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DCA is entirely a risk management issue. Sure, “on average,” lump sum investment yields better results, except when it doesn’t. The problem is that no one knows in advance when that will be. When one dumps in a large sum of money into an investment, not only is the entire amount put “to work,” it is also put at risk.   In this current market when we are just starting to see the beginning of the worst of this situation, who knows how bad it can get. The upward potential is reduced sure , but risk is reduced to a much greater degree.If one has money to “play with” in the market, go ahead and speculate, gamble, and dump in funds as one sees fit. If one has limited means and needs every penny available to survive in retirement, then one needs to stick to traditional rules of asset allocation and systematic investing.   The market is too unpredictable to know which is the better approach. 

Regardless I'm hearing many folks will be getting a lump sum of 1,200.00 from the government. Don't have the details but I believe everyone with income below $70,000 gets it but I'm not clear on the details.  I think this should only be given to people who really need it and not everybody but I understand they are trying to keep the economy afloat.

I'm afraid our comments here are only making  investing sound complicated and scary to others when its supposed to be simple.  

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4 minutes ago, tony said:

Regardless I'm hearing many folks will be getting a lump sum of 1,200.00 from the government.

Yay, a taxable account buoy.

If anyone wants to meet via Zoom during the day, let me know. I'm working from home/sheltering in place for the next few weeks.

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18 minutes ago, tony said:

DCA is entirely a risk management issue. Sure, “on average,” lump sum investment yields better results, except when it doesn’t. The problem is that no one knows in advance when that will be. When one dumps in a large sum of money into an investment, not only is the entire amount put “to work,” it is also put at risk.   In this current market when we are just starting to see the beginning of the worst of this situation, who knows how bad it can get. The upward potential is reduced sure , but risk is reduced to a much greater degree.If one has money to “play with” in the market, go ahead and speculate, gamble, and dump in funds as one sees fit. If one has limited means and needs every penny available to survive in retirement, then one needs to stick to traditional rules of asset allocation and systematic investing.   The market is too unpredictable to know which is the better approach

DCA (as it applies to a pile of cash) mitigates risk in the sense that you aren't invested in the market, but not being invested in the market isn't a valid strategy. Bonds are a valid risk management strategy, sitting on cash is speculative and locking in the erosion of inflation.

One easy way to see what a poor risk mitigation strategy DCA is, is to imagine somebody who is already fully invested and they're scared of market risk. Nobody in their right mind would ever recommend that this person take a lump sum out of the market and slowly dribble it back into the market. Sure doing so reduces risk, but I think we can all see how foolish that approach would be.

The reason people can't see how foolish it is if somebody has a windfall is because we're incorrectly anchoring to the value of the portfolio on the day of the windfall and for a reason I can't explain people don't seem to anchor to the value of the portfolio on the day they're fully invested (at least in the context of DCA).

Investing everything you have in the market isn't speculation or a gamble. Investing in single stocks is a gamble. Investing for the short term is a gamble. Investing in a single sector is a gamble. Putting all of your portfolio into the market is just plain investing. However, pulling money in or out of the market based on short term gyrations...that my friend, that's speculation.

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