Johm221122 wrote: ↑Mon Jan 23, 2023 11:38 am
thedaybeforetoday wrote: ↑Mon Jan 23, 2023 11:06 am
Indexboss wrote: ↑Sun Jan 22, 2023 7:15 pm
I do a lump sum first business day of the market being open every January. I don't pay attention to the market.
I remember an article that Vanguard published saying that
lump sum inventing beats DCA overall. I can't find it right now.
Yes, true, 70% of the time for 100% equities, but what if your not 100% equities?
What percent of the time does lump sum beat DCA if your 60/40 or 60/20/20 as I am?
I suspect it's less than 70% of the time that lump sum beats DCA if one is 60/20/20. If it's closer to 50% of the time then things get murkier.
I've asked up thread but no one responded.
Nobody probably has that data readily available.
But why would a portfolio diversified with bonds and cash rise less often? Bonds and cash would probably make it higher return by using lump sum instead of DCA, because they're safer investments they tend to drop in value less often.
I can make a case equally convincing the other way which is why I'm interested in data.
Not sure why data showing lump sum 60/40 isn't available if we can easily find that 70% of the time 100% equities beats DCA, per vanguard.
Since more folks are closer to 60/40 than 100% equities I would think data around 60/40 would be more useful to more investors.
I can think of why a mutual fund company, upon realizing that 60/40 data is more of a coin toss when it comes to lump sum vs DCA, wouldn't make that data 60/40 as readily available as they have the 100% number, since that 70% success rate might be more to the company's benefit.
Esp since I found this:
"When the markets are trending down, dollar-cost averaging may perform better. Vanguard’s study found that, in lump-sum investing, the 10-year return was negative 22.4% of the time. In the dollar-cost averaging scenarios for the corresponding time periods, the return was negative only 17.6% of the time."
https://sifterfund.com/en/lump-sum-inve ... the%20time.
Either way, not sure DCA vs lump sum results in any major differences in return, so absent data, I'm just going to carry on...
YMMV
"When I was a kid my parents moved a lot, but I always found them." R. Dangerfield