Invest everything now or dollar cost average? [France]

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Havent
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Invest everything now or dollar cost average? [France]

Post by Havent »

Hello,

The past days I have found this amazing forum and I have realized that I have not been managing my money in a smart way. I just turned 30 recently and I have been saving since I started working (almost 8 years ago). During that time, I have been saving this money in a normal bank account, for which I got an interest rate close to 0.

For this reason, I have finally decided to become a boglehead and to invest in VWCE before the end of the week. I never imagined myself investing as none of my friends or relatives has ever invested and they seriously think that investing is similar to gambling. So, thanks everybody for giving me the courage to start investing (even if I may be a bit old to start now, but better now than never).

The question I have now is whether I should go all in or dollar cost average. I see that there are some advocates of one strategy and some advocates of the other. As I want to invest everything I have saved in the last 8 years, I was not sure which strategy I should follow as part of the boglehead strategy says that I should invest periodically but I have previously not. What do you recommend me?

Thanks a lot and sorry if this question may be pretty basic. I am a newbie in this field.
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LadyGeek
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Re: Invest everything now or dollar cost average?

Post by LadyGeek »

Welcome! Based on your mention of VWCE (Vanguard FTSE All-World UCITS ETF), I moved your post to the Non-US Investing forum.

What is your home country?
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TedSwippet
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Re: Invest everything now or dollar cost average?

Post by TedSwippet »

Welcome.
Havent wrote: Tue Aug 24, 2021 3:18 pm The question I have now is whether I should go all in or dollar cost average. I see that there are some advocates of one strategy and some advocates of the other. As I want to invest everything I have saved in the last 8 years, I was not sure which strategy I should follow as part of the boglehead strategy says that I should invest periodically but I have previously not. What do you recommend me?
Some people can withstand the uncertainty that comes with investing everything in one lump sum. Some have withstood it. Some think or say that they can, but have never put this to the test. And some of us prefer to average into markets over time, even if statistically this does not give the best chance of the highest return. (I am in the last camp.)

Overall though, nobody can tell you which will be best. To know that, you would have to know how markets will perform over the next couple of years, and anybody who claims that they can do this is really just guessing. This wiki page contains a decent summary of the trade-offs of DCA:

Dollar cost averaging - Bogleheads

Assuming you are not a US investor -- and if you are, please say so here -- then you should read past the parts of this article that talk about 401k plans and so on. Also, it is not necessarily a binary either/or decision. For example, you could invest half now as a lump sum, and then the rest over time.

VWCE is an excellent core holding. It does however lack an Emerging Markets component, so for completeness you might want to pair it with a small amount of EIMI. Not mandatory though, just a potential bit of added balance and diversification. You can find notes on VWCE and a few alternatives in this wiki article. Definitely worth staying simple.

Simple non-US portfolios - Bogleheads
7eight9
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Re: Invest everything now or dollar cost average?

Post by 7eight9 »

In the words of Clint Eastwood, "You've got to ask yourself one question. Do I feel lucky?"

Lump sum typically beats dollar cost averaging.

Except when it doesn't.

Investors who lump summed into the Nikkei in December 1989 regret their decision to this day.
I guess it all could be much worse. | They could be warming up my hearse.
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arcticpineapplecorp.
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Re: Invest everything now or dollar cost average?

Post by arcticpineapplecorp. »

when I think lump sum it makes us think this is the only money you will ever have to invest. is that true?

if you're retired and not planning on adding to investments, maybe.

if you're working and you have a windfall or some savings, won't you continue to save part of your earnings? If so, is it just lump sum or is it both lump sum and DCA (from your paycheck) over time??

please post more details ("asking portfolio questions") so we can give better answers:

viewtopic.php?t=6212
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uyinvest
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Re: Invest everything now or dollar cost average?

Post by uyinvest »

I'm in a similar position to you (except that it took me longer than you to find out about investing).

I thought I could handle the uncertainty, so I went 90% stocks and 10% bonds. Then I realized I was worrying too much, concerned about the "upcoming market crash" and thinking about what I would do if I had 30% of my lifetime savings wiped.

