Should I invest a lump sum, or dollar cost average?

I get it. It's a volatile time in the stock market. And perhaps you have a large sum of money to invest. You've received an inheritance. You've just gotten a bonus from your employer, or perhaps in the case of several people, I work with,  you've just hired a new advisor and you've come up with a financial plan that includes investing in growth assets, includes investing in the stock market and you feel uncertain about whether you should take all your hard won hard earned investments and put them in this investment strategy at once.

And so I often get questions about a strategy called dollar cost averaging. Like, does it make sense to do lump sum investing or does it make sense to have a plan to invest a portion of your assets each month over time? And I have two answers for you. The first answer is purely financial. Studies have shown that if you are a long term investor with a long horizon, you will do better by taking the lump sum and investing it at once.

Timing the market is a fool's game. And we don't know that piece of news, Ii's currently unanticipated, that will cause the market to rally. And so sitting with a portion of your assets in cash, which is a drag on return, again, over a longer term has been shown to ding your investment returns. On the other hand, there's answer number two, the answer tied to your emotional response.

How much risk can you tolerate? If the fear and anxiety that comes up by being told that you have to take your lump sum of assets and invest it all at once and that's gonna keep you from investing at all? That is not the right answer for you. The right answer for you is to come up with a plan to dollar cost average, to invest a certain amount of your assets in the stock market each month.

Now I'd be happy to talk to you about your individual situation. So please reach out to me if you have a question. My name is Laura Rotter of True Abundance advisors, and I would be happy to work with you to align your money with meaning. Thank you.