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Dollar Cost Averaging vs Lump Sum — The Data-Driven Answer

r/BogleheadsstocksLong-term (decades)by reddit_community

Hybrid DCA: invest 50% immediately, DCA rest over 6 months. Lump sum wins 66% historically but hybrid reduces regret and drawdown while capturing most upside.

ENTRY RULES

Invest 50% of available capital immediately into target allocation | DCA remaining 50% in equal weekly installments over 6 months | Target: broad market index (VTI/VXUS/BND) | Automate the DCA — no timing based on market conditions | Rebalance to target allocation after DCA period ends

EXIT RULES

This is a long-term strategy — no regular exits | Rebalance annually to target allocation | Only sell for life needs or retirement withdrawals | Tax-loss harvest in taxable accounts annually | Review allocation at major life events

INDICATORS

Dollar Cost AverageAsset Allocation

ORIGINAL POST

678

r/Bogleheadsposted by reddit_community

Dollar Cost Averaging vs Lump Sum — The Data-Driven Answer

Analysis of DCA vs lump sum investing using historical data. Lump sum wins approximately 66% of the time because markets trend up. However, DCA reduces maximum drawdown by 30% and feels psychologically easier. Optimal hybrid: invest 50% immediately (lump sum), DCA the other 50% over 6 months. This captures most of the lump sum advantage while limiting regret if market drops immediately after investing.

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Dollar Cost Averaging vs Lump Sum — The Data-Driven Answer | iGotFomo Strategies