At that point I realized I got my asset allocation wrong... I moved to 60/40. If and when the market takes a dip, I may go back to my original 90/10 (or heck, I'm thinking I can stomach 100/0).

Is that trying to time the market? probably... but I'm happy with this decision and I'm back to not checking my account every day :)
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Havent
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Re: Invest everything now or dollar cost average?

Post by Havent »

Thanks you all for your replies, they are very helpful! I see that at the end it all depends on my risk profile and how I can cope better the pressure of investing. At this point my assumption is that I would be always to cope going all in, but that's only an assumption. So I may dollar cost average my savings in order to prevent feeling unexpected pressure or regret.

And regarding some of the questions I received:
LadyGeek wrote: Tue Aug 24, 2021 4:14 pm Welcome! Based on your mention of VWCE (Vanguard FTSE All-World UCITS ETF), I moved your post to the Non-US Investing forum.

What is your home country?
Thank you for moving my post and excuses for my mistake, I am from France.
arcticpineapplecorp. wrote: Tue Aug 24, 2021 5:51 pm
if you're working and you have a windfall or some savings, won't you continue to save part of your earnings? If so, is it just lump sum or is it both lump sum and DCA (from your paycheck) over time??

please post more details ("asking portfolio questions") so we can give better answers:

viewtopic.php?t=6212
Thanks for your reply, I will keep investing every month ( around 350€ - 500€ depending on my expenses), but it will represent a very small amount in relation to the savings I have right now.
mohd
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Re: Invest everything now or dollar cost average?

Post by mohd »

I would say do what ever makes you feel comfortable and get you right into the market.

When I started investing last year (exactly in 24 Aug 2020). I started with the most amount that I feel comfortable to start with, and the market was peaking in almost ATH. Shortly after that the market got down a bit and I kept buying more until I ran out of cash.

Since then, I keep buying on monthly basis regardless of the price (I admit, sometimes I delay my purchases few days to buy when the market is in red, but honestly that doesn't make much difference and I should stop doing that).

There are four scenarios in your case

1. You put 100% and the market keeps going up and u get the most out of ur money.

2. You put 100% and the market goes down, and you miss an opportunity to buy cheaper.

3. You DCA and the market goes up, u get a profit but less than scenario #1.

4. You DCA and the market goes down and you get a better cost average and profit than scenario #3, but less than scenario #1.

None of this is predictable nor does matter. As long as you keep buying in all market conditions, you will be fine.

Studies that show lump sum beats DCA, or the opposite could be true, but it's true in some particular scenarios.

So, if you don't feel comfortable to start with 100%, pick an amount or % that makes you feel confident and start with it. We don't know how the market will perform in future.

...
P.S. I don't know anyone personally of my friends or family that is investing in stocks. And I am sure most of them will discourage this idea.
Last edited by mohd on Wed Aug 25, 2021 6:11 am, edited 1 time in total.
namajones
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Re: Invest everything now or dollar cost average?

Post by namajones »

uyinvest wrote: Tue Aug 24, 2021 9:48 pm I'm in a similar position to you (except that it took me longer than you to find out about investing).

I thought I could handle the uncertainty, so I went 90% stocks and 10% bonds. Then I realized I was worrying too much, concerned about the "upcoming market crash" and thinking about what I would do if I had 30% of my lifetime savings wiped.

At that point I realized I got my asset allocation wrong... I moved to 60/40. If and when the market takes a dip, I may go back to my original 90/10 (or heck, I'm thinking I can stomach 100/0).

Is that trying to time the market? probably... but I'm happy with this decision and I'm back to not checking my account every day :)
Right. Asset allocation is the thing, and it's personal, tied up with risk tolerance, which is also personal--and changes as you do. Find the asset allocation that allows you not to think about your portfolio--or think about it a lot less. For some that's 20/80. For some it's 50/50. For others it's riskier still.
Jags4186
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Re: Invest everything now or dollar cost average?

Post by Jags4186 »

I can’t cite the source, but I believe lump sum investing beats DCAing around 70% of the time. Of course that means 30% of the time you’d have been better of DCAing.

