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Re: Should I lump sum some money today?

Post by ruralavalon » Wed May 27, 2020 5:12 pm

justsomeguy2018 wrote:
Tue May 26, 2020 7:29 pm
mortfree wrote:
Tue May 26, 2020 4:43 pm
Did you invest today?

That way I know to be ready for tomorrow’s drop.

:sharebeer
I did. I pulled the trigger.
. . . . .
Good, now you can stop worrying about it :) .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

FrankTheViking
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Re: Should I lump sum some money today?

Post by FrankTheViking » Wed May 27, 2020 5:54 pm

Triple digit golfer wrote:
Tue May 26, 2020 10:32 am
I think you're looking for confirmation that lump summing today is the right move. I think most will agree that now is always the right time to invest money that is to be invested.
+1.

You might lose this go round but lump sum what you can, when you can in the future. I realize that that sentence seems like putting it in now is a bad idea, but I don't actually know. And neither do you.
No EF. 80% Total U.S. / 20% Total International. 100% equity. Is there a gun to your head? Is there a tiger in the room? No? What's the problem?

FrankTheViking
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Re: Should I lump sum some money today?

Post by FrankTheViking » Wed May 27, 2020 5:56 pm

justsomeguy2018 wrote:
Tue May 26, 2020 7:29 pm
mortfree wrote:
Tue May 26, 2020 4:43 pm
Did you invest today?

That way I know to be ready for tomorrow’s drop.

:sharebeer
I did. I pulled the trigger.

I am sure I got in right at the peak of the suckers' rally. ::sigh::

The annoying part is that I didn't invest the money in March or April....(I did invest money in March, just not enough, apparently)
Getting into the sucker's rally today beats whatever regular investing you did in 2019. (Probably)
No EF. 80% Total U.S. / 20% Total International. 100% equity. Is there a gun to your head? Is there a tiger in the room? No? What's the problem?

Topic Author
justsomeguy2018
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Re: Should I lump sum some money today?

Post by justsomeguy2018 » Wed May 27, 2020 6:17 pm

Triple digit golfer wrote:
Wed May 27, 2020 4:43 pm
justsomeguy2018 wrote:
Wed May 27, 2020 4:19 pm
Buddy0329 wrote:
Wed May 27, 2020 9:18 am
Preparing for the worst I held back my regularly bi-weekly contributions to VTSAX in my taxable account as of a couple of months ago. I've got about $15K in my settlement account now that is burning a hole in my pocket. Was expecting the S&P500 to go back down to the ~2600 level which never happened. Would love to jump back in but a a part of me is saying to wait out this wave.

It's not all bad though; at least in our 401Ks I redirected all of our bond contributions into the S&P500 when the market tanked which has helped. Though I wish I had re-balanced some of those $ sitting in our total bond funds into the S&P500 as well.
I hear you....I didn't optimize during the market downturn as well as I could have either. But on the plus side I did not sell and did get some buys in. Bonsues (401k) also hit during March.

Maybe you can DCA the $15k in? Do $1k a day, or $1k every Monday?
Why DCA anything? Stop thinking. Invest when the money is available, period. You have made several posts that reek of market timing over the last few weeks. Just invest money that is to be invested. If you didn't invest before, do it now. It makes absolutely no sense to hold in cash money to be invested. You wouldn't sell investments to hold in cash, so why would you hold cash rather than buy?
Because he said this:
Was expecting the S&P500 to go back down to the ~2600 level which never happened. Would love to jump back in but a a part of me is saying to wait out this wave.
He might have less regret if he DCA's the $15k in.

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justsomeguy2018
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Re: Should I lump sum some money today?

Post by justsomeguy2018 » Wed May 27, 2020 6:23 pm

FrankTheViking wrote:
Wed May 27, 2020 5:56 pm
justsomeguy2018 wrote:
Tue May 26, 2020 7:29 pm
mortfree wrote:
Tue May 26, 2020 4:43 pm
Did you invest today?

That way I know to be ready for tomorrow’s drop.

:sharebeer
I did. I pulled the trigger.

I am sure I got in right at the peak of the suckers' rally. ::sigh::

The annoying part is that I didn't invest the money in March or April....(I did invest money in March, just not enough, apparently)
Getting into the sucker's rally today beats whatever regular investing you did in 2019. (Probably)
Maybe...

I bought a handful of shares on the dips in May/June and October of 2019. And I bought shares all the way down to the bottom of Q4 2018.

The price I paid for the lump sum yesterday was actually quite a bit higher than my overall cost basis than the shares I owned in taxable.

Truth be told, I am just now at a point where I am having to figure out what to do with excess cash because I like to keep a very healthy EF. Also I've been a little hesitant these past few months because I have no idea what will happen to our jobs given the massive layoffs happening.

But yes...I had earmarked $4k to invest on further declines that never materialized so I am guilty of market timing in that respect. But as I mentioned in my original post, I had more cash flow than anticipated this month so that also gave me the confidence to go ahead and pull the trigger.

FrankTheViking
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Re: Should I lump sum some money today?

