DCA vs lump sum

DCA vs lump sum — peso-cost averaging (DCA) invests a fixed amount on a schedule; lump sum invests everything now. The evidence (Vanguard’s three-country study, Constantinides) favors lump sum ~2/3 of the time, because markets rise more often than they fall; DCA’s honest use is behavioral — it buys sleep for investors who’d panic if a crash followed deployment. Monthly investing from monthly income isn’t really DCA at all: it’s investing money as it arrives, the always-correct move.

First used in: 1.5 · Why the index wins (principles)