I recommend lump sum investing. Advocates of DCAing say that you’ll save yourself in the market crashes right after you put your money in. That’s true, but there’s an equal chance that you DCA into the market for 12 months and then after all your money is in a crash happens. DCAing requires a long term plan that can be hard to stick to. If you have $120,000 and you intend to invest $10,000 on the 1st of each month for a year, are you going to do that if the market goes on a year long decline? Likewise, are you going to do it like clockwork if the market spikes up 25% over the course of a year? I think most people who are concerned about DCAing due to market risk are already fragile/emotional about the money and therefore by doing the lump sum you take out of a yearlong session of second guessing.
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Eagle33
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Re: Invest everything now or dollar cost average?

Post by Eagle33 »

I've read that lump sum beats DCA 2/3 of the time.

On the other hand there was a Vanguard paper I believe that compared results of DCA, waiting for the lowest day of the year, and waiting for the highest point in the year. Obviously waiting for the low point was better than investing at the highest point, but not that much difference. DCA did better than the other 2 scenarios because money was put in as soon as available and was in the market the longest amount of time. Time IN the market beats timING the market.
finite_difference
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Re: Invest everything now or dollar cost average?

Post by finite_difference »

I would do 50-75% lump sum, then DCA the remainder over 1 year to 6 months.
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Havent
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Re: Invest everything now or dollar cost average?

Post by Havent »

Thanks all for your replies. I started investing today morning, now I can say that I became a boglehead!

I invested 60% of my savings and I will keep investing the rest in a period of 7 months (so I will dollar cost average the rest + what I am able to save each month).

Thanks to all of you for the help!
JimBeam
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Re: Invest everything now or dollar cost average?

Post by JimBeam »

TedSwippet wrote: Tue Aug 24, 2021 5:04 pm VWCE is an excellent core holding. It does however lack an Emerging Markets component, so for completeness you might want to pair it with a small amount of EIMI. Not mandatory though, just a potential bit of added balance and diversification. You can find notes on VWCE and a few alternatives in this wiki article. Definitely worth staying simple.
You confused VWCE with something else. VWCE (Vanguard FTSE All-World UCITS ETF) tracks the FTSE All-World index, which tracks stocks from developed and emerging countries worldwide.
TedSwippet
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Re: Invest everything now or dollar cost average?

Post by TedSwippet »

JimBeam wrote: Fri Aug 27, 2021 2:21 am
TedSwippet wrote: Tue Aug 24, 2021 5:04 pm VWCE is an excellent core holding. It does however lack an Emerging Markets component, so for completeness you might want to pair it with a small amount of EIMI. Not mandatory though, just a potential bit of added balance and diversification. You can find notes on VWCE and a few alternatives in this wiki article. Definitely worth staying simple.
You confused VWCE with something else. VWCE (Vanguard FTSE All-World UCITS ETF) tracks the FTSE All-World index, which tracks stocks from developed and emerging countries worldwide.
Thanks. I took my cue from the wiki, specifically the three-fund accumulating sample portfolio, which suggests this blend.

It seems that the wiki needs a bit of review here, then. I'll take a look when I have a moment.
minimalistmarc
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Re: Invest everything now or dollar cost average?

Post by minimalistmarc »

To break the cycle of anxiety, I usually suggest lump sum half of it now then DCA the rest over 6 - 12 months.

Personally, I would lump sum the entire amount though.
minimalistmarc
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Re: Invest everything now or dollar cost average?

Post by minimalistmarc »

Havent wrote: Thu Aug 26, 2021 2:17 pm Thanks all for your replies. I started investing today morning, now I can say that I became a boglehead!

I invested 60% of my savings and I will keep investing the rest in a period of 7 months (so I will dollar cost average the rest + what I am able to save each month).

Thanks to all of you for the help!
Nice.
traveling_salesman
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Re: Invest everything now or dollar cost average?

Post by traveling_salesman »

Eagle33 wrote: Wed Aug 25, 2021 3:03 pm I've read that lump sum beats DCA 2/3 of the time.