Post by FrankTheViking » Wed May 27, 2020 7:27 pm

justsomeguy2018 wrote:
Wed May 27, 2020 6:23 pm
FrankTheViking wrote:
Wed May 27, 2020 5:56 pm
justsomeguy2018 wrote:
Tue May 26, 2020 7:29 pm
mortfree wrote:
Tue May 26, 2020 4:43 pm
Did you invest today?

That way I know to be ready for tomorrow’s drop.

:sharebeer
I did. I pulled the trigger.

I am sure I got in right at the peak of the suckers' rally. ::sigh::

The annoying part is that I didn't invest the money in March or April....(I did invest money in March, just not enough, apparently)
Getting into the sucker's rally today beats whatever regular investing you did in 2019. (Probably)
Maybe...

I bought a handful of shares on the dips in May/June and October of 2019. And I bought shares all the way down to the bottom of Q4 2018.

The price I paid for the lump sum yesterday was actually quite a bit higher than my overall cost basis than the shares I owned in taxable.

Truth be told, I am just now at a point where I am having to figure out what to do with excess cash because I like to keep a very healthy EF. Also I've been a little hesitant these past few months because I have no idea what will happen to our jobs given the massive layoffs happening.

But yes...I had earmarked $4k to invest on further declines that never materialized so I am guilty of market timing in that respect. But as I mentioned in my original post, I had more cash flow than anticipated this month so that also gave me the confidence to go ahead and pull the trigger.
In the grande scheme it doesn't matter. Say EVERY time you invest you lose 2% from the get go. That sucks. As always, did you invest 1k or 2k per month?
No EF. 80% Total U.S. / 20% Total International. 100% equity. Is there a gun to your head? Is there a tiger in the room? No? What's the problem?

Stewpac14
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Re: Should I lump sum some money today?

Post by Stewpac14 » Wed May 27, 2020 9:26 pm

I have been sitting on an extra 20k for a few weeks and am guilty of waiting for a dip. This experiment might be over and a lesson learned. I will DCA into VOO starting tomorrow. Will check back in 5 years.

Buddy0329
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Re: Should I lump sum some money today?

Post by Buddy0329 » Thu May 28, 2020 9:53 am

For better or for worse I also pulled the trigger yesterday and dumped my cash into VTSAX.

Weight has been lifted. Will be better off in the longterm. :sharebeer

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ruralavalon
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Re: Should I lump sum some money today?

Post by ruralavalon » Thu May 28, 2020 10:17 am

Buddy0329 wrote:
Thu May 28, 2020 9:53 am
For better or for worse I also pulled the trigger yesterday and dumped my cash into VTSAX.

Weight has been lifted. Will be better off in the longterm. :sharebeer
Good move :) .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

glucosebanana
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Re: Should I lump sum some money today?

Post by glucosebanana » Fri Jun 05, 2020 11:11 am

I’m in a similar situation to the OP, but I have about 90K $ that I need to invest. I’ve read all about the Bogleheads philosophy, sticking to the AA, not timing the market, and so on. I get it, and assume I know nothing about the future. I’ve made and have stuck to an investment plan to allocate ~6K $ every 3 weeks so that I can still have some cash to invest if a downturn comes in, say, 9 months. There’s just still all this uncertainty and the disconnect between the market and the economy... In spite of all that, would you still recommend making a large-ish lump sum investment?

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ruralavalon
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Re: Should I lump sum some money today?

Post by ruralavalon » Fri Jun 05, 2020 12:08 pm

glucosebanana wrote:
Fri Jun 05, 2020 11:11 am
I’m in a similar situation to the OP, but I have about 90K $ that I need to invest. I’ve read all about the Bogleheads philosophy, sticking to the AA, not timing the market, and so on. I get it, and assume I know nothing about the future. I’ve made and have stuck to an investment plan to allocate ~6K $ every 3 weeks so that I can still have some cash to invest if a downturn comes in, say, 9 months. There’s just still all this uncertainty and the disconnect between the market and the economy... In spite of all that, would you still recommend making a large-ish lump sum investment?
Yes.

The stock market and the economy are two different things. There is always uncertainty in both.

Occasional price declines are a normal part of investing. There is always going to be downturn coming. The stock market has had a correction (drop of 10% or more) about every 2 years, and a bear market (drop of 20% or mkre) about every 7 years. Seeking Alpha, "The Surprising Statistics . . .".

" Meet Bob . . . ".
Last edited by ruralavalon on Fri Jun 05, 2020 12:11 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

EnjoyIt
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Re: Should I lump sum some money today?

