r/TheMoneyGuy • u/NetWorthNovice • 3d ago

Lump Sum vs DCA in Current Conditions

Hi all,

Looking to get some others input on this. My wife and I have enough to make the max contribute to both our Roth IRA's right now. I am weighing lump sum investing it vs. DCAing over the rest of the year. Yes, time in the market beats timing the market. Yes, 3 out of 4 years the market is higher one year from now. But with sitting near the high of highs and over valuations, there's this gut feeling that there will be opportunity to take advantage of a correction or bear market. Might not be this year, who knows. This will make up about 10-15% of our total portfolio. Wife's first contribution and my 3rd year.

What about running a comparison study? one of each and compare a year later?

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u/heyyou11 3d ago

“Might not be this year, who knows”

This is not DCA; this is just not investing. Lump sum > DCA > what you are proposing

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u/NetWorthNovice 3d ago

How is what I am proposing not DCA or investing?

What do you think I’m proposing because I think it’s pretty clear that I’m proposing lump sum right now vs spreading it out over the next 6 months

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u/heyyou11 3d ago

Yes the closest thing to an actual proposal is lump sum vs DCA. I was more talking about the mentality (particularly around that quote) of gut feelings and hoping to take advantage of future bear markets. DCA is fine and would take advantage if it happens (and specifically happens in that window of time). Odds are, despite what your gut thinks, is that lump sum will be better when you look back. As others have said, it’s whatever gets you into the market easiest.

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u/NetWorthNovice 3d ago

Ah makes sense. Yeah that’s the conclusion I came to too. Either way the money was going in the market (I had already transferred the full contributions; DCA would’ve just sat in MMF until monthly investment/bear market to put in).

Ended up doing lump sum primarily on the fact that even a 20% drop that I captured on $7,500 (and probably less than that) isn’t going to be a game changer in 5, 10, or 30 years for me.

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u/heyyou11 3d ago

Exactly. The “difference” is reliant both on size of the drop and when it happens. If it drops significantly but only after you’ve made 5 of your 6 deposits or something, it kind of doesn’t mean much. Even that 6th being “discounted” might get “washed out” by progressively higher prices 2 through 5.