On the other hand there was a Vanguard paper I believe that compared results of DCA, waiting for the lowest day of the year, and waiting for the highest point in the year. Obviously waiting for the low point was better than investing at the highest point, but not that much difference. DCA did better than the other 2 scenarios because money was put in as soon as available and was in the market the longest amount of time. Time IN the market beats timING the market.
Can you point me to that paper? It seems remarkable to think that this happens. Wouldn't it depend really on the volatility of the market?
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Eagle33
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Re: Invest everything now or dollar cost average?

Post by Eagle33 »

traveling_salesman wrote: Sun Aug 29, 2021 1:09 pm
Eagle33 wrote: Wed Aug 25, 2021 3:03 pm I've read that lump sum beats DCA 2/3 of the time.

On the other hand there was a Vanguard paper I believe that compared results of DCA, waiting for the lowest day of the year, and waiting for the highest point in the year. Obviously waiting for the low point was better than investing at the highest point, but not that much difference. DCA did better than the other 2 scenarios because money was put in as soon as available and was in the market the longest amount of time. Time IN the market beats timING the market.
Can you point me to that paper? It seems remarkable to think that this happens. Wouldn't it depend really on the volatility of the market?
Unfortunately I haven't been able to find it it again. I wished I would have downloaded it! :oops:
whereskyle
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Re: Invest everything now or dollar cost average?

Post by whereskyle »

Havent wrote: Tue Aug 24, 2021 3:18 pm Hello,

The past days I have found this amazing forum and I have realized that I have not been managing my money in a smart way. I just turned 30 recently and I have been saving since I started working (almost 8 years ago). During that time, I have been saving this money in a normal bank account, for which I got an interest rate close to 0.

For this reason, I have finally decided to become a boglehead and to invest in VWCE before the end of the week. I never imagined myself investing as none of my friends or relatives has ever invested and they seriously think that investing is similar to gambling. So, thanks everybody for giving me the courage to start investing (even if I may be a bit old to start now, but better now than never).

The question I have now is whether I should go all in or dollar cost average. I see that there are some advocates of one strategy and some advocates of the other. As I want to invest everything I have saved in the last 8 years, I was not sure which strategy I should follow as part of the boglehead strategy says that I should invest periodically but I have previously not. What do you recommend me?

Thanks a lot and sorry if this question may be pretty basic. I am a newbie in this field.
I think the real question is: are you sure that 100% stocks is an asset allocation you are comfortable with?

If you're not comfortable with having the full amount you have invested in stocks now, why would you be comfortable with it at the end of your DCA period? As far as we know, stocks are just as likely to crash after you lump sum as they are after you finish easing into the market by DCAing.

Almost everyone who asks this question should be lumpsumming into an asset allocation that includes a bond portion that makes them feel comfortable lumpsumming.
Last edited by whereskyle on Mon Aug 30, 2021 8:46 pm, edited 1 time in total.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
helloyou
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Re: Invest everything now or dollar cost average?

Post by helloyou »

whereskyle wrote: Mon Aug 30, 2021 7:10 pm
Havent wrote: Tue Aug 24, 2021 3:18 pm Hello,

The past days I have found this amazing forum and I have realized that I have not been managing my money in a smart way. I just turned 30 recently and I have been saving since I started working (almost 8 years ago). During that time, I have been saving this money in a normal bank account, for which I got an interest rate close to 0.

For this reason, I have finally decided to become a boglehead and to invest in VWCE before the end of the week. I never imagined myself investing as none of my friends or relatives has ever invested and they seriously think that investing is similar to gambling. So, thanks everybody for giving me the courage to start investing (even if I may be a bit old to start now, but better now than never).

The question I have now is whether I should go all in or dollar cost average. I see that there are some advocates of one strategy and some advocates of the other. As I want to invest everything I have saved in the last 8 years, I was not sure which strategy I should follow as part of the boglehead strategy says that I should invest periodically but I have previously not. What do you recommend me?

Thanks a lot and sorry if this question may be pretty basic. I am a newbie in this field.
I think the real question is: are you sure that 100% stocks is an asset allocation you are comfortable with?

If you're not comfortable with having the full amount you have invested in stocks, why would you be comfortable with it at the end of your DCA period? As far as we know, stocks are just as likely to crash after you lump sum as they are after you finish easing into the market by DCAing.

