Lump Sum Investing in the US — When to Go All In vs Dollar-Cost Averaging

## Lump sum outperforms 2/3 of the time Vanguard's research found that investing a lump sum immediately outperforms 12-month dollar-cost averaging about 68% of the time across US, UK, and Australian markets. The reason is simple: markets trend upward over time. ## The psychological factor Despite the math favouring lump sum, DCA has a real psychological benefit: if the market drops after you invest, DCA investors feel less regret ("at least I didn't invest it all at the top"). For investors who would panic-sell after a big drop, DCA provides a safety valve. ## Windfall decision framework 1. Invest immediately if you have a 10+ year horizon and can emotionally handle short-term drops 2. DCA over 3–6 months if you're not sure about timing or would lose sleep over a market drop 3. Never DCA over more than 12 months — the opportunity cost becomes significant 4. Keep 3–6 months of expenses in cash before investing any windfall