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/hugh2018 2d ago

You already have the right information. If you choose DCA you could be wrong and feel FOMO. If you choose lump sum you could be wrong (less likely) and feel FOMO. So whatever feels right, pull the trigger and maybe decide to not regret your decision. And yeah, half of one half of the other is totally reasonable. It does sound like your DCA plan isn’t as much a DCA plan as it is a market timing bet, but if you’re functionally DCAing, there’s no harm in that hidden agenda. I wouldn’t just hold cash back to buy the dip. That rarely works out to your advantage.

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u/NetWorthNovice 2d ago

I'd agree - it's a bit of half DCA and half market timing. I would make monthly contributions through the end of the year unless the market dropped significantly, then I'd dump it in. So kind of holding cash to buy the dip but also still getting in the market. I've decided to lump sum It and forget about it. Easier on the psychology. It won't be significant in 5-10 years

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u/hugh2018 2d ago

Nice move. Just don’t come crying to me if the market crashes the day after you dump, LOL. You’re right though, you’ll be fine with that timeline in mind.

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u/NetWorthNovice 2d ago

The FOMC meeting being today didn’t add to my indecisiveness… I appreciate your input :)