Almost everyone who asks this question should be lumpsumming into an asset allocation that includes a bond portion that makes them feel comfortable lumpsumming.
True but I was thinking stock allocation terms of a dual split with bonds is misleading.

If someone net worth is 1m with 500k as a house, 350k in stocks, 100k in bonds and 50k in cash, to me that person is less exposed to equity as someone would think as the cash portion should bring security and act similarly to stocks nowadays (except treasury bonds). Also I believe someone needs to estimate the whole assets value across all asset classes to get a sense of the true exposition with regard to the overall net worth.
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Havent
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Re: Invest everything now or dollar cost average?

Post by Havent »

whereskyle wrote: Mon Aug 30, 2021 7:10 pm
Havent wrote: Tue Aug 24, 2021 3:18 pm Hello,

The past days I have found this amazing forum and I have realized that I have not been managing my money in a smart way. I just turned 30 recently and I have been saving since I started working (almost 8 years ago). During that time, I have been saving this money in a normal bank account, for which I got an interest rate close to 0.

For this reason, I have finally decided to become a boglehead and to invest in VWCE before the end of the week. I never imagined myself investing as none of my friends or relatives has ever invested and they seriously think that investing is similar to gambling. So, thanks everybody for giving me the courage to start investing (even if I may be a bit old to start now, but better now than never).

The question I have now is whether I should go all in or dollar cost average. I see that there are some advocates of one strategy and some advocates of the other. As I want to invest everything I have saved in the last 8 years, I was not sure which strategy I should follow as part of the boglehead strategy says that I should invest periodically but I have previously not. What do you recommend me?

Thanks a lot and sorry if this question may be pretty basic. I am a newbie in this field.
I think the real question is: are you sure that 100% stocks is an asset allocation you are comfortable with?

If you're not comfortable with having the full amount you have invested in stocks now, why would you be comfortable with it at the end of your DCA period? As far as we know, stocks are just as likely to crash after you lump sum as they are after you finish easing into the market by DCAing.

Almost everyone who asks this question should be lumpsumming into an asset allocation that includes a bond portion that makes them feel comfortable lumpsumming.
Well actually the reason why I decided not to invest everything right now is not a matter of comfort, rather irrationality. I have never invested before, so I thought that it would be a good idea to get progressively exposed to volatility. Furthermore the idea of still having money that I can invest in case that there was a dip, makes me feel relaxed when stock prices decrease as I feel that I will be able to do my next purchase at a discount (thus I don't think about whether I have unrealized loses).

But as I said it's totally irrational. However, I think that's the right choice for me.
NerdJock
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Re: Invest everything now or dollar cost average?

Post by NerdJock »

When I retired my company had our retirements funds in Fidelity.
I was told that I should wait some time for the payroll system adjustments to catch up.
So I waited 2 months.

I transferred it to Vanguard.

And then I had to figure out when to invest it.
I waited until there was a big drop in the stock market and invested it then (it was Christmass Eve).
The stock market recovered immediately.

If i was doing it again I would skip the drama and just investment.

Consider that when the money is just sitting in an account it is actually invested in something.
Like a money market or bonds or something.

So you are 0:100

This is a great thing to do if you don't want your money to keep up with inflation.
In other words it is a horrible thing to do.
whereskyle
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Re: Invest everything now or dollar cost average?

Post by whereskyle »

Havent wrote: Tue Aug 31, 2021 11:43 am
whereskyle wrote: Mon Aug 30, 2021 7:10 pm
Havent wrote: Tue Aug 24, 2021 3:18 pm Hello,

The past days I have found this amazing forum and I have realized that I have not been managing my money in a smart way. I just turned 30 recently and I have been saving since I started working (almost 8 years ago). During that time, I have been saving this money in a normal bank account, for which I got an interest rate close to 0.

For this reason, I have finally decided to become a boglehead and to invest in VWCE before the end of the week. I never imagined myself investing as none of my friends or relatives has ever invested and they seriously think that investing is similar to gambling. So, thanks everybody for giving me the courage to start investing (even if I may be a bit old to start now, but better now than never).

