When it comes to investing your money, there are primarily two strategies you can use: lump sum investing and dollar cost averaging. Both of these come with advantages and disadvantages. In this post, I will walk you through both, showing you why you might choose one over the other and ideally, help you to determine which method makes the most sense for you and your goals.
What Is Lump Sum Investing?
Lump sum investing is fairly straightforward. You have a chunk of money to invest and you invest all of it at once. So, if you have $10,000 you want to invest in the stock market, you do it on a given day.
The advantage of lump sum investing is that you are sure to get into the market. You won’t be tempted to go out and buy things with the money, like a new car or smart phone instead of investing it. [Read more…]