DCA vs lump sum investing

[Anonymous No.49326839]

I have been reading about it online and noone seems to be in agreement on which is better.
DCA proponents say it is better because of its psychological advantages and the fact that it works for someone who doesnt have a large sum to invest right now, but has a steady income (i.e. job).
Lump sum proponents say it is better because it typically outperforms DCA in almost every setting, but do mention it relies on "timing the market"/"buying the bottom", which is insanely hard, and is some case, outright impossible to do.

What does /biz/ think about these 2 strategies?
I have a bit of money for investing - should I keep saving in my bank account and then lump-sum when the time looks right, or should I keep it as is and just put my monthly access into investing?

[Anonymous No.49326881]

>>49326839
When I was new: DCA
Now:
Limit orders at targets I know will hit

DCA can still be fine IF done in bear market lows or at least in bear markets in general. NEVER in bull markets. That's when you DCA out

[Anonymous No.49326955]

>>49326881
what about "selling the top"?
>Limit orders at targets I know will hit
explain this in more detail, I am a noob at this stuff

[Anonymous No.49327246]

>>49326839
I've been holding cash for a bit over a year like an idiot but now that the markets and down and people are crying about muh retirements, I'm finally DCA'ing into an ETF. $5k a week. Fuck it. Everything's on sale.

[Anonymous No.49327309]

>>49327246
So I should wait until a bear market sets in and only then invest, but am wondering which is better - DCA in the bear market or lump-sum in a bear market (when I more or less seen where the bottom just was)

[Anonymous No.49327328]

>>49326955
That too. I personally got greedy and ignored macro weakness. Saw the dump from mid 50k coming. Same with the may crash, but I kept marrying the idea of "but we need a blowoff top first so it can't be right".
NEVER marry your bags. Never get greedy. Never panic buy back in bull markets.

[Anonymous No.49327360]

>Better
Incoherent. DCA limits the effect of volatility on your portfolio, for better and for worse. Lump sum maximizes volatility, better and worse. The choice between the two depends on your personal risk tolerance and assessment of the market over the term you'd plan to DCA, not any objective factor.

[Anonymous No.49327361]

Lump sum doesn't rely on timing the market, that is incorrect. Lump sum works because you have more money invested for longer. There is no timing involved.

[Anonymous No.49327387]

>>49327360

Lump sum has higher expected return. I would consider that better. The benefits of DCA is purely psychological.

[Anonymous No.49327403]

>>49327309
I don't think bottom is in yet, but I don't think dcaing every week now is a bad idea since as far as I'm concerned, bear market is almost over. I still think we'll get a final dump though to the low 20s and maybe a wick in the high teens (that's when I'd go all in), but dcaing now is not bad.

[Anonymous No.49327450]

>>49326955
You can't sell the top. You can sell higher than you bought though. Set targets based on the market momentum and take profits.

[Anonymous No.49327475]

>>49327387
>higher expected return
Only given certain assumptions. If prices rise during the averaged period, lump sum outperforms. If prices fall during the averaged period, no. Hence, it's circumstantial - and subject to individual risk tolerance. Anticipating bullish conditions and more worried about missing the boat than you are about the downside? Ape in. Anticipating bearish, and more worried about chasing lower dips than you are about missing the next boat? DCA.

[Anonymous No.49327534]

>>49327328
>>49327360
seems like good advice, I'll try to keep it in mind

[Anonymous No.49327576]

>>49327361
well, if you go all in and the market them plummets, then I would say it is a bad investment, as the market was not timed well for entry

[Anonymous No.49327716]

>>49326955
>what about "selling the top"?
So basically, you seem to think you have an idea of when we're going to hit the top or bottom and think you'll have the balls to bet a large sum of money on that hunch. Cool.

Personally, all I know is that the markets will recover from today's prices. No doubt. I'll make gains, one way or another.

[Anonymous No.49327878]

>>49327716
I claim no such certainty, I just want to know peoples opinions - would bigger returns be received when using DCA (averaging) or lump sum (in and out with larger amounts at the "right" time). Assume in bot cases the amount of money invested into the market is the same

[Anonymous No.49328156]

>>49327878
The problem with the question is that you don't choose by deciding which one you think will make more, you choose by deciding which probabilistic set of outcomes you like better. You lump sum in because you just want in and you want in NOW, and you don't care about the
probability of dips getting your whole sum down into the red before the next pump (because you either figure the probability is low and/or that the dips won't be that deep, and you figure the next leg up could hit at any time). You DCA because you're feeling a little more tepid in your assessment, and will accept the risk of leaving gains on the table in pumps alongside the chance of getting extra gains buying future dips. It's a matter of picking your poison.

[Anonymous No.49328231]

>>49326839
DCA during a bear market if you dont have a feel for it. If you have a good feel then dca but not as much, because you want to save your cash for those crazy dips that get bought pretty quickly.

Do not DCA during a bullrun because you get priced out quickly. If you didnt accumulate before a big takeoff then you wait for a dip then buy heavy.

[Anonymous No.49328353]

>>49326839
If you're going to DCA you better be collecting yield on idle stablecoins while you wait. That's one of the ways that DCA can be better than lump-sum.
Generally speaking though lump-sum is better.

[Anonymous No.49328473]

>>49328156
I see, this is a bit different from what I gathered before. thank you, will keep this in mind
>>49328231
seems like I will have to do a combination of both then, I am a bit of a noob

[Anonymous No.49328524]

>>49328353
is lump sum really better though? some people say that is isnt, just a matter of choice. Now I am a bit confused

[Anonymous No.49328649]

>>49328524
Pretty sure Vanguard released a study confirming that, statistically speaking, lump-sum tends to outperform DCA.

[Anonymous No.49328872]

>>49326839
>boomer or newfag
dca
>peak dunning kruger daytrader
limit
>ascended oldfag
ride the trends

[Anonymous No.49329044]

>>49328649
That study was done across a rising market period, and thus of course lump-sum would outperform. If instead you look only at falling market periods, DCA does better because it has less time in the market. The question is, which type of market are we in?

[Anonymous No.49329219]

>>49328649
>>49327361
"Time in the market beats timing the market" and every derivative of this notion relies on two assumptions: (1) A widely diversified boomer etf style stock portfolio, and (2) An arbitrarily long time-horizon. Neither of these assumptions apply to the normal investor here.

[Anonymous No.49329292]

>>49329219
what is wrong with those thing though? isnt diversification supposed to be good? I plan on getting into mainly stocks, maybe only a little bit of crypto

[Anonymous No.49329591]

>>49329292
Nothing's wrong with them, they just need to be understood in-context rather than applied as blanket generalizations. Do you plan to go wide old-timer style and want to ride the general tide of the market for 20-30 years? Then apply that idea. If you're an average /biz/ poster trying to catch moonshots and slick trades on crypto and/or a smaller selection of key stocks, then don't.

[Anonymous No.49329640]

>>49329591
I plan on doing swing trading, it is supposed to be a middle ground between the 2 if I understand correctly

[Anonymous No.49329656]

>>49326839
Lump sum with leverage every time there is a true market crash. The market cycles are becoming shorter and more violent.

[Anonymous No.49330156]

I will be buying EQ presale with a lump sum at public offering and DCA after launch.

[Anonymous No.49330212]

>>49329292
>>49329591
And to add, Fama French factors show that value investing beats market weighted indexing.

Indexes add a lot of "junk" to your portfolio that will reduce your risk adjusted returns