The question I have now is whether I should go all in or dollar cost average. I see that there are some advocates of one strategy and some advocates of the other. As I want to invest everything I have saved in the last 8 years, I was not sure which strategy I should follow as part of the boglehead strategy says that I should invest periodically but I have previously not. What do you recommend me?

Thanks a lot and sorry if this question may be pretty basic. I am a newbie in this field.
I think the real question is: are you sure that 100% stocks is an asset allocation you are comfortable with?

If you're not comfortable with having the full amount you have invested in stocks now, why would you be comfortable with it at the end of your DCA period? As far as we know, stocks are just as likely to crash after you lump sum as they are after you finish easing into the market by DCAing.

Almost everyone who asks this question should be lumpsumming into an asset allocation that includes a bond portion that makes them feel comfortable lumpsumming.
Well actually the reason why I decided not to invest everything right now is not a matter of comfort, rather irrationality. I have never invested before, so I thought that it would be a good idea to get progressively exposed to volatility. Furthermore the idea of still having money that I can invest in case that there was a dip, makes me feel relaxed when stock prices decrease as I feel that I will be able to do my next purchase at a discount (thus I don't think about whether I have unrealized loses).

But as I said it's totally irrational. However, I think that's the right choice for me.
Assuming you have many working years ahead of you, you will (or should) be investing new dollars in both up and down markets.

My point remains the same: you should reconsider whether you want this entire amount, either now or eventually, invested exclusively in stocks.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Topic Author
Havent
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Re: Invest everything now or dollar cost average?

Post by Havent »

whereskyle wrote: Tue Aug 31, 2021 1:48 pm
Havent wrote: Tue Aug 31, 2021 11:43 am
whereskyle wrote: Mon Aug 30, 2021 7:10 pm
Havent wrote: Tue Aug 24, 2021 3:18 pm Hello,

The past days I have found this amazing forum and I have realized that I have not been managing my money in a smart way. I just turned 30 recently and I have been saving since I started working (almost 8 years ago). During that time, I have been saving this money in a normal bank account, for which I got an interest rate close to 0.

For this reason, I have finally decided to become a boglehead and to invest in VWCE before the end of the week. I never imagined myself investing as none of my friends or relatives has ever invested and they seriously think that investing is similar to gambling. So, thanks everybody for giving me the courage to start investing (even if I may be a bit old to start now, but better now than never).

The question I have now is whether I should go all in or dollar cost average. I see that there are some advocates of one strategy and some advocates of the other. As I want to invest everything I have saved in the last 8 years, I was not sure which strategy I should follow as part of the boglehead strategy says that I should invest periodically but I have previously not. What do you recommend me?

Thanks a lot and sorry if this question may be pretty basic. I am a newbie in this field.
I think the real question is: are you sure that 100% stocks is an asset allocation you are comfortable with?

If you're not comfortable with having the full amount you have invested in stocks now, why would you be comfortable with it at the end of your DCA period? As far as we know, stocks are just as likely to crash after you lump sum as they are after you finish easing into the market by DCAing.

Almost everyone who asks this question should be lumpsumming into an asset allocation that includes a bond portion that makes them feel comfortable lumpsumming.
Well actually the reason why I decided not to invest everything right now is not a matter of comfort, rather irrationality. I have never invested before, so I thought that it would be a good idea to get progressively exposed to volatility. Furthermore the idea of still having money that I can invest in case that there was a dip, makes me feel relaxed when stock prices decrease as I feel that I will be able to do my next purchase at a discount (thus I don't think about whether I have unrealized loses).

But as I said it's totally irrational. However, I think that's the right choice for me.
Assuming you have many working years ahead of you, you will (or should) be investing new dollars in both up and down markets.

My point remains the same: you should reconsider whether you want this entire amount, either now or eventually, invested exclusively in stocks.
My apologies, I misunderstood your point. That's something I am still taking into account, I might allocate 20% of my portfolio in bonds by the end of the year. But I am still unsure about that given the current low interest rate environment. It's something I still need to think a bit more about it and also to get better informed.
whereskyle
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Re: Invest everything now or dollar cost average?