Post by EnjoyIt » Fri Jun 05, 2020 12:10 pm

glucosebanana wrote:
Fri Jun 05, 2020 11:11 am
I’m in a similar situation to the OP, but I have about 90K $ that I need to invest. I’ve read all about the Bogleheads philosophy, sticking to the AA, not timing the market, and so on. I get it, and assume I know nothing about the future. I’ve made and have stuck to an investment plan to allocate ~6K $ every 3 weeks so that I can still have some cash to invest if a downturn comes in, say, 9 months. There’s just still all this uncertainty and the disconnect between the market and the economy... In spite of all that, would you still recommend making a large-ish lump sum investment?
This is a post I made for another investor discussing dollar cost averaging vs lump sum and examining what it actually means with regards to your asset allocation. Maybe it will help you. Maybe it won't. it ws about an investor who chose to DCA $1.7 million over 2 years starting August 2019 at a 60/40 asset allocation. At the time of writing he had $500k invested so far our of the $1.7 million.
EnjoyIt wrote:
Thu Jun 04, 2020 9:47 am

1st and foremost, if DCA gets you investing, it is better than doing nothing which means DCA is working for you. But what exactly is happening when you DCA is actually a slow transition from a bond/safe asset portfolio to a more risky yet more balanced equities and bond/safety portfolio. I tried describing this above but I will go into specific details about you using the data you have provided so far describing how DCA is nothing more than an AA (asset allocation) adjustment .

For this discussion we need to accept that keeping money in bonds, high yield savings accounts, money market accounts, CDs and short term treasuries provide a relatively similar result. They provide a ballast and are the safe portion of your portfolio. Especially in this very low interest rate environment we can just lump them all together as the safe or bond portion of your portfolio. Back in August 2019 you had $1.7 million where all of it was outside of equities, held in safe assets. At that time your asset allocation was 0/100. Back in August 2019 you felt that 0/100 was not good enough and you were willing to take on risk and buy some equities but not sure how to get into it. In addition, rightfully so, you did not want to be 100% in equities either.

At that particular moment you realized that your desired AA is somewhere between 0/100 and 100/0. But where did you want to be? I assume with a lot of discussion and advice from the people on this forum you came to the conclusion you want to be at a 60/40 AA. But, you don't want to be there immediately. In essence what you said in August is that 60/40 is good for you sometime in the future but right now at that moment 60/40 was too risky so you decided to DCA (dollar cost average.) Over the next 10 months you slowly started buying equities. If your first purchase was $100k that would mean your asset allocation was $100k/$1,600k or 6/94. You sat at that AA for a time being and then bought another $100k bringing your AA up to 12/88. The plan as I understand it is to continue adding equities for 2 years until you finally get to 60/40.

This is what your DCA plan does: It gets you to try out a bunch of different AA over the next 2 years. Everything from 0/100 all the way up to 60/40. The question arrises though is 60/40 right for you? If 60/40 was not the right decision in August 2019 or Sept 2019 or Jan 2020 or June 2020, then why is 60/40 the right choice for you in Aug 2021? What will change in those 2 years about you that would make 60/40 correct on August 2021 and not over the preceding 2 years? I see only 1 difference and that is you will get the opportunity to experience all those other AA and hopefully learn something about yourself and your risk tolerance.

Currently you are at $500k/$1,200k or an AA of 29/71. How does it feel? If the $500k turned into $250k in the next 6 months via a 50% equities decline, how do you think you would react? These are rhetorical questions but something you should probably think through with every AA change you make.

The unsolicited advice I give is to understand what you are doing when you DCA and act with that understanding. It is very possible that when you get closer and closer to 60/40 you will find that just like in August 2019 60/40 is too risky for you and you may want to drop it down to 50/50 or 40/60 which is fine. I believe, using DCA with the understanding I described above is far more valuable than just blindly picking some future AA, getting there without learning anything about yourself, and then realizing it was the wrong AA during market turmoil leading to making a detrimental behavioral mistake.

In my opinion, there is nothing wrong with DCA when the investor understands why they are doing it, what is actually happening, and learns from it. DCA can be a very valuable tool in that regard.

I really hope you or someone else finds the above useful and I did not waste a bunch of my time typing.
A time to EVALUATE your jitters. | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418

glucosebanana
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Re: Should I lump sum some money today?

Post by glucosebanana » Sun Jun 07, 2020 2:18 pm

ruralavalon wrote:
Fri Jun 05, 2020 12:08 pm
glucosebanana wrote:
Fri Jun 05, 2020 11:11 am
I’m in a similar situation to the OP, but I have about 90K $ that I need to invest. I’ve read all about the Bogleheads philosophy, sticking to the AA, not timing the market, and so on. I get it, and assume I know nothing about the future. I’ve made and have stuck to an investment plan to allocate ~6K $ every 3 weeks so that I can still have some cash to invest if a downturn comes in, say, 9 months. There’s just still all this uncertainty and the disconnect between the market and the economy... In spite of all that, would you still recommend making a large-ish lump sum investment?
Yes.

The stock market and the economy are two different things. There is always uncertainty in both.

Occasional price declines are a normal part of investing. There is always going to be downturn coming. The stock market has had a correction (drop of 10% or more) about every 2 years, and a bear market (drop of 20% or mkre) about every 7 years. Seeking Alpha, "The Surprising Statistics . . .".

" Meet Bob . . . ".
Thanks for the advice and the links ruralavalon and EnjoyIt. I made a lump sum investment to arrive at a desired asset allocation.

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