Post by whereskyle »

Havent wrote: Tue Aug 31, 2021 2:04 pm
whereskyle wrote: Tue Aug 31, 2021 1:48 pm
Havent wrote: Tue Aug 31, 2021 11:43 am
whereskyle wrote: Mon Aug 30, 2021 7:10 pm
Havent wrote: Tue Aug 24, 2021 3:18 pm Hello,

The past days I have found this amazing forum and I have realized that I have not been managing my money in a smart way. I just turned 30 recently and I have been saving since I started working (almost 8 years ago). During that time, I have been saving this money in a normal bank account, for which I got an interest rate close to 0.

For this reason, I have finally decided to become a boglehead and to invest in VWCE before the end of the week. I never imagined myself investing as none of my friends or relatives has ever invested and they seriously think that investing is similar to gambling. So, thanks everybody for giving me the courage to start investing (even if I may be a bit old to start now, but better now than never).

The question I have now is whether I should go all in or dollar cost average. I see that there are some advocates of one strategy and some advocates of the other. As I want to invest everything I have saved in the last 8 years, I was not sure which strategy I should follow as part of the boglehead strategy says that I should invest periodically but I have previously not. What do you recommend me?

Thanks a lot and sorry if this question may be pretty basic. I am a newbie in this field.
I think the real question is: are you sure that 100% stocks is an asset allocation you are comfortable with?

If you're not comfortable with having the full amount you have invested in stocks now, why would you be comfortable with it at the end of your DCA period? As far as we know, stocks are just as likely to crash after you lump sum as they are after you finish easing into the market by DCAing.

Almost everyone who asks this question should be lumpsumming into an asset allocation that includes a bond portion that makes them feel comfortable lumpsumming.
Well actually the reason why I decided not to invest everything right now is not a matter of comfort, rather irrationality. I have never invested before, so I thought that it would be a good idea to get progressively exposed to volatility. Furthermore the idea of still having money that I can invest in case that there was a dip, makes me feel relaxed when stock prices decrease as I feel that I will be able to do my next purchase at a discount (thus I don't think about whether I have unrealized loses).

But as I said it's totally irrational. However, I think that's the right choice for me.
Assuming you have many working years ahead of you, you will (or should) be investing new dollars in both up and down markets.

My point remains the same: you should reconsider whether you want this entire amount, either now or eventually, invested exclusively in stocks.
My apologies, I misunderstood your point. That's something I am still taking into account, I might allocate 20% of my portfolio in bonds by the end of the year. But I am still unsure about that given the current low interest rate environment. It's something I still need to think a bit more about it and also to get better informed.
Here's an article I really like on the subject that may address your concerns:

https://www.advisorperspectives.com/art ... bout-bonds
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
Topic Author
Havent
Posts: 9
Joined: Tue Aug 24, 2021 3:05 pm

Re: Invest everything now or dollar cost average?

Post by Havent »

whereskyle wrote: Tue Aug 31, 2021 2:20 pm
Havent wrote: Tue Aug 31, 2021 2:04 pm
whereskyle wrote: Tue Aug 31, 2021 1:48 pm
Havent wrote: Tue Aug 31, 2021 11:43 am
whereskyle wrote: Mon Aug 30, 2021 7:10 pm

I think the real question is: are you sure that 100% stocks is an asset allocation you are comfortable with?

If you're not comfortable with having the full amount you have invested in stocks now, why would you be comfortable with it at the end of your DCA period? As far as we know, stocks are just as likely to crash after you lump sum as they are after you finish easing into the market by DCAing.

Almost everyone who asks this question should be lumpsumming into an asset allocation that includes a bond portion that makes them feel comfortable lumpsumming.
Well actually the reason why I decided not to invest everything right now is not a matter of comfort, rather irrationality. I have never invested before, so I thought that it would be a good idea to get progressively exposed to volatility. Furthermore the idea of still having money that I can invest in case that there was a dip, makes me feel relaxed when stock prices decrease as I feel that I will be able to do my next purchase at a discount (thus I don't think about whether I have unrealized loses).

But as I said it's totally irrational. However, I think that's the right choice for me.
Assuming you have many working years ahead of you, you will (or should) be investing new dollars in both up and down markets.

My point remains the same: you should reconsider whether you want this entire amount, either now or eventually, invested exclusively in stocks.
My apologies, I misunderstood your point. That's something I am still taking into account, I might allocate 20% of my portfolio in bonds by the end of the year. But I am still unsure about that given the current low interest rate environment. It's something I still need to think a bit more about it and also to get better informed.
Here's an article I really like on the subject that may address your concerns:

https://www.advisorperspectives.com/art ... bout-bonds
Thanks, this article is really useful!
helloyou
Posts: 222
Joined: Sun Apr 26, 2020 6:09 am

Re: Invest everything now or dollar cost average?

Post by helloyou »

Havent wrote: Tue Aug 31, 2021 2:45 pm
whereskyle wrote: Tue Aug 31, 2021 2:20 pm
Havent wrote: Tue Aug 31, 2021 2:04 pm
whereskyle wrote: Tue Aug 31, 2021 1:48 pm
Havent wrote: Tue Aug 31, 2021 11:43 am

Well actually the reason why I decided not to invest everything right now is not a matter of comfort, rather irrationality. I have never invested before, so I thought that it would be a good idea to get progressively exposed to volatility. Furthermore the idea of still having money that I can invest in case that there was a dip, makes me feel relaxed when stock prices decrease as I feel that I will be able to do my next purchase at a discount (thus I don't think about whether I have unrealized loses).

But as I said it's totally irrational. However, I think that's the right choice for me.
Assuming you have many working years ahead of you, you will (or should) be investing new dollars in both up and down markets.

My point remains the same: you should reconsider whether you want this entire amount, either now or eventually, invested exclusively in stocks.
My apologies, I misunderstood your point. That's something I am still taking into account, I might allocate 20% of my portfolio in bonds by the end of the year. But I am still unsure about that given the current low interest rate environment. It's something I still need to think a bit more about it and also to get better informed.
Here's an article I really like on the subject that may address your concerns:

https://www.advisorperspectives.com/art ... bout-bonds
Thanks, this article is really useful!
Have you decided if you will take bonds for 20% of your portfolio?
Topic Author
Havent
Posts: 9
Joined: Tue Aug 24, 2021 3:05 pm

Re: Invest everything now or dollar cost average?

Post by Havent »

helloyou wrote: Tue Aug 31, 2021 8:32 pm
Havent wrote: Tue Aug 31, 2021 2:45 pm
whereskyle wrote: Tue Aug 31, 2021 2:20 pm
Havent wrote: Tue Aug 31, 2021 2:04 pm
whereskyle wrote: Tue Aug 31, 2021 1:48 pm

Assuming you have many working years ahead of you, you will (or should) be investing new dollars in both up and down markets.

My point remains the same: you should reconsider whether you want this entire amount, either now or eventually, invested exclusively in stocks.
My apologies, I misunderstood your point. That's something I am still taking into account, I might allocate 20% of my portfolio in bonds by the end of the year. But I am still unsure about that given the current low interest rate environment. It's something I still need to think a bit more about it and also to get better informed.
Here's an article I really like on the subject that may address your concerns:

https://www.advisorperspectives.com/art ... bout-bonds
Thanks, this article is really useful!
Have you decided if you will take bonds for 20% of your portfolio?
At the end I decided to take a 10% of my portfolio in bonds. As I am investing for at least 15 years I believe that this is a good proportion and as soon as time passes I will start increasing it.
solidi
Posts: 16
Joined: Thu Sep 09, 2021 1:57 am

Re: Invest everything now or dollar cost average?

Post by solidi »

Studies show that the risk/yield ratio is better with 80/20 asset allocation but congrats on your new portfolio :D
Swiss Bee
Posts: 92
Joined: Mon Dec 07, 2020 10:03 am

Re: Invest everything now or dollar cost average?

Post by Swiss Bee »

First, I think you are not very old to invest :happy It is not easy to set aside money for this and congratulations to breaking the cycle of family and friends who do not invest. This is hard!

I dont have much to add to the above. Personally, I would also DCA into the market, but not over a super long period of time. That said, make sure you have an emergency fund first (e.g. 6 months of living expenses in cash), and pay off any consumer debt you might have (car etc.). :moneybag

All the best on your journey! :happy
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